-Caveat Lector-

an excerpt from:
The Founding Fortunes
Michael Patrick Allen©1987
All rights reserved.
E. P Dutton
ISBN 0-525-48484-1
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An excellant reference book.
Om
K
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CHARITY AND IDEOLOGY

In recent years, corporate rich families have begun to influence government
policy by providing financial assistance to a number of policy-research
institutions or "think tanks." By and large, these organizations advocate
policies that are consistent with the political goals and economic interests
of the corporate rich. In a few cases, the members of wealthy capitalist
families have donated their personal funds to these study groups. Most of the
time, however, they have used grants from their family foundations to finance
these policy-research institutions. In short, corporate rich families have
been able to advance their political and social agenda with funds originally
designated for charitable purposes. Because these policy-research institutions
are ostensibly concerned with conducting social policy research and
propagating the results of this research to the public, they qualif as tax-
exempt organizations. As such, they can receive charitable contributions from
both individuals and private foundations. As a result, a large number of
conservative policy-research institutions have been established over the past
few years with the financial support of wealthy capitalist families and their
foundations. In his study Who Rules America Now?, G. William Domhoff found
that charitable foundations were tan integral part of the policy-planning
process both as sources of funds and as program initiators." Indeed, a staff
member of one of these family foundations recently asserted that "foundations
have been quietly and extraordinarily effective in the propagation of certain
ideas."

One of the best-known policy-research institutions in the nation is the
American Enterprise Institute for Public Policy Research. This organization
was founded in 1943 in order to educate government officials and the public at
large about the benefits of the free-enterprise system and the problems
associated with excessive government regulation and taxation. Over the years,
it has published a series of studies advocating the implementation of
conservative economic policies. AEI was one of the first policy-research
institutions to appoint experts in various fields as resident scholars. In the
words of one conservative, "AEI made conservatism intellectually respectable."
At least 20 of its resident scholars and associates were later appointed to
senior positions in the Reagan administration. By 1984, AEI had a staff of 145
and a budget of over $11 million. Although it depends primarily upon donations
from major corporations, this nonprofit institution has received large grants
from several foundations controlled by conservative corporate rich families.
Over the past decade, for example, AEI has received over $7.3 million from the
J. Howard Pew Freedom Trust, a foundation controlled by the descendants of the
founder of Sun Company. During that same period, AEI also received over $2.1
million from the Smith Richardson Foundation, a foundation controlled by the
descendants of the founder of the Richardson-Vicks Company. Another $2.1
million was received from the Lilly Endowment, the Charles S. Mott Foundation,
the John M. Olin Foundation, and the J. M. Foundation.

Another influential conservative research institution is the Hoover
Institution on War, Revolution, and Peace in Palo Alto, California. Although
it is officially affiliated with Stanford University, this policy-research
institution has its own staff and its own endowment. Founded in 1919 as an
academic research institute, the Hoover Institution first became involved in
public policy research about a decade ago. Unlike other policy groups, the
Hoover Institution generally refrains from issuing explicit policy
recommendations. Instead, it ,provides research facilities and financial
support for scores of conservative scholars. In the last few years, they have
produced studies on such issues as Social Security reform and the deregulation
of the transportation industry. Many of these scholars later had opportunities
to put their ideas into practice. At least 40 former fellows of the Hoover
Institution have served as advisers to the Reagan administration. By 1984, the
institution had a staff of 200 and a budget of over $10 million. Although it
has a substantial endowment of its own, the Hoover Institution has also
received funds from a number of foundations. Since 1978, it has received $2.4
million from the J. Howard Pew Freedom Trust. During this same period, it has
received another $2.4 million from the Sarah Scaife Foundation, a foundation
controlled by Richard M. Scaife, whose grandfather was a major stockholder in
Gulf Oil and several other major corporations. In addition, the Hoover
Institution has received a total of $1.4 million from the Lilly Endowment,
Samuel R. Noble Foundation, the J. M. Foundation, the John M. Olin Foundation,
and the Smith Richardson Foundation.

Since the election of President Reagan in 1980, established conservative
policy-research institutions, such as the American Enterprise Institute and
the Hoover Institution, have been eclipsed to some extent by institutions
advocating even more conservative policies. One of the best-known and most
influential of these is the Heritage Foundation. This neoconservative policy-
research institution was founded in 1973 with a $250,000 donation from Joseph
Coors, a grandson of the founder of Adolph Coors Company. By 1984, the
Heritage Foundation had a staff of 110, including 35 resident scholars, and a
budget of $10 million. Although it now receives contributions from many
wealthy individuals and business corporations, this nonprofit institution
still receives large grants from a number of foundations controlled by
conservative corporate rich families. The Samuel R. Noble Foundation, for
example, has contributed over $3.1 million to the Heritage Foundation since
1978. The Sarah Scaife Foundation has contributed another $2.1 million in the
past four years alone. In addition, the J. M. Foundation, the J. Howard Pew
Freedom Trust, the John M. Olin Foundation, and the Smith Richardson
Foundation have contributed at least $1.8 million to the Heritage Foundation
since 1978. The Heritage Foundation is now one of the largest and most
influential policy-research institutions in the nation. In 1982, the
foundation paid $9 million for an eight-story office building in Washington,
D.C., not far from the Capitol Building.

The Heritage Foundation has achieved its prominence as a policy-research
institution largely through the publication and distribution of countless
research reports and recommendations. For example, the Heritage Foundation
publishes a quarterly journal, Policy Review, and a monthly report, National
Security Record. It also publishes and disseminates extensive reports on
particular issues. Perhaps the bestknown publication of the Heritage
Foundation was a voluminous tome titled Mandate for Leadership. Policy
analysts at the foundation began work on this document in 1979, before
President Reagan took office. Free copies of this publication, which outlined
a conservative agenda for the Reagan administration, were later delivered
directly to officials throughout the legislative and executive branches of
government. In 1984 alone, the staff at the Heritage Foundation produced more
than 200 books, monographs, and reports. At present, the typical Heritage
Foundation report is distributed to about 1,000 elected and appointed
government officials. Instead of simply being mailed, these reports are often
hand delivered to important officials. Another 6,000 copies of these reports
are distributed free of charge to journalists and scholars. Although many of
the advisers to the Reagan administration during its first term came from
either the American Enterprise Institute or the Hoover Institution, many of
the advisers appointed during the second term have come from the Heritage
Foundation. By 1984, at least twelve resident scholars from the Heritage
Foundation had served as advisers to the Reagan administration.

Another influential policy-research institution is the Center for Strategic
and International Studies (CSIS) in Washington, D.C. Although it is officially
affiliated with Georgetown University, the center maintains a separate staff
and facilities. Founded in 1962, CSIS conducts studies of various aspects of
foreign policy and national security. Many of these studies appear as articles
in Washington Quarterly, a public policy journal published by the center. In
addition, the center conducts seminars for both senior corporate officers and
senior government administrators. However, one of the main activities of CSIS
is the formation of public opinion through news reports and broadcasts.
Several former cabinet officers, such as Henry Kissinger, James Schlesinger,
and Zbigniew Brzezinski, serve as fellows at the center, even though they are
rarely in residence. Whenever a foreign policy development or national
security issue becomes news, these experts provide newspaper, radio, and
television reporters with interviews. By 1984, CSIS had a staff of 160 and a
budget of over $7 million. Although the center receives funds from the major
media corporations, it also receives large grants from foundations controlled
by conservative corporate rich families. In the past decade, the Sarah Scaife
Foundation has contributed over $1.6 million to CSIS. The J. Howard Pew
Freedom Foundation, the John M. Olin Foundation, the S. R. Noble Foundation,
and the H. Smith Richardson Foundation have contributed at least another $1.1
million.

Several other neoconservative policy-research institutions are financed
primarily by a few corporate rich families and their foundations. One of the
smallest and least-known neoconservative policy groups is the Institute for
Contemporary Studies in San Francisco. Two of the directors of this institute
eventually became special advisers to President Reagan. Since 1980, this
institute has received over $1.1 million from the Sarah Scaife Foundation. It
also received relatively small contributions from the Smith Richardson
Foundation, the J. Howard Pew Freedom Trust, the J. M. Foundation, the Adolph
Coors Foundation, and the John M. Olin Foundation. Another small but
influential conservative policy-research institution is the Pacific Legal
Foundation, which has brought suit on behalf of a number of conservative
causes. It has received over $1.3 million in grants from the Sarah Scaife
Foundation and the Lilly Endowment. Other neoconservative policy-research
institutions include the Institute for Research on the Economics of Taxation,
which does research on the benefits of minimal taxation; the Institute for
Foreign Policy Analysis, which issues conservative foreign policy
recommendations; the Manhattan Institute, which advocates the reduction or
elimination of many welfare programs; and Freedom House, which monitors the
suppression of individual liberties in socialist countries. All of these
institutions have received large grants from either the Sarah Scaife
Foundation or the J. Howard Pew Freedom Trust. Most of these institutions have
also received grants from the Samuel R. Noble Foundation, the J. M.
Foundation, and the John M. Olin Foundation.

The conservative and neoconservative policy-research institutions funded in
large part by grants from a few private foundations form a diffuse but
coherent social network. Most of these institutions once relied on grants from
these foundations for their financial survival. As a result, some of the most
influential individuals within this policyformation network are those members
of wealthy capitalist families who control the foundations that provide funds
to these institutions. Using a combination of personal and foundation funds,
these members of the corporate rich have been able to influence the activities
of these study groups. One of the most influential individuals within the
network of neoconservative policy-research institutions is Richard M. Scaife,
chairman of the Sarah Scaife Foundation. This foundation, with assets of $200
million, was founded by his mother, Sarah Mellon Scaife, the daughter of
Richard B. Mellon. Since 1973, when Richard Scaife became chairman, the
foundation has devoted more and more of its resources to conservative causes.
In fact, Cordelia Mellon Scaife, the sister of Richard Scaife, resigned as a
trustee because she objected to the fact that the Sarah Scaife Foundation had
departed from the original philanthropic goals of its founder. She pointed out
that their late mother, Sarah Mellon Scaife, had originally intended the
foundation to fund the arts and research on population control. According to
one estimate, Richard Scaife has donated a total of $36 million of foundation
and personal funds to over twenty different conservative nonprofit
organizations. Some of these personal funds have come from the income
generated by trusts originally established by his mother for his children.

Several foundations, such as the Samuel R. Noble Foundation, established by
Oklahoma oilman Lloyd Noble, and the J. M. Foundation, established by New York
financier Jeremiah Milbank, fund conservative causes, but they also fund a
large number of other charitable activities. However, there are a few
foundations at the center of the neoconservative policy-research network that
devote most of their funds to conservative organizations and programs. One of
these is the J. Howard Pew Freedom Trust. This foundation is controlled
through the Glenmede Trust Company, by the grandchildren of Joseph N. Pew. In
recent years, this foundation has devoted about half of its annual budget to
neoconservative organizations. Similarly, the Smith Richardson Foundation
devotes roughly half of its grant funds to neoconservative organizations. The
Smith Richardson Foundation is controlled by several of the grandchildren of
Lunsford Richardson. Its president is R. Randolph Richardson, a grandson of
the founder. Last but certainly not least, there is the John M. Olin
Foundation, which devotes almost all of its grant funds to neoconservative
organizations. Although one member of the Olin family serves as a trustee of
the foundation, the president of the John M. Olin Foundation is William E.
Simon, a former cabinet member under Presidents Nixon and Ford. These three
foundations often collaborate in their efforts to assist neoconservative
organizations and causes. In 198 1, for example, the John M. Olin Foundation
joined with the Sarah Scaife Foundation and the Smith Richardson Foundation to
establish New Criterion, a neoconservative review of contemporary arts
criticism.

POWER PLAYS

The corporate rich are not reluctant to exercise their political power to
their own advantage. For example, members of corporate rich families have
occasionally lobbied the Congress and the president to enact special
legislation for their benefit. A case in point involves the du Pont family. In
1949, the Justice Department filed an antitrust suit against the members of
the du Pont family and their various holding companies on the grounds that
their control of both E. I. du Pont de Nemours and Company and General Motors
violated the Clayton Antitrust Act. At that point, Pierre S. du Pont, his
siblings, and their descendants owned, directly and indirectly, over 26
percent of the stock in Du Pont. In turn, Du Pont owned almost 23 percent of
the stock in General Motors. Members of the du Pont family also served as
directors of both Du Pont and General Motors. Five years later, the presiding
judge dismissed the antitrust complaint. However, the Justice Department
appealed the decision to the Supreme Court, which overruled the District Court
decision in 1957. After five more years of legal skirmishes, the presiding
judge finally entered a final judgment that required Du Pont to divest itself
of its General Motors stock by 1965. According to the terms of this decree, Du
Pont was required to distribute its General Motors stock to its own
stockholders in three installments. Similarly, Christiana Securities, the main
holding company of the du Pont family, was required to sell some of this
General Motors stock and distribute the rest to its stockholders. The judgment
also required several members of the du Pont family, particularly those who
were large stockholders in Christiana Securities, to sell a portion of this
General Motors stock.

The divestiture order raised serious tax problems for the members of the du
Pont family. Du Pont was required to distribute General Motors stock then
worth approximately $3 billion to its stockholders. Because the members of the
du Pont family owned, either directly or indirectly, at least 26 percent of
the stock in Du Pont, they were due to receive about $790 million in General
Motors stock. Even though this stock was due to be received in three separate
installments over a period of four years, this stock distribution would create
enormous tax liabilities because the tax laws treated such distributions as
income. Specifically, the du Ponts were faced with the prospect of paying as
much as $550 million in income taxes on this General Motors stock. Even before
the final divestiture order was issued, special bills were introduced in both
the House and the Senate to provide Du Pont stockholders, including the du
Ponts, with tax relief. In general, these bills required Du Pont stockholders
to pay relatively low capital-gains taxes on only a portion of the value of
the General Motors stock they received as a result of these distributions.
President Kennedy signed the special Du Pont tax-relief bill in 1962. By 1964,
however, the du Ponts were seeking additional tax relief. Because General
Motors stock had doubled in value since 1962, the tax liabilities of the du
Ponts on the last distribution of General Motors stock were also about to
double. Yielding to a concerted lobbying effort, the Treasury Department ruled
that the final distribution of General Motors stock was a tax-free
distribution. In all, the du Ponts probably saved at least $350 million in
income taxes as a result of these government actions.

On occasion, individual members of the corporate rich have lobbied Congress to
pass special legislation for their benefit alone. One of the most blatant
political maneuvers of this sort involved H. Ross Perot, the founder of
Electronic Data Systems. In 1975, as the House Ways and Means Committee was
about to finish its work on a major taxreform bill, one of its members
introduced a very unusual amendment. This amendment would permit any taxpayers
who had capital losses of more than $30,000 in one year to receive a
corresponding refund of any taxes they paid on capital gains during the
previous three years. A few weeks earlier, the Senate Finance Committee had
included a similar amendment in its version of the tax bill. The main
beneficiary of this amendment was H. Ross Perot. In fact, the proposed
amendment had been prepared by his lawyer, who was also a former commissioner
of the Internal Revenue Service. It seems that Perot had paid roughly $18
million in capital-gains taxes on the sale of $57 million worth of Electronic
Data Systems stock in 1971. Three years later, he lost approximately $15
million when a brokerage house that he had financed became bankrupt. This
amendment would have entitled him to a tax refund of about $15 million in
1974. H. Ross Perot had some reason to believe that his amendment might pass.
Earlier in 1974, he had contributed $90,000 to various congressional
candidates, more than any other individual. Moreover, $55,000 of this went to
members of the House Ways and Means Committee and the Senate Finance
Committee. This amendment was eliminated only after the details of the Perot
amendment and his campaign contributions were published in several major
newspapers.

A more recent and more successful attempt by the members of a corporate rich
family to amend the tax laws for their own benefit involves the Gallo family.
Ernest and Julio Gallo and their four children are the owners of a large wine
company worth roughly $600 million. When the House Ways and Means Committee
began considering a tax-reform package in 1985, one of the proposed changes in
gift and estate taxes was the imposition of a new "generation-skipping tax."
The existing law contained a provision for taxing distributions from
generation-skipping trusts, but the proposed law would tax direct gifts and
bequests from grandparents to grandchildren as well. However, the proposed law
included a $1 million exclusion for each grandparent. Under this law, for
example, the Gallo brothers and their wives would have been able to transfer a
total of $4 million in company stock to their grandchildren before they had to
pay generation-skipping taxes. Ernest and Julio Gallo, who planned to
distribute some of their stock in the family company to their twenty
grandchildren, wanted a more generous exclusion. An amendment to the proposed
generation-skipping tax that would grant an additional $2 million exclusion to
each grandparent for each grandchild was introduced. Indeed, a temporary
version of the "Gallo Amendment," as it came to be known, was included in the
final tax law. The passage of this amendment may have been aided by the fact
that Ernest and Julio Gallo and their wives had contributed over $276,000 to
various federal campaigns since 1977. In any event, the Gallos now have until
1990 to transfer a total of $84 million worth of stock in the family
corporation to their twenty grandchildren without paying any generation-
skipping taxes.

Sometimes, special legislation is introduced in order to enable the
descendants of a wealthy entrepreneur to maintain control of their family
corporation. For example, the Pew family sought to change the tax laws in 1971
so they could retain their control over Sun Company. The Tax Reform Act of
1969 was the first attempt by the federal government to regulate the
activities of tax-exempt private foundations. One of the key provisions of
this legislation was a minimum payout rate that required private foundations
to disburse 6 percent of the market value of their assets each year. One of
the foundations threatened by this provision was the Pew Memorial Trust, which
was endowed and controlled by members of the Pew family. Indeed, the
descendants of Joseph N. Pew have been able to retain almost absolute control
over Sun Company through their control of the Pew Memorial Trust, which, in
turn, owns about 22 percent of Sun Company stock. The problem facing the Pews
was the fact that Sun Company stock paid very small dividends. In 1971, a
member of the House of Representatives from Pennsylvania, the home of Sun
Company, the Pew Memorial Trust, and the Pew family, introduced a bill that
would have greatly reduced the minimum payout requirement as it applied to the
Pew Memorial Trust. The Treasury Department later recommended passage of a
bill that reduced the minimum payout provision from 6 percent to 5 percent of
foundation assets and extended the deadline for full compliance from 1975 to
1978. Although both bills eventually failed to gain passage, the Pews did
receive some assistance from the Republican administration. It was the least
they could expect, because they had contributed over $142,000 to national
Republican organizations in 1968.

The members of corporate rich families are sometimes able to amend the laws of
particular states to suit their own purposes. For example, the Getty family
had the laws governing estates and trusts in the state of California changed
in order to resolve a lingering family feud. By 1984, the three surviving sons
and fifteen grandchildren of J. Paul Getty were the beneficiaries of a trust
worth roughly $3 billion. One of the sons, Gordon P. Getty, was the sole
trustee of this trust. However, many of the beneficiaries, including his
brothers and several of his nieces and nephews, did not approve of his
management of the trust. To begin with, many of them felt that he had exposed
the trust to unnecessary capital-gains taxes when he agreed to the acquisition
of Getty Oil Company by Texaco in 1984. Although the trust received just over
$4 billion in cash for its Getty Oil stock, it also incurred state and federal
tax liabilities of nearly $1 billion as a result of this sale. During this
period, several family members brought suit to have Gordon Getty removed as
the trustee of the family trust. After months of litigation, the various
descendants of J. Paul Getty finally agreed to split the trust into several
smaller trusts, one for each branch of the family. This arrangement would
enable the members of each branch of the family to choose the trustees for
their trusts. There was one problem with this solution. The laws of the state
of California did not contain any explicit provision for dividing a trust into
a series of separate trusts. Within a matter of weeks, a bill that allowed the
Gettys to resolve their family feud by dividing their trust into separate
trusts was passed by the state legislature and signed by the governor.

Even though they are major contributors to many political campaigns, it is not
easy for the corporate rich to obtain the passage of preferential legislation.
Legislative relief in the form of a change in the law requires the cooperation
of the members of various congressional committees and the assent of a
majority of the members of both the Senate and the House of Representatives.
It is difficult to convince a majority of the members of both houses of
Congress to vote for a law that benefits only the members of a few wealthy
families. They are much more likely to vote for a law that purports to benefit
a large segment of the population, even if the bulk of the benefits accrue to
the members of corporate rich families. In 1981, for example, President Reagan
advocated several changes in both the income tax and the transfer tax that
were very beneficial to the corporate rich. In particular, his tax-reform
package contained a provision that would eventually reduce the federal
transfer tax on gifts and estates from a maximum rate of 70 percent to a
maximum rate of 50 percent. In order to gain legislative support for this
provision, the proponents of the Economic Recovery Tax Act argued that the
small family farm in America was being destroyed because farm families could
not afford to pay the transfer taxes incurred whenever a farm passed from one
generation of family members to the next. Because the maximum transfer tax
rate applied only to gifts and estates in excess of $5 million, however, the
family farms that stood to benefit the most from this change in the law were
hardly small. Indeed, the main beneficiaries of this reduction in the maximum
transfer tax rate were the corporate rich.


THE PRIVILEGED CLASS

The members of corporate rich families are clearly more powerful and
influential than the members of most other families. First and foremost, they
are principal stockholders in large corporations. In many cases, family
members also serve as officers and directors of these corporations. To the
extent that they control major corporations, the members of wealthy capitalist
families are able to exercise tremendous economic power. For example,
corporations have the power to build new plants and close old ones. In this
way, they affect the welfare and even the survival of entire communities.
Consequently, government officials, at both the state and local levels, are
generally very solicitous of these corporations and the families that control
them. At the national level, corporations are sometimes able to influence
government policy by lobbying members of Congress for or against particular
pieces of legislation. The members of corporate rich families also exercise
considerable social power by virtue of the fact that they often control large
philanthropic foundations. Almost all of the large foundations in America were
endowed by members of wealthy capitalist families. Moreover, many of these
foundations are still controlled by these donors or their descendants. As a
result, corporate rich families often determine which organizations and causes
receive grants from these foundations. The control that these families exert
over these foundations enables them to influence civic and cultural affairs at
the local, regional, and national levels.

Economic power is not always translated directly into political power. Indeed,
the political power exercised by the corporate rich is subtle yet pervasive.
For example, only a few scions of wealthy capitalist families are actively
involved in politics. Those descendants of wealthy entrepreneurs who have
entered electoral politics have usually done so as a means of personal
fulfillment. In fact, many of the most important decisions are made by elites
who occupy formal positions of authority in major institutions and
organizations. These elites are usually affluent, but they rarely possess
great wealth. Consequently, the corporate rich must exercise their political
power primarily by influencing these elites. In the case of elected officials,
the members of wealthy capitalist families are able to influence the selection
of candidates by their campaign contributions. Large campaign contributions
from the members of wealthy capitalist families provide a distinct financial
advantage to those candidates who are willing to defer to the economic
interests of these families and their corporations. Similarly, the members of
corporate rich families sometimes use their foundations to fund conservative
policy-research institutions that, in turn, issue reports and studies
advocating policies that are consistent with their economic interests.

In terms of political power, it is important to distinguish between the power
of the corporate rich as individuals or families and the power of the
corporate rich as a class. Although the boundaries between different social
classes in America are vague and indeterminate, the corporate rich belong to a
distinct and coherent social class. Specifically, corporate rich families form
the core of the capitalist class in America. The members of these families
constitute an identifiable social class for several reasons. First and
foremost, they represent a social class inasmuch as the members of different
families share certain economic interests. These shared economic interests
stem from the fact that wealthy entrepreneurs and their descendants are
typically principal stockholders in large corporations. As a result, they
share a common interest in corporate profitability. The members of these
families also constitute a distinct social class because their economic
interests are often opposed to the economic interests of other large segments
of the population. For example, the corporate rich are generally opposed to
many of the government regulations enacted on the behalf of workers and
consumers, at least to the extent that they impinge upon the profits of their
corporations. In this regard, the corporate rich have important allies among
the legions of small-business proprietors across the nation. Although they do
not possess great wealth, the proprietors of small businesses have many of the
same economic interests and political objectives as the members of wealthy
capitalist families.

The corporate rich have also forged alliances with other powerful groups in
American society. In particular, the members of established corporate rich
families have derived certain political advantages from their acceptance into
the national upper class. Although the capitalist class and the upper class
overlap to a significant extent, they are not identical. On the one hand, the
capitalist class is defined in terms of economic interest and comprises
primarily the officers, directors, and principal stockholders of corporations.
The upper class, on the other hand, is defined in terms of social status and
comprises the members of families that have been socially prominent for
several generations. The fortunes of many upper-class families have become
depleted over the years, and the members of these families are often unable to
subsist comfortably on the incomes provided by their investments.
Consequently, many of the scions of these established families have been
compelled to take positions in business and government. Of course, they
usually obtain positions that are commensurate with their social status. For
example, scions of upper-class families often become partners in large
investment banks, lawyers in prestigious law firms, professors at elite
colleges and universities, or senior government officials. Some of these
individuals from upper-class families eventually occupy positions of authority
in the major institutions and organizations. In short, there is a great deal
of overlap between the upper class and the power elite. The integration of
corporate rich families into the upper class serves, therefore, to augment
their power and influence at the national level.

The essential question is not whether or not the members of corporate rich
families exercise an inordinate amount of political power. It is abundantly
clear that they are one of the most powerful groups in American society.
Rather, it is whether or not these wealthy capitalist families as a class
represent a dominant or ruling class. The corporate rich are obviously
powerful, but they are far from omnipotent. Indeed, the very existence of
progressive income and transfer taxes, for example, demonstrates that the
members of wealthy capitalist families have not been able to prevent the
passage of legislation inimical to their economic interests. By and large, the
corporate rich favor substantial reductions in the level of government
expenditures accompanied by corresponding reductions in taxes. At the same
time, most of them accept, albeit reluctantly, the necessity for some minimal
level of taxation. They understand that government, at the local, state, and
national levels, performs many important functions that contribute to the
profitability of their corporations. Corporations are dependent upon
government at one level or another for the provision of important facilities
and services, such as highway construction, police and fire protection, and
education. Moreover, state and local governments, with the assistance of the
federal government, are responsible for providing social welfare services to
ameliorate the effects of unemployment. Last but not least, these corporations
also rely on the fiscal and monetary policies of the federal government to
maintain stable rates of economic growth.

The members of corporate rich families may be resigned to the necessity of
taxes, even to the inevitability of progressive taxes, but they are not about
to relinquish their fortunes without a struggle. After all, wealth is the
foundation of the corporate rich family and the source of all its privileges.
Consequently, the members of these families take every opportunity to preserve
their fortunes. As Karl Marx once proclaimed, "tax struggle is the oldest form
of class struggle." The corporate rich have conducted their struggle against
taxes on two levels. As individuals and families, they have employed elaborate
strategies to avoid or reduce the taxes on their gifts and estates. On
occasion, they have even sought special legislation or Internal Revenue
Service rulings to relieve particular tax problems. Moreover, as a class, the
members of corporate rich families have sometimes induced members of Congress,
as well as presidents, to endorse tax reforms that have included reductions in
the taxes on intergenerational transfers of wealth. Over the years, these
efforts have produced a tax system that is formally progressive but still
permits wealthy capitalist families to transfer the bulk of their wealth
intact from one generation to the next. In the final analysis, the issue is
not whether the corporate rich in America have lost any important political
battles, but whether they have lost the war. For the members of these
families, the most important war is the war for wealth. Although the corporate
rich have lost some significant political battles, such as the imposition of
progressive transfer taxes, they have certainly not lost the war for wealth.

pps. 277-306


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Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris

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CTRL is a discussion and informational exchange list. Proselyzting propagandic
screeds are not allowed. Substance—not soapboxing!  These are sordid matters
and 'conspiracy theory', with its many half-truths, misdirections and outright
frauds is used politically  by different groups with major and minor effects
spread throughout the spectrum of time and thought. That being said, CTRL
gives no endorsement to the validity of posts, and always suggests to readers;
be wary of what you read. CTRL gives no credeence to Holocaust denial and
nazi's need not apply.

Let us please be civil and as always, Caveat Lector.
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