Question of math
The concept of a billion dollars is difficult to grasp, even for someone accustomed to working with numbers. Recently I became curious about how far a billion $1 bills laid end-to-end would reach. My guess was maybe as far as the distance from Little Rock to Memphis.
Oh, how wrong I was!
A few minutes of Google research showed that a dollar bill is 6.14 inches long. A billion of them would extend for 6.14 billion inches which, when divided by 36 inches per yard, equates to 170,555,556 yards. When 170,555,556 yards are divided by 1,760 yards in a mile, the result is that one billion $1 bills laid end-to-end stretches 96,906 miles.
But even that number is difficult to grasp without a meaningful comparison. So, a trip back to Google yielded the information that the circumference of Earth is 24,901 miles. Learning that one billion $1 bills laid down end-to-end would circle the globe virtually four times whetted my appetite for more such information.
If the one billion $1 bills were stacked, how high would the stack be? Another trip to Google revealed that one thousand $1 bills would be 4.3 inches high. A stack of a million such bills would be 4,300 inches tall, while a billion of them would be 4.3 million inches in height. That amounts to 119,444 yards, so at 1,760 yards per mile the stack would be almost 68 miles high.
By comparison, the Empire State Building is 416.667 yards high. Thus, the stack of one billion $1 bills would be equal in height to over 286 Empire State Buildings.
Now I became curious about the increase in the number of American billionaires over the past half-century. In 1966, the Guinness Book of Records named J. Paul Getty as the richest person in the world with a net worth of a little over $1 billion. The Forbes 400 in October of 2020 said that 614 Americans had a net worth of $1 billion. The richest was Elon Musk, whose net worth was more than $188 billion.
Laid end-to-end in $1 bills, the net worth of Elon Musk would reach to the moon (238,900 miles away) and back to the earth over 37 times.
Turning from net worth, I made the same type of analysis of income, recognizing that income-tax returns are not available. However, last year Forbes reported that Larry Ellison owned 1.1 billion shares of Oracle stock which paid a dividend in 2020 of 96 cents per share. That amounts to $1.56 billion of annual income, or monthly income of $88 million, or over $3 million per day. Carrying it to the extreme, it would be over $125,000 of income every hour of the day and night.
As a tax lawyer, my mind turned to the tax consequences of this amount of dividend income.
The maximum federal income tax rate on dividend income is 20 percent, while the maximum rate on earned income is almost double at 37 percent. This difference of 17 percentage points means a tax benefit of $170 million per year to the recipient of $1 billion in annual dividends, simply because the income is from dividends rather than salary.
Opinions regarding the fairness of any tax system obviously vary according to whose ox is being gored. But I have to question the fairness of the current system as applied to any taxpayer with an annual income of $1 billion or more.