Bruce Murphy
Murphy’s Law

Wisconsin, Land of the Plutocrats

Forbes 400 list offers more evidence of wealth gap in Wisconsin.

By - Sep 19th, 2013 12:38 pm
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Menards / Kohler $

Menards / Kohler $

You think of Wisconsin as a state removed from the fabulous wealth of the East Coast and West Coast. Indeed, the Midwest as a whole doesn’t loom that large in the latest Forbes list of the wealthiest 400 Americans.

But Wisconsin comes off looking rather wealthy. Nine of the nation’s 400 super-rich live in this state. In fact, they were all ranked among the top 250 richest.  Wisconsin has 1.8 percent of the nation’s population but 3.6 percent of the most wealthy 250 Americans.

The latest Forbes list is a stunning testament to the growth of wealth inequity in America. The wealthiest 400 Americans are worth $2.2 trillion, “roughly equivalent to the GDP of Russia,” Forbes notes. “That is a gain of $300 billion from a year ago, and more than double a decade ago. The average net worth of list members is a staggering $5 billion, $800 million more than a year ago and also a record. The minimum net worth needed to make the 400 list was $1.3 billion… Because the bar is so high, 61 American billionaires didn’t make the cut.”

That 2.2 trillion owned by 400 people is greater than the wealth of the bottom 50 percent of Americans, meaning 150 million people make less in total than these 400 plutocrats.

Ranked 57th on the Forbes list is John Menard of Eau Claire at a net worth of $7.5 billion. Menard is almost a poster boy for the wealth gap, finding many ingenious ways to under pay help, as I’ve noted in a past column. As Forbes notes, Menard’s reputation “is suffering, thanks to a slew of lawsuits alleging sexism, ageism, discrimination. The latest alleges he pressured his former business partner’s wife for sex and is now trying to financially ruin the couple.”

Ranked 65th is Herb Kohler, with a net worth of $6.4 billion. The Kohler company for decades ran the ultimate company town, Kohler, WI, where everything was owned by the company. Kohler lives a kind of Hollywood version of the rich man’s life, with his fabled golf courses, hunting lodge, and the Morgan show horses he breeds on his farms in Kentucky and Wisconsin.

Ranked 103rd, with a net worth of $4.4 billion, is Diane Hendricks, the co-founder and sole owner of ABC Supply, the nation’s largest roofing, window and siding wholesale distributor, based in Beloit. Hendricks was the largest donor to Gov. Scott Walker in 2012, giving him more than $500,000 and became infamous among Democrats when a documentary film captured her urging Walker to turn Wisconsin into a right to work state. Walker replied that he wanted to “divide and conquer” unions in Wisconsin. Hendricks lives on a 200-acre estate in Afton, WI.

The next four richest Wisconsinites are members of the Johnson family, all connected to the old Johnson Wax company based in Racine, whose longtime patriarch and CEO Samuel Curtis Johnson expanded SC Johnson from floor wax to a company that included industrial cleaning, banking and camping supplies.

The family has always exemplified the progressive portion of the plutocracy, with a penchant for environmentalism, a passion for Frank Lloyd Wright’s architecture, and a family foundation that gave away millions. But that reputation has been besmirched, Forbes notes, by Curtis Johnson, the eldest of company founder SC Johnson’s great-great-grandchildren, who “is still awaiting trial after being charged in March 2011 with repeated sexual assault of a child later revealed to be his stepdaughter.”

Forbes lists four members of the Johnson family as each worth $3 billion and tied for 166th place on the list. That includes Curtis Johnson, H. Fisk Johnson, the current chairman and CEO of SC Johnson, Imogene Powers Johnson, the widow of SC Johnson, and Helen Johnson-Leipold, chairman and CEO of Johnson Outdoors, a publicly traded company that sells supplies for camping, fishing and diving. She is also board chair of the Johnson Foundation at Wingspread, one of many Wright-designed buildings maintained by the family.

Ranked 209th on the list is James Cargill II,with a net worth of $2.6 billion. Cargill is only a Wisconsinite in the sense that the eastern suburbs of Twin Cities sprawling into this state are part of Badgerland. Cargill lives in Birchwood, WI, in Washburn County, about 123 miles northeast of Minneapolis and is undoubtedly worth far more than the total combined income of his fellow residents of Birchwood, whose average household income is $31,272. His wealth comes from an estimated 7 percent stake in Cargill, the nation’s largest private company, based in a Minneapolis suburb, which operates in the food industry, “processing crops, trading commodities, sourcing ingredients to food manufacturers, and providing financial risk management.”

Ranked 243rd, is Judy Faulkner, with a net worth of $2.3 billion, whose company exemplifies the growing high-tech economy of Madison. Faulkner is CEO of electronic health record company, Epic Systems, which she founded in 1979. The company pulled in $1.5 billion in revenue in 2012, up 25 percent from 2011. “Almost half the U.S. population will have its medical information stored in Epic digital records when hospitals finish installing them,” Forbes reports.

The Forbes story comes shortly after a new national study which found the wealth gap between the top 1 percent and the bottom 99 percent in the U.S. is as wide as it’s been in nearly 100 years.

The gap continues to widen. Between 1993 and 2012, the real incomes of the top 1 percent grew 86.1 percent, while those of the 99 percent grew just 6.6 percent, according to the study, based on Internal Revenue Service statistics examined by economists at UC Berkeley, the Paris School of Economics and Oxford University.

The top 1 percent is defined as families with incomes above $394,000 in 2012. The study found that since the Great Recession, the top 1 percent “are close to full recovery” while the bottom 99 percent “have hardly started to recover.”

The study goes all the way back to 1917, when the federal income tax began. It finds that the wealth of the top 10 percent of Americans hit a peak of owning about 48 percent of all wealth in the year before the 1929 market crash, averaged a bit above 45 percent from the mid-‘20s until 1940, then dropped to an average of about 33 percent from WWII until the late 1970s, when it began creeping up. Today the wealthiest 10 percent own more than half — 50.4 percent — of all wealth in America.

As I’ve written previously, the wealth gap has also had a profound impact on Wisconsin. A study by the Center on Wisconsin Strategy found that between 1996 and 2010, the bottom 40 percent of income earners in this state saw their income drop by $2,407 while the richest 1 percent saw their income rise by $168,773.

Between 2000 and 2010, the incomes of the top 20 percent of Wisconsinites rose by a total of $4.8 billion while the incomes of the bottom 80 percent of Wisconsinites dropped by $4.8 billion. All of the gains of that decade went to the wealthy, an analysis of Department of Revenue data by the Wisconsin Council on Children and Families found.

This gap will only increase as a result of tax policies by Gov. Walker and the Republicans. Assembly Speaker Robin Vos, declaring that Wisconsin is “not a good place to be middle-income,” said the income tax cut ultimately passed by them was intended to remedy that situation. The cut did provide some help for the middle class but provided proportionately more relief for the wealthy. An analysis by the nonpartisan Legislative Fiscal Bureau found the change will give more than 60 percent of the proposed $600 million-a-year tax cut to those making more than $100,000 a year. For example, a married couple with adjusted gross income of between $50,000 and $60,000 a year would receive a tax cut of $90 in 2014 and $150 in 2015, while married taxpayers making more than $300,000 a year would receive an average cut of $1,627 in 2014 and $2,584 in 2015.

Wisconsin created the income tax in 1911, before it was adapted by the federal government, with the goal of creating a system where those better able to afford it would pay more in taxes. So a choice to cut this tax, rather than the sales or property tax, inevitably gives the greatest benefit to wealthier Wisconsinites.

Categories: Murphy's Law, Politics

10 thoughts on “Murphy’s Law: Wisconsin, Land of the Plutocrats”

  1. Kat says:

    Just wait! Can’t you just hear the wealth trickling down? Hold your breath… it’ll happen.

  2. Bill Sweeney says:

    This quote by Justice Louis Brandeis can not be cited too often: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” But he also said this which, praying for miracles, I hope could soon appear on the masthead of the Wall St Journal: “Real success in business is to be found in achievements comparable rather with those of the artist or the scientist, of the inventor or statesman. And the joys sought in the profession of business must be like their joys and not the mere vulgar satisfaction which is experienced in the acquisition of money, in the exercise of power or in the frivolous pleasure of mere winning.” One of the reasons, perhaps the chief reason, why this growing inequality is so detrimental for our country is what it is doing to our democracy. People may be interested in taking a look at a new book by John Nichols and Robert W. McChesney, “Dollarocracy, How the Money and Media Election Complex Is Destroying America. Here is one rather long quote: “The ‘investors’ bankrolling permanent campaigns don’t worry about silly notions like ‘throwing good money after bad.’ For them, political investments come from the petty-cash drawer. What does $150 million mean to Adelson, a man with a net worth of $20.5 billion? If Sheldon Adelson donated $10 million to political campaigns EVERY SINGLE DAY from January 1, 2013, until Election Day, November 1, 2016, he would wake up on November 2, 2016, with a net worth of $6.6 billion and still be among the 50 or 60 richest people in the United States. . . . There was the assumption, writ large across the reporting, that millionaires and billionaires were desperately spending their fortunes down in order to ‘buy’ an election. That’s silly. A David Koch, a Dick DeVos, a Sheldon Adelson does not spend until it hurts on politics. They’re making investments, not high-end consumer purchases, and those investments are small in the scheme of things.”

  3. Todd Spangler says:

    Shades of the Gilded Age…..

  4. East Slider says:

    Sure, slam the trickle-down theory all you want, but WHO has been in charge since the start of the “Great Recession”-WHO??? BARACK OBAMA!!!!-Not exactly the poster child for trickle-down economics!

  5. Todd Spangler says:

    The events leading to the “Great Recession” began during the term of his predecessor and were mostly due to a boom in real estate that was not sustainable in the long term. Some of the boom, admittedly, was driven by policies implemented during the Clinton administration in regard to increasing the availability of mortgages to people of lesser economic means. Another Great Depression would have resulted, in my opinion, if not for herculean efforts on the part of the Treasury Department in both the GWB and Obama administrations, as well as the Federal Reserve during that time period. Because of this, I think our current chief executive probably gets too much blame for the continuing sluggishness in the economy, if you look at how long the country took to recover after the stock market crash in 1929 as at least a vaguely similar occurrence.

    That being said, I think his leadership could have been better than what it has proven to be, and Obamacare was probably a significant mistake in policymaking. I think there is also blame on both sides in the continuing standoff between Republicans and Democrats in Congress, but from where I sit, there appears to be more on the GOP side. The current attempt to defund Obamacare by the House Republicans is misguided IMO. If they really wanted to accomplish that, the GOP should have done better in the 2012 elections.

  6. dohnal(Wis. Conservtive Digest says:

    This site has the silliest comments. Sure we have a very few rich people but damn few as the Doyle people chased 7500 big earners out of state, taking their millions and future jobs with them just as they did with KC. Still have never recovered from that debacle by Tony.
    Tommy brought some of it back, but then doyle and his new taxes went off on a blunder and chased more out.
    Headlines to day again showed the mis management of Doyle and the left when it ran the state. Thank God for Scott, he has turned it around. From a deficit to a surplus and we are not raising taxes but lowering them.
    Look at the disastrous run by the Left and Doyle. Education, got worse. Doyle took hundreds of millions from UW system and never reformed it. Tech schools got worse. Highways were robbed, now have to catch up. Taxes were disaster and jobs left in droves, now slowly coming back without much help from Obama.
    And Barrett??? Flynn?? Crime is going up, jobs leaving, nothing happens in Milwaukee. Only the quality of the people have saved it from bad leaders.
    Barrett and Flynn run around yelling about the semi auto guns that we have used for hundred years and they are never used in murders. Drugees use pistols. Registration is silly, put the bad guys in jail as David Clarke points out.

  7. Dave Reid says:

    “This site has the silliest comments. ” Yup.

  8. Dohnal(Wis. Conservtive Digest says:

    I give Bruce and the Left credit. when you cannot win the debate, change the subject. I want to talk about the failures of the Left in MPS, eduction, MMSD, MATC and no jobs, poverty and he is worried about 8 wisconsinites that have made money. he believes that if we take their money and give it away that all these problems will disappear. good Luck.

  9. Bruce Murphy says:

    Bob, I’ll leave it to the readers to decide who is actually changing the subject here, but for the record, in more than three decades of journalism, I’ve never argued that we should “take away” the money of the wealthy and give it away to others. I don’t think there are any easy solutions here but I have discussed potential policy solutions here: http://urbanmilwaukee.com/2013/01/08/murphys-law-wisconsins-rising-wealth-gap/

  10. Stacy Moss says:

    Here we go again…..chased 7500 big earners out of state.

    A recent study by the IRS concluded there is indeed a drain of money out of the state of Wisconsin.

    5,567 “big earners” left the State.

    According to a study by the IRS in conjunction with the last Census….

    68% of those retired to a warmer climate.
    14% left to be closer to their children
    8% left for medical reasons.
    6% said they left for tax reasons.
    4% other, this includes professional athletes who were traded.

    Interestingly, 29% of those who left said they regretted after 5 years.

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