Opinion: The one way to stop billionaires from ruining our democracy

Opinion by Rep. Barbara Lee and Abigail E. Disney

(CNN) — The two of us have led very different lives. One is a multimillionaire who grew up flying her famous family’s private plane to her famous family’s private castle in Ireland. The other is a member of Congress who was born in the hallway of a segregated hospital and who raised two sons as a single mom on public assistance.

Our disparate experiences have nonetheless led us to the same conclusion: Extreme wealth inequality is a threat to our economy and democracy, and we need a tax specifically aimed at constraining it. 

The Supreme Court recently agreed to hear a case, Moore v. United States, which will decide the constitutionality of a little-known tax known as the mandatory repatriation tax. Although it’s not receiving much attention, the potential effects of the case cannot be understated. Should the court rule in favor of the plaintiffs, the case may essentially quash other proposals to tax extreme wealth and, in so doing, impede the ability of Congress to fight inequality.

But the Supreme Court’s baffling decision to entertain radical legal theories won’t deter us. The stakes are too high to do nothing.

Economic inequality in America has reached heights not seen since the Gilded Age, when “robber barons” like Andrew Carnegie, John D. Rockefeller and Cornelius Vanderbilt amassed their infamously large fortunes. America’s 735 billionaires now hold more wealth than the entire bottom half of the country. Over the course of the pandemic, America’s billionaires increased their combined wealth to nearly $4.7 trillion. And, if that’s not enough, there’s talk that America (and the world) may soon see its first trillionaire.

This extraordinary concentration of wealth in so few hands is concerning to us for many reasons, but primarily because of the destabilizing effect that it has on our democracy. As the rich have gotten richer over the last few decades, they have used their wealth to dominate the campaign finance system. In the 2022 midterm elections, billionaires contributed no less than $1 billion to candidates’ campaigns and super political action committees (PACs) — more than 300 times what they spent just over a decade ago. During the 2020 election cycle, the top 20 billionaire donors spent $2.3 billion, or more than twice as much as the entire Biden campaign.

They’ve gone a step further than traditional campaign finance, though. Recent reports have revealed that they’ve even tried to use their fortunes to cozy up to Supreme Court justices. Lavish vacations, luxury fishing trips, tuition payments and real estate deals are all means to an end for billionaires trying to score wins with the nation’s highest court before it hears a case about whether those same billionaires should be taxed reasonably.

In return for their massive political contributions, America’s wealthiest have received a system of government that caters to their every whim and wish. If a political donor calls a member of Congress, their offices are three to four times more likely to make room in their schedule than they are with their regular constituents. Consequently, public policy outcomes have come to largely reflect the interests of the wealthy and well-connected.

People constantly talk about the need to safeguard and strengthen our democracy, especially since the January 6 Capitol attack. But if we are not able to constrain exploding inequality, there won’t be a democracy left to protect. We’re speed-racing toward an oligarchy, where a handful of spectacularly wealthy people call all the shots. We need significant reform to our campaign finance system, but that’s not enough — the sheer size of the fortunes of some of America’s richest people are themselves destabilizing.

This threat calls for direct action from our government, which is why we need the Oppose Limitless Inequality Growth and Reverse Community Harms (OLIGARCH) Act. Our tax code can and should play an important role in reining in runaway wealth. Strong progressive tax codes have coincided with periods of both thriving middle-class growth and lower levels of inequality.

For example, in 1978, when wealth inequality was at its lowest point in modern American history — the top 1% held less than 25% of the nation’s wealth — the federal income tax and estate tax both had top marginal rates of 70%. Today, however, the top 1% holds almost a third of the nation’s wealth, while the top marginal rates for the federal income tax and estate tax have dropped to 37% and 40%, respectively.

The OLIGARCH Act aims to right America’s economic ship through the introduction of an annual wealth tax, with a progressive rate structure that waxes and wanes depending on how much we build up the median American’s household wealth. The tax will only impact those who have at least 1,000 times the median household wealth in this country (currently people with more than $120 million in household wealth). It will levy a 2% tax on wealth between 1,000 and 10,000 times the median; a 4% tax on wealth between 10,000 and 100,000 times the median; a 6% tax on wealth between 100,000 and 1,000,000 times the median; and finally an 8% tax on wealth over 1,000,000 times the median.

Despite what our critics say, we have no interest in punishing the wealthy for hard work or ingenuity. We are also not trying to encourage them to take their fortunes and leave the country. In fact, there is no evidence to support the idea of “millionaire tax flight.” On the contrary, billionaires’ wealth is so extreme that taxes are an afterthought — if even a thought at all — when they’re deciding where to live.

In the end, there simply comes a point where obscene wealth endangers our economy and democracy. Our wealth tax aims to tackle this threat. If we allow inequality to grow to the point where a small handful of individuals hold oversized political influence in this country, the nearly 250-year-old American experiment will crumble.

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.” For the past few decades, America has chosen extreme wealth concentration. The time has come for us to choose democracy again, pass the OLIGARCH Act and take a first step in taming inequality.

The-CNN-Wire
™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.