Political Power Cannot be a Family Heirloom

Family businesses – from restaurants to hardware stores to plumbing companies to hair salons – make up the beating heart of America. But when the “family business” is wielding unfathomable wealth to influence our democracy, it becomes a problem.

Last week, our allies at Americans for Tax Fairness (ATF) published a report, “The Billionaire Family Business,” which revealed the enormous sums that billionaire families have already injected into the 2024 election cycle. ATF has put out similar reports in the past, but this is the first of its kind that has focused on billionaire families as opposed to individuals. It’s an ominous but predictable next step as America enters a Second Gilded Age and wealth increasingly becomes dynastic.

For this week’s Closer Look, we’d like to share the report’s top findings and spotlight one billionaire family – the Mellon family – to explain how elections increasingly resemble struggles between wealthy aristocratic fiefdoms. If, on the off chance, you aren’t familiar with the urgent need for campaign finance or tax reform, you will be after reading this newsletter.

Here are some of the key takeaways from the report:

  • The 50 billionaire families who have thus far given the most money in the 2024 elections have donated a combined $600 million to political parties, PACs, and Super PACs.
  • Over two-thirds (69%) of billionaire families’ giving has supported Republican candidates while less than a quarter (23%) has favored Democrats.
  • Among the top 50 families, donations are highly concentrated among the top ten givers, who have contributed over half ($359 million) of the $600 million total. In order, these families are: Jeffrey Yass and family, Ken Griffin and family, the Mellon family, the Uihlein family, the Koch family, Reid Hoffman and family, Jim Simons and family, the Walton family, Paul Singer and family, and Joe Ricketts and family.
  • The real political spending total of these 50 billionaire families is likely higher than $600 million because of the increasing prevalence of dark money groups, which allow billionaires to give unlimited anonymous contributions.
  • Some notoriously politically active billionaires and their families – including Larry Ellison, Peter Thiel, and Miriam Adelson – have thus far given little or nothing at all in the 2024 election cycle. A reasonable explanation for their absence from traditional campaign funding circles may be that they have shifted their attention and energies to dark money groups.

Of the 50 billionaire families that ATF analyzed, the Mellon family was the third highest political spender, having given $50 million to Republicans. If you’ve never heard of the Mellons, we’ll make things easy for you: if there was a poster child competition for “old money” in America, the Mellons would be a top contender. They descend from Andrew Mellon (1855-1937), the Pittsburgh industrialist and banker who was one of the most famous “robber barons” of the Gilded Age.

Like his billionaire counterparts today, Andrew Mellon was also heavily involved in politics and campaign financing. He donated so much money to Warren G. Harding’s 1920 presidential campaign that, after he was inaugurated, Harding made Mellon treasury secretary. Mellon went on to serve in that role for 11 years – the longest in history. He instituted a number of reforms during his tenure as secretary, but he is often remembered for spearheading a number of tax cuts for the wealthy, including eliminating the gift tax and cutting the estate tax rate by half.

Judging from the ATF report, it appears the apple doesn’t fall far from the tree in the Mellon clan when it comes to political giving and avoidance of taxes. Timothy Mellon, Andrew’s grandson and the most prominent member of the Mellon family today, has thus far contributed $15 million to former President and GOP frontrunner Donald Trump, who has made no secret about his intention to extend the expiring provisions of his 2017 tax law which gave a windfall to the wealthy and corporations. Timothy has also given $20 million to Robert F. Kennedy Jr.’s campaign in a blatant attempt to siphon votes from President Biden’s re-election. 

Timothy Mellon offers perhaps the greatest case study into the dangers of dynastic wealth. One person is wielding his family’s $14.1 billion fortune to elect a candidate who will solidify oligarchic control of our economy and undermine what’s left of the guardrails protecting our democracy. It is remarkably destabilizing for any one person to have the wealth and power to do this, but it adds insult to injury when this person did nothing to earn his fortune except win the birth lottery. In a book on tax that Andrew Mellon wrote in 1924 during his time at the Treasury, he said, “The social necessity for breaking up large fortunes in this country does not exist.” Unbeknownst to him, a century later, his own grandson would demonstrate just how wrong he was.

We will likely see more Timothy Mellon-esque characters in the years to come as the “Great Wealth Transfer” accelerates. As billionaires around the world age – the average billionaire is 69 years old – they are expected to pass on an estimated $5.2 trillion to their heirs over the next 20 to 30 years. In the US specifically, no less than $30 trillion is expected to be transferred to the top 1.5% of households. And as fortunes find their way into the hands of the young, it’s safe to assume that they will weaponize their wealth in politics the same way that their grandfathers did.

All of these developments drive home the need to reform the estate tax and the rest of the tax code to put a check on dynastic wealth. Over the years, the estate tax has become so weak and watered down that it has essentially become an optional tax for rich families. Experts expect that, given the way the estate tax is currently structured, ultra-wealthy Americans will only pay about $4.2 trillion in taxes on the $30 trillion they are expected to pass down by 2045. And of course, the rest of the tax code needs fixing as well to ensure that billionaires stop paying lower tax rates than all other income groups.

Fortunately, there are a number of legislative solutions that Congress can and should take advantage of. To strengthen the estate tax, Congress should pass Senator Bernie Sanders’ For the 99.5% Act, which would close several loopholes that shield intergenerational wealth from tax. To put a check on large fortunes before billionaires transfer them to their heirs, Congress should pass our very own OLIGARCH Act, which would enact a progressive annual wealth tax.

To curb the political power of the rich, we also need to reform our campaign finance system. There can be no hope of achieving our economic agenda – and that includes revising the tax code to check dynastic wealth – unless we make it easier for candidates to run for office without courting billionaires and millionaires for large checks. To do this, in the immediate term, Congress should look to pass Senator Sheldon Whitehouse and Representative David Cicilline’s DISCLOSE Act, which would require dark money groups to disclose the identity of all of their donors who give $10,000 or more. In the long term, overturning Citizens United, instituting stricter contribution limits, and even moving to a public campaign finance system are all things that Congress should consider.

Here at the Patriotic Millionaires, we love family businesses and passing down traditions, trades, and crafts to future generations. But political power cannot be allowed to become a family heirloom if we want our democracy to survive. 

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