The energy is easy to understand. The 25 wealthiest Americans pay a “true tax rate” of just 3.4%—a fraction of what nurses and teachers pay—while holding about 2% of the nation's wealth. That’s nearly as much as the entire bottom half of the country combined.
One obvious response is to tax the fortunes at the top and redistribute those funds. But I worry that the wealth-tax movement is aimed at the wrong target. Billionaires create a lot of damage, to be sure. As Alex Gibney’s new documentary Musk lays out, the Tesla and SpaceX CEO spent nearly $300 million helping elect a president and then slashed federal agencies, including several investigating his own companies. Still, he and his tech-bro pals are not themselves the underlying reason for our economic dysfunction.
Since 1970, when Milton Friedman declared that a corporation's only social responsibility is profit, businesses have been re-engineered around delivering the most value possible to shareholders. Today, the bulk of many senior executives’ pay comes in the form of stock options and share buybacks (when a company spends its earnings to buy up its own stock and lift the price), which now send over a trillion dollars a year to shareholders rather than into wages or investment. Before 1982, this practice was viewed as market manipulation. In the following decades, the forces that once pushed back against inequality were gutted: union membership fell from 20% of American workers to 10%, and antitrust enforcement was consistently muted.
You don't have to look hard for examples. The Walton fortune rests on wages so low that a federal watchdog found Walmart among the biggest employers of workers on Medicaid and food stamps. In other words, taxpayers are subsidizing the payroll beneath a dynastic fortune. Amazon founder and CEO Jeff Bezos's wealth compounded over years during which Amazon paid no federal income tax on billions in profit while fighting its warehouse workers' union drives. In each case, the fortune is substantially extracted from workers and the public, not the market reward it is billed as.
In a 1971 memorandum, future Supreme Court justice Lewis Powell urged the Chamber of Commerce to put business on a political war footing. Today, lobbying has grown into a multibillion-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, every election has cost more than the last—nearly $16 billion in 2024, mostly corporate money.
This is why a politics aimed only at billionaires will miss the mark. I support wealth taxes, and I hope Proposition 40 passes. Yet wealth taxes only claw back winnings after the fact. This year's Forbes’ Billionaires list added 390 newcomers. Taxing Musk, Bezos, and other billionaires does not touch the executives, boards, investment funds, and political machines that keep minting new ones.
It also means redesigning ownership itself. In my research on alternative corporate models, I have studied companies that are deliberately structured so that no one can extract a dynastic fortune, because the equity is legally locked to purpose. When Patagonia's founder moved the company into a purpose trust in 2022, such extraction became impossible by design; Bosch has been majority-owned by a foundation for decades and competes ferociously. Steward ownership, employee ownership, and benefit corporations are working alternatives operating in thousands of companies around the world and address wealth concentration at its source.
None of this argues against Proposition 40 or its state and federal counterparts. Vote for them, pass them, let the revenue fund healthcare and schools. It is an argument about where attention needs to be focused next. History tells us that previous American confrontations with concentrated wealth, from Progressive Era trustbusters to the New Deal, succeeded not merely by taxing the winners but by restructuring corporate power through antitrust enforcement, securities regulation, and protecting labor rights.
The real question facing America is whether corporations exist to serve society, or society exists to serve corporations. A politics that stops at the wealth tax has already conceded the answer.
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