Friends,
Last week, I testified at a congressional hearing organized by Rhode Island Senator Sheldon Whitehouse and New Mexico Senator Martin Heinrich about what Big Oil has gotten from its mammoth contribution to Trump’s 2024 campaign — and how much Americans are paying for this bribe in higher fuel costs and destructive climate change.
The short answer: It’s the most corrupt deal in American history.
But it’s hardly the only corrupt deal in Washington. Political corruption is growing dramatically — partly because Trump is the most corrupt president in American history. But also because America’s wealthy and their corporations have been pouring more and more money into politics because the return on this “investment” has become so large.
I have some good news to share with you about all this. But first I want to sketch the core problem, 1-2-3. Then I’ll suggest a solution, 4.
Take a look at the graph just below, which shows the richest 0.1 percent of Americans — households with a net worth over $45 million as of 2025 — pulling away from the rest of us at a rapid clip.
As you see, from 1990 to around 2003, the wealth of most Americans grew at about the same pace. The gap started to widen around 2003, when Wall Street went on a gambling spree, creating a financial bubble. When the bubble burst in 2008, the top 0.1 percent took a big hit.
But since 2008, the wealth of the top 0.1 percent has really taken off. And after 2018, it exploded — mainly due to the combined effects of the 2017 Trump tax cut, the COVID-19 recession (whenthe ultra-wealthy used low interest rates to buy real estate and stocks), and the subsequent stock-market surge.
Nearly 72 percent of the wealth of the richest 0.1 percent is made up of corporate equities, mutual fund shares, and private businesses, according to the Fed. The S&P 500 has more than tripled in the past decade. The richest 1 percent of Americans now control $55.8 trillion of assets. That’s more than the gross domestic product of the United States and China combined.
The New York Times recently analyzed data on campaign finances to see how wealthy donors have been weighing into politics.
The analysis shows that in the federal election of 2024, just 300 billionaires and their immediate family members provided more than $3 billion in campaign funding — directly or through political action committees. More than $2 billion of this went to Republican candidates, including Trump.
That was 19 percent — almost a fifth — of all political contributions.
The billionaire families gave an average total of $10 million each, roughly equal to what 100,000 typical political donors gave, combined.
And this doesn’t include so-called “dark money” contributions channeled through nonprofits that don’t have to report their source.
Part of the reason for the explosion in political contributions from the super-wealthy is the Supreme Court’s 2010 ruling in Citizens United v. the Federal Election Commission that ended many remaining campaign finance restrictions.
Before that ruling, the share of billionaire spending was almost zero — 0.3 percent.
But a larger reason is the explosion of wealth at the top. Not only has this given the super-wealthy the means to make political contributions. It has also given them a big reason to make them.
They want lower taxes, fewer regulations on their businesses, and more “business-friendly” laws and rules.
In other words, they want to keep more of their gigantic wealth.
If you’re super-wealthy, democracy may appear to threaten it. The more wealth you accumulate, the more frightening democracy may seem. That’s because you’re a tiny minority. A majority of the population could vote for measures that take away part of your wealth — higher income taxes, a wealth tax, regulations that reduce pollutants you can put into the air or water, initiatives to bust up your monopolies or allow your workers to unionize and demand higher wages.
Billionaire Peter Thiel once wrote that he “no longer believe[s] that freedom and democracy are compatible.”
Presumably, Thiel defines “freedom” as the ability to accumulate huge amounts of wealth unimpeded by any responsibilities to the rest of society.
But there’s a very different idea of freedom and democracy, best articulated by the famous jurist Louis Brandeis, who’s reputed to have said: “America has a choice. We can have great wealth in the hands of a few, or we can have a democracy. But we cannot have both.”
For Brandeis, democracy was the source of freedom, rather than a constraint on it.
As Thiel’s view gains a wider following among those with great wealth — who are rapidly accumulating even more, and corrupting ever-more of American politics — Thiel is inadvertently proving Brandeis’s point.
Part of the answer is to get big money out of politics. I’ve suggested how this can be done without attempting the almost impossible tasks of getting the Supreme Court to reverse itself on Citizens United or passing a constitutional amendment. See here.
The other part of the answer is to raise taxes on the super-wealthy — Louis Brandeis’s dream and Peter Thiel’s nightmare.
The good news is that — despite the wealthy’s growing political power — this is beginning to happen. It’s not yet a prairie fire, but it may soon become one.
The state of Washington has just enacted a 9.9 percent income tax on Washingtonians earning more than a million dollars a year. The state estimates this will affect about 20,000 households (less than one-half of one percent of the state’s population). Washington state plans to use the tax revenue, an estimated $3 billion to $4 billion per year, to pay for school lunches for kids, expand a family tax credit to include another 460,000 low-income households, and fund other critical services the state budget can’t otherwise afford.
The New York state legislature just unveiled a proposed 0.5 percent income tax hike on New Yorkers who make more than $5 million yearly.
Massachusetts voters in 2022 passed a 4 percent surcharge on annual taxable income that exceeds $1 million. Since the tax took effect in 2023, the state has collected nearly $6 billion in additional tax revenue — and the number of millionaires in the state has grown, not shrunk.
New Jersey has had a wealth tax in place since 2020. Minnesota implemented a tax on investment income over $1 million in 2024.
California is on the way to putting on November’s state ballot a 5 percent one-time wealth tax on the state’s billionaires.
San Francisco and Los Angeles are aiming for municipal ballot initiatives to raise taxes on corporations whose CEOs make either 100 times (in the San Francisco version) or 50 times (in the L.A. version) what their median workers make.
And in Congress, California Rep. Ro Khanna and Vermont Sen. Bernie Sanders have introduced a bill to tax the wealth of America’s billionaires.
Getting big money out of our politics and raising taxes on the super-wealthy are both possible — not easy, but possible. They’re also necessary to reverse the mounting corruption that’s undermining our system of democratic capitalism.