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THE BILLIONAIRE CLASS IN THE U.S. IS NOW BIGGER THAN EVER – WE NEED
PROGRESSIVE TAXATION NOW.  
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Omar Ocampo
April 2, 2024
Inequality.org
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_ There are now 813 billionaires with $5.7 trillion in wealth, making
the ten-figure club even more powerful economically and politically.
We need a progressive taxation system to reverse inequality. _

Image credit: Christopher Penler / Shutterstock // Institute on
Policy Studies (IPS),

 

A new, disturbing milestone has been confirmed with the release
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Magazine_’s 38th annual World Billionaires List. The US billionaire
class is now larger and richer than ever, with 813 ten-figure
oligarchs holding $5.7 trillion firmly in their possession.

This is a $1.2 trillion increase compared to the year before, bringing
total billionaire gains since mid-March 2020 to a gargantuan $2.7
trillion in current dollars.

The staggering upsurge in billionaire wealth over the last four years
is further proof that our economy is designed primarily to benefit
high-net-worth individuals. Profits are not held by the laboring
masses who produce it. Instead, they flow into the bank accounts of
the wealthiest Americans, who use those earnings and assets to
undermine our democracy.

The resources of the billionaire class endow them with an enormous
power to influence the political process directly and indirectly. Even
when their preferred candidates are not in office, our democratic
institutions are still more likely to respond to the policy
preferences of the rich rather than the average voter, especially when
it comes to taxes
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It is no secret that the vast majority of Americans
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including 63 percent of Republicans, are supportive of measures that
increase taxes on the wealthy. Yet our representatives consistently
fail to deliver on this demand. A quintessential example of this was
Donald Trump’s 2017 Tax Reform bill that promised to boost
everyone’s income. It was the most unpopular piece of legislation
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into law in the past twenty-five years. 

A recent report
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Center on Budget and Policy Priorities revealed that the primary
beneficiaries of Trump’s tax bill were the top one percent. They are
set to receive an average tax cut of more than $60,000 in 2025 while
the vast majority of workers will see no growth in wages or earnings.

The good news is that Trump’s tax cut is set to expire on New
Year’s Eve 2025. It provides us with an opportunity to implement a
new tax regime that not only expands the revenue base of the federal
government but also seeks to dilute extreme wealth concentration.

President Joe Biden’s Billionaire Minimum Income Tax (BMIT)
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promising proposal. By raising the top tax rate and imposing a higher
levy on the diverse income streams the top 0.01% receive from their
assets, including a tax on unrealized capital gains, the BMIT seeks to
tax the most economically privileged. It is estimated to raise $50
billion a year
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the next decade, making our tax system a bit more equitable.  

Another proposal was introduced
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Senator Ron Wyden (D-Oregon). The similarly named Billionaire Income
Tax (BIT) is more straightforward in that it targets asset gains that
can easily be tracked by the public, like a billionaire’s stock
holdings in a publicly traded company.

Microsoft’s stock increased $142.82, or 63.5 percent, between
January 2023 to January 2024. A billionaire who purchased Microsoft
stock last January would have to pay a 20 percent capital gains tax
— about $28 per stock purchased — under Wyden’s proposal, even
if they had not sold any shares. 

A well-designed progressive tax on billionaire wealth is an efficient
alternate way to raise revenue.

A modest five percent tax on all wealth above a billion dollars levied
today would raise more than $244 billion in 2024. And that’s likely
an underestimation since there are several ten-figure oligarchs that
keep their wealth concealed from _Forbes_. Wealth-X, a private
research firm, identified 955 billionaires in their Billionaire
Census [[link removed]] last
year, 142 more than what Forbes just registered.

But a wealth tax is not without its detractors. The wealth defense
industry
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its fellow travelers argue that the imposition of a wealth tax would
hurt investment and innovation. But most innovation that occurs in the
US economy is driven
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people worth less than $50 million. Plus, a modest wealth tax is
unlikely to change billionaire behavior, but is instead likely to
function “as a constraint on their rate of wealth accumulation
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Others will point to the failure of wealth taxes
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several European countries as proof as to why it is a bad idea. But
research has demonstrated
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unpopularity was largely the result of poor policy design. Low wealth
thresholds set by lawmakers hurt  upper-middle-class households who
did not have the cash to pay since their home was their most valuable
or only asset. They consequently lobbied for a number of exemptions
that were granted and later exploited by the ultrawealthy. The erosion
of the wealth tax base led to a significant shortfall in the revenue
collected by the state.

For a wealth tax to be effective, it must be applicable only to
individuals and households with a very-high net worth. Billionaires
possess an unfathomable amount of financial resources, meaning that
liquidity constraints do not hinder their ability to pay wealth tax
obligations. 

Of course, a wealth tax alone is not enough to ensure the safety of
our political democracy. The fact that billionaires spent $1.2
billion
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the 2020 general election and more than $880 million
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the 2022 midterms should be seen as a crisis of political inequality.
This is a system designed for the rich. It makes our democracy less
representative and limits electoral competition down to people who can
curry favor with the ultrarich. Campaign finance reform is needed to
prevent the further capture of our representative bodies.

We also need to strengthen working class institutions to expand
economic democracy and prevent extreme concentrations of wealth from
occurring in the first place. Trade unions not only increase the
collective power of workers, but they also allow for a greater labor
share of national income
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wage inequality gaps
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The growth of billionaire wealth provides this class of tycoons the
material resources to disproportionately influence our elections and
tax policy to the detriment of the working-class. The Inflation
Reduction Act of 2022 is projected to give the IRS an unexpected
windfall in tax revenue
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the next decade. These resources will be critical in enforcing a tax
on the top 0.01% and limiting the wealth concentration in the
billionaire class. It is a great first step towards strengthening our
political democracy and democratizing our economy.

_[OMAR OCAMPO is a researcher at the Program on Inequality and the
Common Good at the Institute for Policy Studies.]_

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* Income Inequality
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* wealth
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* Billionaires
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* tax the rich
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* wealth tax
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* Oligarchs
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* taxes
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* progressive taxes
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* Billionaire Minimum Income Tax
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* BMIT
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* Billionaire Income Tax
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* BIT
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* progressive taxation
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