Billionaires Shouldn't Exist— But Not Because We Need Their Money For Anything

The Only Need Is To Keep Them From Doing Harm With It

Earlier today, in a discussion that began with the misuse of the word “moderate” as political jargon and ended up in a discussion of tech billionaires attempting to remake San Francisco in their own image, the word “billionaire” was never mentioned. We did, however, note that equating extreme individual or familial wealth with anything at all besides greed and avarice has always been a politically fatal mistake. Sometime after, I saw an essay on Informed Comment by Sam Pizzigati, Can Democracy and Billionaires Coexist? Not on this planet. Pizzigati explains his book, The Rich Don’t Always Win in this 4 minute clip. He may sound mild-mannered in his affect, but his ideas are refreshingly jarring:

On Tuesday, Pizzigati asked if we can “have anything approaching democracy when some among us are sitting on fortunes grander than the rest of us can even imagine?” He also noted that “By the 1950s, Americans of massive means faced tax rates as high as 91 percent on their income over $200,000, the equivalent of about $2.4 million today. In those same years, the wealth America’s wealthiest left behind when they entered the great beyond faced an estate tax top rate that could go as high as 77 percent. Wealthy married couples here in 2024, by contrast, can totally exempt as much as $27.22 million from any federal estate tax. Our wealthiest today have good reason to be high-fiving these wealth-enhancing new tax realities. Top 1 percenters are now grabbing 21 percent of our nation’s income, over double the top 1 percent income share in 1976.”

Why is that a problem? I turned to our old friend, Bob Lord, a former Arizona congressional candidate, author of this decade-old classic DWT post, and a current policy expert at Patriotic Millionaires, for an answer. “It's a problem,” he told me today, “because we are way past the point where wealth at the top lost its significance in terms of the goods and services it can buy and is significant only in terms of the power it buys. So, we have a vicious circle. The ultra-wealthy use the political power that flows from their wealth to force policy choices that increase their wealth, which further increases their political power. In the end, we lose our democracy. Peter Thiel years ago declared his belief that freedom and democracy are not compatible. In 2021, ProPublica revealed that Thiel dodged tax on $5 billion of income through the misuse of a Roth IRA. In 2022, Thiel effectively bought himself a U.S. Senator, JD Vance, by contributing $15 million to Vance's campaign. Now, Thiel and dozens of other multi-billionaires are lining up to support Trump to secure additional tax breaks, American democracy be damned. This is what's meant by late-stage capitalism.”

Pizzigati further noted that in a just-released report from Americans for Tax Fairness, “The wealthiest of our wealthy are doing their best to keep these good times— for America’s rich— rolling. ‘Just 50 billionaire families,’ the new ATF report details, ‘have already injected more than $600 million collectively into the crucial 2024 elections, with that number sure to show accelerating growth in the final six months of the campaign.’ Stats like these, adds the report, offer ‘further proof that the nation’s richest families consider democracy just another commodity they can buy.’”

Many adherents of MMT leave out a crucial piece when discussing its advocacy for taxing the ultra-rich. It isn’t about needing their money for social good. That isn’t how money works in the real world. Taxing the billionaire class is about keeping them from buying society, which is very much what they’re doing now. I wanted to check my thinking, so I went right to the source. This comes from Stephanie Kelton's new book, The Deficit Myth, which I hope you read if you haven't yet:

Any transaction requires, of course, both buyers and sellers. In the buying and selling of our democracy, the sellers sit in Congress, and some have even called the White House home. This spring, one particular former president has been doing “selling” aplenty to get back to his former 1600 Pennsylvania Avenue address.

In one recent private event, the Washington Post reports, Donald Trump “asked oil industry executives to raise $1 billion for his campaign and said raising such a sum would be a ‘deal’ given how much money they would save if he were reelected as president.”

At another event with deep-pocket donors, held at New York’s luxurious Pierre Hotel, Trump reminded all present that a re-elected Joe Biden would let Trump’s 2017 tax cuts for the rich expire at the end of 2025. Warned Trump: “You’re going to have the biggest tax increase in history.”

What can we do to significantly limit how deeply political candidates can feed at the billionaire trough? The Billionaire Family Business— the new Americans for Tax Fairness report— advances two core recommendations.

The first: We need to reform our current campaign finance landscape. A good place to start would be ending our burgeoning “dark money” political contribution charade.

To end run our already feeble federal limits on political giving— and, at the same time, keep their donations secret— our contemporary billionaires have over recent years been advancing frightfully huge sums to non-profits that don’t have politics as their “primary” purpose. These non-profits have then been moving those dollars to billionaire-friendly candidates without having to publicly reveal the identity of the billionaires behind the contributions.

But closing gaping loopholes like this “dark money” two-step, the new Americans for Tax Fairness study recognizes, would only get us so far. The wealth of our richest, just like water, seeks its own level. Cut off one channel and that wealth will find another. To limit the impact of our wealthiest on our politics, in other words, we simply must limit the wealth of our wealthiest.

“We need,” as the new Americans for Tax Fairness paper puts it, “more effective taxation of billionaires.” And that more effective taxation must include moves to seriously tax the billionaire inheritances that “leave economic dynasties with plenty of spare cash to try to influence elections.”

Without those sorts of moves, the ATF concludes, we’ll continue to have “no practical limit to how much billionaire families can spend” on getting their “allies into office.”

Plutocracy can flourish in that environment. Democracy most definitely cannot.