The OLIGARCH Act, Explained
Our country is on the brink. American oligarchs have used their wealth to accumulate an unprecedented level of political power and used that political power to amass even greater wealth. Without decisive action, within the next decade, this vicious cycle of concentrated power and money will destroy democratic capitalism, and, with it, our American way of life.
Recognizing that extreme inequality is a direct result of extreme wealth concentration, today a group of prescient lawmakers introduced innovative legislation designed to reduce both–permanently.
The Oppose Limitless Inequality Growth and Reverse Community Harms (OLIGARCH) Act – introduced by Representatives Barbara Lee (CA-12), Summer Lee (PA-12), Rashida Tlaib (MI-12), and Jamaal Bowman (NY-16) – is designed to contain extreme inequality, restore social stability, and ensure the viability of democratic capitalism for the next 250 years.
- In 2018 the richest 0.1% of US households held 20% of the country’s wealth. We haven’t seen these levels of inequality since the Gilded Age.
- While the pandemic caused losses of jobs, income, and loved ones for most Americans, America’s 700 or so billionaires added over $1 trillion to their collective net worth.
- Political scientists Jeffrey Winters and Benjamin Page analyzed the relative political power of America’s wealthiest citizens and found the 400 richest had about 22,000 times the political power of the average member of the bottom 90% (the top 100 richest had nearly 60,000 times as much).
- A disturbing real world example: the Kochs spent $20 million on outside spending promoting the Tax Cuts and Jobs Act, and sent nearly $1 million to Republican leadership PACs, before getting a tax package that saved them about $1.4 billion annually.
What’s in the OLIGARCH Act?
The OLIGARCH Act implements a tax on the wealth of the ultra-rich based on the level of inequality the country suffers. When inequality reaches destabilizing levels, the tax is high. When inequality is at a manageable level, the tax disappears. The tax works as follows:
- 2% for all wealth between 1,000 and 10,000 times median household wealth;
- 4% for all wealth between 10,000 and 100,000 times median household wealth;
- 6% for all wealth between 100,000 and 1,000,000 times median household wealth;
- 8% for all wealth over 1,000,000 times median household wealth.
Additionally, because the richest households are the most likely to evade taxes, the bill includes a requirement for at least a 30% audit rate on oligarch households and establishes penalties for substantial valuation understatements.
In the unlikely event median household wealth fell below $50,000 from its current level of about $120,000, the thresholds would be fixed at $50 million, $500 million, $5 billion, and $50 billion respectively. Otherwise, the tax is not pegged to a specified dollar threshold. By design, this causes the tax to wax and wane with wealth concentration, intensifying during periods of rising inequality, but tapering off to near non-existence when median household wealth increases and inequality moderates to an acceptable level.
Because the richest households are the largest tax evaders, the bill also includes significant enforcement measures, including a requirement for at least a 30% audit rate on households covered by this tax, and establishes penalties for substantial valuation understatements.
Why is the OLIGARCH Act important?
There comes a point when extreme wealth is, by definition, extreme power. We have reached that point. Concentrated wealth is suffocating our democracy, threatening our economic system, and undermining our social cohesion. A government that works only for billionaires while ordinary Americans suffer cannot withstand authoritarian forces and extremists.
It is time for America to make its choice: extreme wealth concentrated in the hands of a few, or a powerful capitalist democracy?
Who supports the OLIGARCH ACT?
The OLIGARCH Act has been endorsed by: Americans for Democratic Action (ADA), Americans For Tax Fairness, American Family Voices, Center for Popular Democracy, Coalition on Human Needs, Demand Progress, Economic Policy Institute, HedgeClippers, Institute for Policy Studies-Program on Inequality, Main Street Alliance, MoveOn, Our Revolution, Oxfam, People’s Action, Patriotic Millionaires, Progressive Democrats of America, Responsible Wealth Project of United for a Fair Economy, Social Security Works, Strong Economy for All Coalition, Take on Wall Street, and Unrig Our Economy.
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