Tax Billionaires

The United States has created more billionaires than any country in history while allowing them to pay lower effective tax rates than teachers, nurses, and firefighters. This is not an accident of economics—it is a policy choice. For decades, Congress has slashed top marginal rates, created loopholes for investment income, and starved the IRS of enforcement resources. The result is a system where working families fund the government while billionaires accumulate dynastic wealth largely untouched by taxation.

The numbers are staggering. According to economists Emmanuel Saez and Gabriel Zucman at UC Berkeley, the richest 0.1 percent of Americans have seen their share of national wealth triple from 7 percent in the late 1970s to over 20 percent today.¹² Meanwhile, the bottom 90 percent has seen its share plummet from 35 percent to just 25 percent over the same period. This concentration of wealth at the top has reshaped American society, distorting our politics, hollowing out the middle class, and undermining the basic promise that hard work leads to prosperity.

The wealthiest Americans do not accumulate this wealth through income that gets taxed like a paycheck. They build fortunes through stock appreciation, real estate holdings, and business ownership—assets that are never taxed until sold, and often never sold at all. When they need cash, they simply borrow against their assets, accessing billions in spending money without triggering a single dollar in capital gains taxes.

A History of Higher Rates

The argument that taxing the wealthy at higher rates would destroy the economy is contradicted by American history. During the Eisenhower administration—a period many conservatives remember fondly for its economic prosperity—the top marginal income tax rate exceeded 90 percent.³ This was not an aberration. From the mid-1940s through the mid-1960s, top marginal rates remained above 90 percent, and the economy boomed. The middle class expanded dramatically, wages rose steadily, and massive infrastructure investments transformed the nation.

The 91 percent rate during the Eisenhower years applied only to income above approximately $200,000—equivalent to roughly $2 million in today’s dollars. Most wealthy Americans did not pay this full rate due to deductions and other provisions, but the high marginal rate served a crucial function: it discouraged the extreme accumulation of personal wealth and encouraged corporations to reinvest profits into their businesses and employees rather than extracting massive executive payouts.

Since the Reagan administration began slashing top rates in 1981, we have witnessed a dramatic transfer of wealth from working families to the very top.⁴ The top marginal rate fell from 70 percent to just 28 percent by 1988. It has fluctuated since then but remains at 37 percent today—less than half what it was during the post-war economic boom. This collapse in top rates coincides precisely with the explosion in wealth inequality documented by economists.

Federal Proposals to Tax the Wealthy

Congress already has the tools to make extreme wealth pay, and I support two measures in particular. The first is the Ultra-Millionaire Tax Act, reintroduced by Senator Elizabeth Warren with Representatives Pramila Jayapal and Brendan Boyle. It would levy a 2 percent annual tax on net worth above $50 million, plus a 1 percent surtax on net worth above $1 billion, for a 3 percent rate on the very largest fortunes.⁵ The tax would reach only the wealthiest 0.05 percent of households, leave everyone else untouched, and raise an estimated $3 trillion over ten years to invest in the healthcare, housing, and schools that working families actually need.⁶ A modest annual levy on the greatest concentrations of wealth in human history is not radical. It is overdue.

The second is raising the top marginal income tax rate to 70 percent on income above $10 million, as Representative Alexandria Ocasio-Cortez has proposed.⁷ Polling found that 59 percent of registered voters supported this rate, including 45 percent of Republicans.⁸ It would still sit below the top rates that prevailed throughout the Eisenhower, Kennedy, Johnson, and Nixon administrations, and it would apply only to income above ten million dollars in a single year, the kind of income that reflects not work but the compounding returns of wealth already held.

Understanding Marginal Tax Rates

A common misconception—often exploited by opponents of progressive taxation—is that a 70 or 90 percent marginal rate means the government takes 70 or 90 percent of someone’s entire income. This is false. Marginal rates apply only to income above specific thresholds, with lower rates applying to income in lower brackets.

Consider a hypothetical 70 percent marginal rate on income above $10 million, as proposed by Representative Ocasio-Cortez. A person earning $15 million would pay the standard rates on their first $10 million—the same rates as everyone else at those income levels—and only pay 70 percent on the $5 million above the threshold. Their effective tax rate would be far below 70 percent.

This progressive structure ensures that taxes increase with ability to pay. A nurse earning $80,000 and a hedge fund manager earning $30 million both pay the same rate on their first $80,000 in income. The higher rates apply only to income that most Americans will never earn—income that represents not hard work but the compounding returns of existing wealth.

Why This Matters for Working Families

When billionaires pay lower effective tax rates than working families, the burden of funding government services falls disproportionately on everyone else. Roads, schools, national defense, Medicare, and Social Security must be paid for somehow. Every dollar that billionaires avoid in taxes is a dollar that must be made up through higher taxes on the middle class, reduced public services, or increased national debt.

The undertaxation of extreme wealth also distorts our democracy. Billionaires use their untaxed fortunes to fund political campaigns, lobby Congress, and shape public policy in their favor. They purchase media outlets that amplify their preferred narratives. They fund think tanks that produce research supporting lower taxes on the wealthy. The concentration of wealth becomes self-reinforcing: the rich use their riches to ensure policies that make them richer still.

Higher marginal rates would not eliminate billionaires, but they would reduce the incentive to accumulate personal wealth beyond any reasonable measure. When top rates were 91 percent, corporations reinvested profits into wages, research, and expansion rather than extracting maximum payouts for executives and shareholders. A return to higher rates could help rebuild the broad-based prosperity that defined the mid-twentieth century American economy.

Taxing Wealth, Not Just Income

Raising income tax rates is necessary, but it is not sufficient. The truly rich report little taxable income to begin with, so a higher rate on declared income barely touches them. Their fortunes sit in appreciating assets that are never sold and never taxed. They borrow against those assets to fund their lives, and they pass them to their heirs at death, where a provision called stepped-up basis (Section 1014 of the tax code) resets the value of the assets to their full market price and erases every dollar of gain that accumulated over a lifetime.⁹ This is the “buy, borrow, die” strategy, and it is why a billionaire can grow a fortune by hundreds of billions of dollars and pay almost nothing. ProPublica’s analysis of leaked IRS records found that the 25 richest Americans paid a “true tax rate” of just 3.4 percent on their wealth gains from 2014 to 2018, a fraction of what middle-class households pay.¹⁰ To reach this wealth, we have to tax the assets and the gains, not only the income that the ultra-rich choose to declare.

The estate tax was supposed to be the backstop. It no longer works. Congress has raised the exemption so high, and left so many loopholes open, that the tax has become close to voluntary for the people it was meant to reach. Fewer than 4,000 estates, less than 0.2 percent of all deaths, owed any estate tax in 2023.¹¹ The 2025 reconciliation law then locked the exemption in permanently at $15 million per person, $30 million per couple.¹² Dynastic wealth now passes from one generation to the next largely untaxed, and the country drifts toward a hereditary aristocracy of the kind our founders rejected.

The contrast with working people is stark. In 2012, Mitt Romney dismissed “the 47 percent” who “pay no income tax” as people who see themselves as victims.¹³ The line was misleading. Working people pay the payroll tax from the very first dollar they earn, and anyone with just $400 in self-employment income is required to file.¹⁴ Payroll taxes now make up roughly a third of all federal revenue.¹⁵ When you count payroll, sales, and state and local taxes together, our system is far less progressive than most people assume. Economists Emmanuel Saez and Gabriel Zucman found that in 2018, for the first time in modern history, the 400 richest families paid a lower total tax rate than the bottom half of households.¹⁶ Even the poorest Americans pay their share. The very richest are the ones who have stopped.

The answer is to close the loopholes and finally tax inherited wealth and investment gains the way we tax a paycheck. Building on the work of tax scholar Ray Madoff, I support a reform package that does exactly that.¹⁷ Inheritances and large gifts should be brought into the income tax and taxed as ordinary income to the person who receives them, ending the special exclusion that lets fortunes change hands tax-free. Unrealized capital gains should be taxed at death, closing the stepped-up basis loophole the way Canada already does, by treating assets as sold at death and taxing the gain.¹⁸ And the rules meant to make charity actually flow to charity should be restored: donor-advised funds, which let donors take an immediate tax deduction while money sits indefinitely without ever reaching a working charity, should face real payout requirements modeled on the private-foundation rules Congress enacted in 1969.¹⁷ None of this is a tax cut for the rich. Replacing a broken estate tax that the wealthy already avoid with a system that taxes inherited wealth as income is how we make the rich finally pay.

We Must Tax Billionaires

I support the Ultra-Millionaire Tax Act and raising the top marginal income tax rate to at least 70 percent on income above $10 million, returning to the rates that prevailed during America’s greatest period of middle-class expansion. I will work to close the loopholes that let billionaires live tax-free, to tax inherited wealth and unrealized gains as income, and to lift the cap on the Social Security payroll tax so the wealthy contribute on the same proportional basis as everyone else. Working families already pay their fair share. It is time the very richest did too.

Wealth inequality at current levels is incompatible with democracy. When 0.1 percent of households control 20 percent of national wealth—and use that wealth to purchase political influence—we no longer have government of, by, and for the people. We have government of, by, and for the billionaires. Progressive taxation is not class warfare; it is the restoration of the basic principle that those who benefit most from American society should contribute most to its maintenance.

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