A Tax the Rich Can’t Avoid

New income is only a fraction of their fortunes—we need to target their wealth.

In These Times Editors

(Illustration by Terry LaBan)
wealth tax


There’s real momentum to take on the billionaires once again.

1. A pol­i­cy to break up the enor­mous, unearned assets of super-rich families

It is a win-win idea for the Amer­i­can peo­ple, an idea no con­ven­tion­al politi­cian would have the guts to put for­ward.” —Don­ald Trump, propos­ing a one-time tax on wealth in 1999 

Can’t we just raise the income tax?

As bad as income inequal­i­ty is in the U.S., wealth inequal­i­ty is worse. The top 1% now own more wealth than the bot­tom 90 per­cent com­bined. Three fam­i­lies with multi­gen­er­a­tional wealth — the Wal­tons, the Kochs and the Mars­es — have a com­bined for­tune of $365.7 bil­lion, more than 5 mil­lion times the medi­an wealth of U.S. fam­i­lies. Increas­ing the income tax on the top brack­ets is good pol­i­cy, but it doesn’t tack­le the immense dynas­tic wealth hand­ed down from the ultra­rich to their descendants.

Don’t we already have an estate tax?

Yes, but it’s full of exemp­tions and loop­holes that have ben­e­fit­ed peo­ple like Shel­don Adel­son and Don­ald Trump. The Right has steadi­ly chipped away at its effec­tive­ness, paint­ing it as a death tax” on fam­i­lies who have just lost loved ones. Trump near­ly suc­ceed­ed in axing it entire­ly in the 2018 tax bill, and the final ver­sion passed by the GOP will reduce tax­a­tion on wealthy estates by an esti­mat­ed $83 bil­lion over the next decade. One alter­na­tive is sim­ply to extend the fed­er­al income tax to include large inher­i­tances. Dozens of devel­oped coun­tries, includ­ing Japan, the U.K. and France, tax wealth in this man­ner. While we’re at it, we could also tax the wealth before the rich die. An addi­tion­al 1 per­cent wealth tax on house­holds with more than $20 mil­lion in assets would bring in an esti­mat­ed $1.9 tril­lion in rev­enue over the next decade, accord­ing to the Insti­tute for Pol­i­cy Studies.

What could we do with all that money?

Full lead pipe replace­ment, uni­ver­sal hous­ing, stu­dent debt can­cel­la­tion, oh my! Since con­cen­trat­ed wealth also trans­lates to out­sized polit­i­cal pow­er — look at the Koch broth­ers — break­ing up these for­tunes gets us clos­er to a sys­tem of gov­ern­ment where don’t make the rich peo­ple mad” is no longer the dri­ving principle.

Is this actu­al­ly possible?

Not with that atti­tude! Con­sid­er this: Begin­ning in the 1890s, reform­ers used tax­es to expro­pri­ate the for­tunes of the Gild­ed Age. Mar­gin­al tax rates on the rich rose as high as 94 per­cent in 1944, result­ing in a steady decon­cen­tra­tion of wealth up until the 1980s — fol­lowed by a rapid shift back in the oth­er direc­tion with the advent of Reaganomics and neolib­er­al eco­nom­ic pol­i­cy. In the after­math of the 2008 finan­cial cri­sis — and thanks to Occu­py, Bernie and a renewed move­ment for demo­c­ra­t­ic social­ism — there’s real momen­tum to take on the bil­lion­aires once again. 

This is part of The Big Idea,” a month­ly series offer­ing brief intro­duc­tions to pro­gres­sive the­o­ries, poli­cies, tools and strate­gies that can help us envi­sion a world beyond cap­i­tal­ism. For past In These Times cov­er­age of wealth tax in action, see, Just Tax­ing the 1 Per­cent as Much as We Tax the Poor Would Yield Bil­lions for Cash-Strapped States, The GOP Tax Bill Is Every­thing That’s Wrong With Our Democ­ra­cy, Why Don’t the Amer­i­can Peo­ple Want to Tax the Rich? Oh Wait, They Do.

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