It’s a monumental day at the Patriotic Millionaires!
Today, with support from our organization and a number of our allies, Representatives Barbara Lee (CA-12), Summer Lee (PA-12), Rashida Tlaib (MI-13), and Jamaal Bowman (NY-16) introduced the Oppose Limitless Inequality Growth and Reverse Community Harms (OLIGARCH) Act, which will create an annual wealth tax focused exclusively on containing destabilizing inequality in America and ensuring the viability of democratic capitalism for the next 250 years. Co-sponsors of the Act include Representatives Jerrold Nadler (NY-12), Chuy Garcia (IL-04), Raúl Grijalva (AZ-07), Ilhan Omar (MN-05), Jan Schakowsky (IL-09), and Jared Huffman (CA-02).
The OLIGARCH Act has already attracted a great deal of media buzz, including a mention in this morning’s The New York Times Dealbook. CNN also ran an op-ed about the bill co-authored by Rep. Barbara Lee and one of our members, Abigail Disney, which you can read HERE.
For today’s Closer Look, we want to show you why the OLIGARCH Act is critical to stabilizing our democracy and its economic underpinnings, how the legislation would do so, and why it’s imperative that Congress passes the legislation as soon as possible.
The Problem: Inequality destabilizes democracy
Over the past four decades, economic inequality has exploded in America. America’s 735 billionaires – who increased their collective wealth to $4.7 trillion over the pandemic – hold more wealth than the entire bottom half of the country. Meanwhile, 60% of Americans live paycheck to paycheck, 40% of Americans can’t afford a $400 financial emergency, and a third of workers make less than $15 an hour.
We’ve discussed before why high levels of inequality are a problem for our economy: it hurts GDP growth and social mobility and is associated with poor social outcomes, e.g. lower life expectancy, more crime, and more mental illness. But there’s another reason why we should care that so much wealth in America is concentrated in so few hands: it destabilizes our democracy.
As America’s rich have become richer, they’ve used their fortunes to make investments in the political sphere. Their investments have certainly paid off, as we increasingly have a system of government that caters almost exclusively to the interests – particularly the economic interests – of the wealthy and well-connected. Over the years, their taxes have been cut, financial regulations have been slashed, and efforts to raise the minimum wage and strengthen unions have been squashed – all of which helps no one but the billionaire class. It’s not a coincidence.
One prominent example is campaign finance. Thanks to the Supreme Court’s controversial 2010 Citizens United ruling, they’ve flooded our elections with contributions to traditional campaigns, Super PACs, and dark money groups. In the 2022 midterm elections alone, billionaires contributed a total of $1 billion to candidates’ campaigns and Super PACs – which was more than 300 times what they spent a decade ago. In the 2020 election cycle, the top 20 billionaire donors spent twice as much as the entire Biden campaign.
As recent reports have made clear, they’ve even used their fortunes to try to influence the Supreme Court. Nothing is off limits: lavish vacations, luxury fishing trips, and private school tuition payments are apparently all fair game for billionaires looking to get in the good graces of Supreme Court Justices.
The Solution: The OLIGARCH Act
The OLIGARCH Act represents an important step toward fixing America’s inequality crisis and securing our democracy. It will enact a progressive annual wealth tax on America’s richest oligarchs; they will be subject to different rates depending on how much wealth they have compared to the median American household wealth, which is currently just over $120,000.
The tax has four brackets:
- 2% for all wealth between 1,000 and 10,000 times median wealth
- 4% for all wealth between 10,000 and 100,000 times median wealth
- 6% for all wealth between 100,000 and 1,000,000 times median wealth
- 8% for all wealth over 1,000,000 times median wealth
The thresholds are structured this way, instead of tying them to specific dollar amounts like the income tax, so that they automatically adjust to inflation without needing congressional tinkering, and so that the tax naturally waxes and wanes depending on if inequality is expanding or shrinking to more acceptable levels.
You might be wondering: how much will a tax like this raise? Our answer is: we don’t know and the revenue is not the motivation behind this legislation. In years when inequality is high (like it is now), the tax will inevitably raise a lot of revenue. In years when inequality is low, it won’t raise as much. In fact, if the tax achieves its purpose of constraining inequality, the revenue will eventually shrink to zero.
As we’ve explained before, we want to raise taxes on the rich not because we want to raise more revenue to “pay for” things like education, transportation, and infrastructure. Because the federal government issues our currency, it will never run out of money to fund important projects. Instead, we want to raise taxes on the rich to shrink the dangerously large gap between them and working people of America in order to safeguard our democracy.
As we highlighted earlier this month, the Supreme Court agreed to hear Moore v. United States in its next term. If the Court rules in favor of the plaintiffs, the results could be disastrous, potentially resulting in major swaths of the tax code being upended. Such an outcome could effectively kill existing proposals to tax wealth and unrealized capital gains – including our own proposal, the OLIGARCH Act.
It’s a worrisome prospect, especially given that our current Justices have shown themselves to be friends (literally) of billionaires and big business. But we cannot be deterred by the mere threat of a rogue Supreme Court, especially as experts have made clear that there is no ambiguity whatsoever regarding the constitutionality of a wealth tax. We won’t rest and will utilize every legal avenue at our disposal to achieve our goal of taxing the rich.
The late Supreme Court Justice Louis D. Brandeis once said, “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” It’s time to finally choose democracy by passing the OLIGARCH Act.