Billionaires are a symptom, not a disease

Christopher Marquis argues that wealth taxes are justified and overdue, but unless we directly confront corporate power, wealth will remain concentrated in the hands of the few.

After nearly a century, America rediscovered the wealth tax. This November, Californians will vote on Proposition 40, a union-sponsored plan that would impose a one-time 5 percent tax on the state's billionaires' net worth. Senator Bernie Sanders and Representative Ro Khanna have introduced a federal version. Twelve states have raised taxes on millionaires or billionaires this year. And Maine, Washington, Hawaii and Rhode Island have all adopted one. Not since the progressive era of taxing the rich has there been so much momentum.

Energy is easy to understand. The 25 richest Americans pay a "real tax rate" of just 3.4%—a fraction of what nurses and teachers pay—while owning about 2% of the nation's wealth. That's about the size of the entire lower half of the country.

This spring, Forbes reported a record 3,428 billionaires worth $20.1 trillion, up $4 trillion from last year. Elon Musk topped the list with $839 billion and became the first trillionaire ever this summer. At the same time, workers' share of economic output fell to 52.8 percent, the lowest since records began in 1947.

One obvious answer is to tax the top wealth and redistribute those funds. But I worry that the wealth tax movement is aiming at the wrong target. Billionaires certainly cause a lot of damage. As Alex Gibney's new documentary Musk reveals, the Tesla and SpaceX CEO spent nearly $300 million to help elect the president and then slash federal agencies, including several investigations into his own companies. However, he and his tech friends are not themselves the main cause of our economic inefficiency.

In my view, the root cause is corporate power—the way modern corporations are owned, run, and allowed to organize markets and policies in their favor—and how much that power has become concentrated over the past 50 years. The evidence is everywhere. Since the late 1990s, three-quarters of US industries have become more concentrated. Corporate profit margins have nearly tripled since 1980, and after-tax profits – below 10% of GDP for almost all of 1950 to 2010 – are now over 12%, near a record. Economist Thomas Philippone calculates that weakening competition costs the average family about $300 a month.

Since 1970, when Milton Friedman declared that a corporation's only social responsibility is profit, businesses have been reengineered around providing the greatest possible value to shareholders. Today, a large portion of the pay of many top executives comes in the form of stock options and stock buybacks (when a company uses earnings to buy back its own stock and increase its price), now sending more than a trillion dollars a year to shareholders in lieu of pay or investments. Prior to 1982, this practice was considered market manipulation. In the decades that followed, the forces that had once pushed back against inequality were eroded: union membership fell from 20 percent of American workers to 10 percent, and antitrust enforcement was consistently muted.

This is where billionaires come in. No one makes $839 billion from one paycheck. Wealth on this scale can only be obtained by accumulating stocks. That is, the profit from the company's profit. Profit is simply what remains after wages are reduced, taxes are minimized, and costs are imposed on workers, communities, and the environment. It does not make much difference whether these profits are claimed from the establishment of a company or, as with hedge funds and private equity, from the fruits of companies that other people have built. Because the wealthiest one-tenth of Americans own nearly 90 percent of household stock market wealth, every dollar in paychecks is funneled upward into a nearly undiluted profit stream.

You don't have to look hard for examples. Walton's wealth is tied to wages so low that a federal watchdog found Walmart among the largest employers of Medicaid and food stamp workers. In other words, taxpayers subsidize wages below a family fortune. The fortune of Amazon founder and CEO Jeff Bezos was made during the years when Amazon did not pay billions in federal income taxes while fighting lobbying by its warehouse workers' union. In each case, wealth is significantly extracted from workers and people, not the market reward that is billed.

None of this will last without Washington's help. Over the past half century, political spending has become a core business strategy and arguably the highest return on investment a large corporation can make.

In a 1971 memo, future Supreme Court Justice Louis Powell urged the Chamber of Commerce to put business on a political war footing. Today, lobbying has become a multi-billion dollar industry, and business now outspends labor and public interest groups 34 to one. Since Citizens United removed the last meaningful limits on business political spending in 2010, each election has cost more than the last — roughly $16 billion in 2024, mostly corporate money.

Under Donald Trump, this trade-off has become impossible to ignore. Companies lined up with seven-figure donations to his inaugural fund. Oil executives, who were asked for $1 billion at a Mar-a-Lago dinner, have since watched climate rules collapse. Paramount paid $16 million to settle a lawsuit dismissed by legal experts while the merger awaited federal approval. And the crypto industry spent more than $130 million on the 2024 tournament, saw enforcement cases against it fall away, and spent hundreds of millions of dollars on the 2026 midterms this fall.

This is why a policy that only targets billionaires will miss the mark. I support the wealth tax and I hope Proposition 40 passes. However, the wealth tax only takes back the winnings after the fact. The Forbes billionaires list added 390 new entrants this year. Taxing Musk, Bezos, and other billionaires to executives, boards, hedge funds, and political machines that keep building new machines.

What does it mean to target the root cause of inequality instead? First, we need to recognize that the shareholder-first corporation is a policy choice—a product of lobbying and legislation since the 1970s—and policy choices can be rebuilt by restructuring the workforce through labor law reform and sectoral bargaining, revitalizing antitrust, and getting corporate money out of politics. Early American corporate charters, however, were granted for limited public purposes and could be revoked if abused.

It also means redesigning the property itself. In my research on alternative corporate models, I have studied companies that are deliberately structured so that no one can extract wealth from the families because the stock value is legally locked to the target. When Patagonia's founder moved the company into a purpose-built trust in 2022, such mining became impossible by design. Bush has been majority-owned by a foundation for decades and is fiercely competitive. Stewardship ownership, employee ownership, and benefit corporations are alternatives that operate in thousands of companies around the world and check the concentration of wealth at its source.

In other words, the wealth tax debate is about how to redistribute the profits from corporate power. But we need to redistribute corporate power itself.

None of this is against Proposition 40 or its state and federal counterparts. Vote them, pass them, let the revenues fund health care and schools. This is a debate about where attention should be focused next. History tells us that America's previous confrontations with concentrated wealth, from Progressive-era trusts to the New Deal, succeeded not only by taxing the winners, but also by restructuring corporate power through antitrust enforcement, securities regulation, and protection of labor rights.

The real question facing America is whether corporations exist to serve society or society exists to serve corporations. A policy that stops short of taxing wealth holds the answer.