Dear John,

We’ve always been told that becoming a billionaire is a sign of success, but in reality? It’s a sign of the deep-rooted inequity in our society. The Elon Musks, Jeff Bezos, and Mike Bloombergs of the world didn’t make their fortunes from hard work—they've benefitted from loopholes in the tax system and the exploitation of others. Elon Musk is backing out of his deal to buy Twitter—but should he have even been in a position to buy the company in the first place?

Most millionaires and billionaires are white and benefit from an economic system that takes advantage of women and people of color. Our current tax code is no exception. It increasingly rewards extreme wealth, shields it from taxation, and allows it to grow larger across generations. Why should you care? It exacerbates racial and gender inequality, hinders economic growth, and sharply limits the tax revenues available to make investments in women and people of color.

Here are some must-know facts about our tax system and how billionaires use the system to their advantage:

• Their Income From Wealth Is Taxed at a Lower Rate Than Your Income from Work:

  Billionaires don’t make most of their money from working—for example, Elon Musk took no salary at all in 2020. Instead, they make their money from their wealth, such as their stock and other investments. Musk’s wealth grew from $24.6 billion to $234 billion in the first two years of the pandemic, mostly in the increased value of his Tesla and SpaceX stock. Unlike ordinary people, who pay taxes on their wages and salaries every time they get a paycheck, wealthy people only have to pay taxes on their investment increases when they sell their investments.

• They Can Avoid Paying Some Taxes Forever:

  If billionaires never sell their stock and investments, they can use a loophole to pass down unsold assets to their children without ever paying taxes on them. For example, if Musk’s children inherit his unsold Tesla and SpaceX stock when he dies, neither he nor his children will have to pay any taxes on the amount the stock’s value increased over the course of Musk’s life. If that happened now, he would avoid $50 BILLION in taxes.

• But It Doesn’t Have to Be This Way! The Tax System Can Be Used For Good:

  Closing loopholes like these can be a powerful tool to reduce inequality and to raise revenue to help women, families, and communities. In fact, taxing the patriarchy could pay for a ton of important programs like child care, affordable housing, health care, community college, etc. Check out our tax calculator to see just how much we could accomplish if we taxed the patriarchy!

When we tax the patriarchy, we make life better for our families, our communities, and ourselves.

Sincerely,

Kat Menefee
she/her/hers
Counsel, Income Security
National Women's Law Center