Pritzker is just another oligarch
The Illinois governor's finances deserve more scrutiny from the left.
JB Pritzker has become a kind of folk hero among the liberal-left in recent months, largely because of his outspoken opposition to Donald Trump. He’s been combative with Trump in a way that most Democrats aren’t; earlier this year, for example, he compared Trump’s administration with Nazis. Before that he vowed to protect legal residents of Illinois regardless of their immigration status, defying Trump’s ongoing deportation campaign. All of this is to his credit.
But it also seems increasingly likely that Gov. Pritzker is going to run for president. And while we do not know who is opponents will be yet, I can say one thing for certain: we do not need another reactionary oligarch as president.
Point out that the Pritzkers are a family of billionaires and the standard defense will be that he’s a class traitor. But if anything, the Pritzkers are betraying capitalism for feudalism. Because instead of accruing money through free market competition like the normal bourgeoisie, the Pritzkers are creating a world of dynastic wealth.
Chuck Collins, in The Wealth Hoarders:
[South Dakota] repealed the “rule against perpetuities”… Over the next twenty years…Wealthy families began establishing “dynasty trusts” in the state, including the Chicago Pritzker family…
Pritzker has denied he is using this sort of “offshore”1 tax haven, but a 2018 investigation of the Paradise Papers — a leak of millions of documents detailing offshore accounting schemes — said differently. Or as the ICIJ politely put it, they “appeared to counter his earlier assertions.” Pritzker for his part pleads that those trusts “benefit charitable interests,” but financial arrangements involving shell companies, offshore accounts and charities are staples of tax avoidance. They are, as Collins puts it, “the castle walls and portcullises of legal protections” for wealth.
The standard defense of tax avoidance advanced by wealth managers and their employers is that it is perfectly ethical as long as it’s legal — but the liberal-left has long held otherwise. During his presidential runs Barack Obama attacked both John McCain and Mitt Romney for legal tax avoidance; Hillary Clinton attacked Donald Trump for it as well. One objection to tax avoidance is that it games the law in ways lawmakers did not anticipate or intend; another is that even when lawmakers do intentionally create tax shelters, it is often because the rich have leveraged their wealth to lobby for them. In both cases the rich are getting out of paying what a reasonable person would consider their “fair share.”
That the Pritzker family is engaged in tax avoidance is bad enough; but what makes their financial dealings truly reactionary is their investment in a trust that is not subject to the so-called rule against perpetuities (RAP). The gist of the RAP is that it limits how wealth can be held in a trust, which prevents trusts from serving as a permanent repository for dynastic wealth. The history of the RAP is illuminating: as George Haskins writes, it
was necessary by the end of the seventeenth century because perpetuities impeded the development of the mercantile middle class by taking property out of the stream of commerce. In a society… changing from a feudal to a capitalist order, the creation of a new rule restricting a landowner’s ability to tie up his lands would, not suprisingly, be perceived as proof of such a transition.
The RAP was foundational to liberalism. It was instrumental in ending a feudal society where wealth was primarily determined by birth. In that light, the end of the RAP actually creates an interesting problem for orthodox Marxism because it would seem to facilitate a slide from liberal capitalism back to feudalism. Private property might still exist de jure in such a society, but it would de facto be wiped out by the economic dominance of inheritance.
Just as the RAP was foundational to liberalism, the estate tax was at the core of the economic reforms that ended the Gilded Age and launched the greatest period of prosperity and relative equality in American history. The Populists in particular fought for its passage in 1916, and by midcentury, Piketty writes, estate taxes
were an integral part of the institutional tools that would form the basis of the postwar world order: free elections would be complemented by solid fiscal institutions to prevent democracy from being captured once again by oligarchal and financial interests.
But since the 1980s, he adds, tax avoidance strategies like Pritzker’s have become dangerously widespread in the United States:
In particular, various ways of avoiding the estate tax — most notably the use of family trusts and other legal devices for reducing the value of estates or hiding them behind pseudo-philanthropic facades — are tolerated.
It is in this sense that Pritzker’s financial dealings are dangerously reactionary. The normalization of tax avoidance and the return of dynastic wealth threaten to turn back the clock in America back to the Gilded Age. And we can see, with the political ascent of billionaires like Trump and Musk and the absolute impunity with which they operate, how extreme wealth inequality can exacerbate other kinds of inequality, too.
Obviously the most effective solution to this problem will be to legislate against it. But an additional strategy is to try to keep out of office politicians who have a direct and massive financial incentive to leave dynasty trusts in place. This is not a big ask; unless Bloomberg runs again it’s fairly unlikely that other Democratic primary candidates will have a dynasty trust. This is a unique failure of Pritzker, and when it’s time to vote for our next nominee he should be held accountable for it.
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In finance “offshore” is commonly used to mean any kind of account that is sheltered from regulations, not just accounts that are literally outside of the continental US.