Editor’s Note: The Impact of Wealth

Wealth, like religion, is a touchy subject. Most people like to have it, but they dont like to talk about it. And in a place like Seattle, they dont flaunt it.

At a dinner party not long ago, we danced around the subject, wondering what it means to be rich in Seattle, where there are four individuals worth more than $15 billion and six more worth more than $1 billion each.

If by rich you mean having more than you need to live very comfortably, it turns out theres a sizable number of you out there. Nearly 1,000 people have at least $30 million in investable assets and 85,000 have more than $1 million (page 28). Since investable assets dont include your primary residence or money tied up in a business, thats a lot of people with a lot of folding money.

So you would think all that wealth must be a huge boon to the economy. You would be only partly right. Sure, the wealthy patronize restaurants, buy yachts and push up real estate values. And with so many of the new wealthy committed to attacking societys ills, there is a multitude of worthy organizations pursuing noble causes. In 2010, there were 26,000 tax-exempt charities in the state, double the number in the early 1990s, according to a report from the University of Washingtons Evans School of Public Affairs. But even the Gates Foundation, with $34 billion in assets, employs only 1,100 people, about as many as a moderately sized for-profit business. Locally, its economic impact is relatively limited.

I ran across one entrepreneur recently who argued that the social activism of Seattles new rich may actually hurt the regions economy because, unlike in Silicon Valley, less of the regions wealth is recycled into financing new businesses.

Meanwhile, Washington has the most regressive tax system in the nation, according to a report released earlier this year by the Institute on Taxation and Economic Policy. The top one percent of income earners in our state (you need to make more than $430,000 in income to be a one percenter here) pay only 2.8 percent of their income in taxes to this state, mostly in property and sales taxes. By comparison, those in the middle 60 percent in our state pay 9.5 percent and the bottom 20 percent pay 16.9 percent.

Dick Conway of the Puget Sound Economic Forecaster notes that businesses might be healthier if the tax system were reformed to shift more of the tax burden from businesses to the wealthy. Business taxes would be less if there was an income tax, he says.

Sure, its good to have wealthy people in our community. They support the theater and the symphony, and that helps attract talented people. And its heartwarming when so much money is raised at auctions for good causes. But is all that wealth doing much to boost our economy and create more jobs? The jurys still out on that.