Hardly a month goes by without news of billionaires lavishing gifts or favors on members of the U.S. Supreme Court. The latest revelation once again involved Justice Clarence Thomas, who reportedly has been traveling in private jets and luxury yachts to exotic destinations, paid for by a group of ultrawealthy benefactors.
The fact that corruption grips the highest court of the land isn’t surprising. It’s what you get when the rich wield so much power — when oligarchy is on the rise. It’s time for Congress to stand up to the oligarchy by taxing the bloated fortunes of the ultrawealthy.
By some estimates, the current concentration of money in the hands of the few has surpassed even that of the Gilded Age, the era more than a century ago when the Rockefellers and Morgans held sway. It’s hard to wrap one’s head around how vast economic inequality has become, but consider this: in 2021, three billionaires together held more wealth than the bottom half of all people in the U.S. combined.
Vast inequality weakens economic growth and innovation, undermines physical and mental health, and leads to lower levels of happiness and trust in others. It is also an existential threat to our democracy.
The old saying that money is power is even more true when it comes to the mountains of riches of the ultrawealthy. These fortunes “are far beyond any significance for the goods and services they’ll buy,” says Bob Lord, Senior Advisor on Tax Policy for Patriotic Millionaires and Associate Fellow at the Institute for Policy Studies. “They’re significant only for the amount of power they will buy.”
From vast pools of so-called “dark money” flowing into candidate elections, to billionaires dumping millions into state elections, to the wealthy purchasing newspapers and social media companies, the power of the rich is a cancer spreading throughout our political system.
But what can we do to curb the economic and political power of billionaires? What can we do before an oligarchy fully seizes control of our nation? The answer is to tax extreme wealth.
For decades, the rich and powerful have waged war on what was once a truly progressive tax system, where the rich paid proportionally more than the poor. They have succeeded spectacularly. Congress has slashed the top tax rates on personal income; cut taxes on corporations, whose profits mainly flow to the rich; and gutted the estate tax that is supposed to guard against the rise of dynastic fortunes. Congress has also created a bevy of tax loopholes benefiting the rich and corporations, while turning a blind eye to tax avoidance schemes devised by the lawyers and accountants of the rich. Today, when you look at federal, state, and local taxes combined, you find that the working class pays a higher tax rate than billionaires.
Just as the rich grew their fortunes and power by manipulating tax policy, we can use it to go in the opposite direction. Indeed, tax policy is indispensable in reining in the power of billionaires. “The only way to constrain the build up of their wealth is if they’re sufficiently taxed, because that’s their only real cost,” Lord says. And the most direct way to do so is to tax concentrated wealth.
So it was a hopeful sign last month when members of Congress introduced the Oppose Limitless Inequality Growth and Reverse Community Harms (OLIGARCH) Act. It would create a tax on those with wealth that is one thousand times the wealth of the typical (median) U.S. household. The tax would be in effect during times of extreme levels of inequality, like the present, and would disappear in times of more manageable levels of inequality.
If it were in effect right now, the tax would kick in at about $120 million of wealth. So it’s clear the OLIGARCH Act would affect no one’s level of comfort or even lavish lifestyle. The only thing it would do is rein in the massive power accumulated by a tiny few.
For the survival of our democracy and the well-being of our nation, it’s time to tax away the oligarchy.