“‘We want to let the country know that some people want to do something about this, and others don’t want to do something about it. Maybe they think that what makes America great is gross inequality.’”
The biggest backers of a new tax-the-rich proposal called the Oligarch Act admit that the bill doesn’t stand a chance in a Republican-controlled U.S. House of Representatives, but they say it’s important to continue to bring attention to growing economic and political inequality.
The Patriotic Millionaires — a group that has been pushing for higher taxes on the rich for more than a decade — say that as of 2018, the richest 0.1% of U.S. households held one-fifth of the nation’s wealth. In addition, the group says that the more than 700 billionaires in the U.S. got even richer over the past few years because of the coronavirus pandemic, adding more than $1 trillion to their collective wealth.
A bill introduced in the House last week seeks to establish a new tax that would rise and fall with U.S. median household wealth. The legislation, introduced by Democratic Reps. Barbara Lee of California, Summer Lee of Pennsylvania, Jamaal Bowman of New York and Rashida Tlaib of Michigan, was backed by the Patriotic Millionaires. The group has long said that economic and political inequality threatens business, society and the nation.
Morris Pearl, the chair of the Patriotic Millionaires and a former BlackRock executive, acknowledged in an interview with MarketWatch on Monday that the House, which is majority Republican, isn’t likely to pass a bill that calls for new taxes. But, he said, “civil-rights bills were first introduced during the Truman administration and finally passed under Lyndon Johnson. Sometimes things take time.”
The legislation would establish four brackets for the new tax:
- 2% for all wealth between 1,000 and 10,000 times median household wealth
- 4% for all wealth between 10,000 and 100,000 times median household wealth
- 6% for all wealth between 100,000 and 1,000,000 times median household wealth
- 8% for all wealth over 1,000,000 times median household wealth
Lee, who introduced the Oppose Limitless Inequality Growth and Restore Civil Harmony (OLIGARCH) Act last week, sought to draw a contrast between Democrats and Republicans in a statement to MarketWatch on Monday as she referred to a package of tax cuts introduced by Republicans last month: “Decades of Republican tax cuts for the wealthy and well-connected have created a dangerously unequal society that is both a threat to our economy and democracy. As my colleagues on the other side of the aisle prepare to force yet another GOP tax scam through the House, the Oligarch Act presents an alternative future to the American people: one where the middle class thrives and inequality is reined in.”
The bill also calls for the Internal Revenue Service to audit at least 30% of the households that would be subject to the tax.
John Buhl, a spokesperson and analyst for the Urban-Brookings Tax Policy Center, said Monday that “given the divided government we have and the looming 2024 election, it’s hard to see many substantive bills moving forward and getting to the president’s desk. That’s even more true in the case of taxes, I think.”
Buhl also said the legislation could create some unintended consequences, such as incentivizing more speculative investing.
“Because a wealth tax targets your net worth instead of your net earnings, some taxpayers could respond by being even more speculative with their investments,” Buhl said. “Chasing higher yield can be beneficial in some instances, but other times you get the cryptocurrency/Web3 gold rush that came crashing down last year.”
Still, Buhl said, “it’s hard to argue that the current system is working, if addressing inequality is the policy goal.”
From our archives (April 2023): ‘We want to pay more taxes,’ ultra-wealthy Americans tell Congress on Tax Day
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