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There’s a virus in our tax system.

A stealth virus, it was embedded in America’s economic DNA for a century, biding its time, waiting for the appropriate conditions to reveal itself. And then we created those conditions, unleashing it to infect our institutions of culture and democracy, replicate, and burst forth to infect anew.

An oligarchy virus.

In his departing address, President Joe Biden warned of rising oligarchy in the United States—a notable event, being the first time any US president had thus directed a term previously associated with corrupt Russian billionaires. In truth, oligarchy has been thriving for decades in the United States, though never so much as it is today. University of California, Berkeley, economist Gabriel Zucman recently calculated that, as of November 2025, the richest 0.00001 percent of the population, just 19 politically influential billionaires, held in excess of $3 trillion. That’s more than 12 percent of the nation’s total income. The richest among them, Elon Musk, may soon be the planet’s first trillionaire.

The United States now has 1,000 billionaires, give or take. This so-called megadonor (really megataker) class has always pulled strings in the background. But with a few exceptions, only recently have they become such conspicuous political players. After Biden’s disastrous June 2024 debate performance, mainstream media headlines conveyed, without a lick of irony, who was really calling the shots: “Biden campaign tries to soothe panicked donors in tense phone calls” (Reuters); “Democratic Donors’ Big Question: What’s Plan B?” (New York Times).

A Washington Post analysis last fall found that federal campaign spending by the 100 richest Americans, untethered by a series of permissive Supreme Court rulings, had soared 50-fold over the previous decade. In March, a New York Times analysis revealed that 300 billionaires and their close family members had spent more than $3 billion on federal elections in 2024—19 percent of overall expenditures, whereas billionaire spending on the 2008 election had been a scant 0.3 percent of the total. Many of these same billionaires, the Times noted, are now flexing their wealth power in state and local elections as well.

Nowhere is the oligarchy problem more acute than among those 0.00001 percenters. Fifteen of the 19 are hectobillionaires, with assets north of $100 billion each. Each of the top six controls a major media outlet or social media platform—three (Musk, Jeff Bezos, and Mark Zuckerberg) sat onstage at Donald Trump’s inaugural celebration. 

No person anywhere, in any era, has spent as much to sway election outcomes as Musk, the richest person in history who, according to Open Secrets, shelled out almost $292 million in 2024 helping get Trump and other Republican candidates elected. And that doesn’t count the value of harnessing his X platform to support a twice-impeached, felonious former president who openly promised to make the rich richer—and delivered.

Musk expended 0.1 percent of his wealth in the process and got far more in return. The Trump administration promptly shelved dozens of investigations into Musk’s companies, awarded him billions of dollars in new contracts, and sent his firms’ share prices soaring by placing him in charge of the Department of Government Efficiency, an unsanctioned body that succeeded wildly—not in eliminating government fraud and waste as promised, but in gutting and disabling federal agencies, including the ones creating headaches for Musk’s companies. 

Whatever you may think of billionaires and their existence, the ways in which extreme wealth concentration distorts our culture and government have become so screamingly obvious that they no longer need be debated. The real, existential question is: Can this oligarchy virus be stopped? Or have we, as with our climate, allowed things to go too far?

To answer these questions, it pays to examine how we got here in the first place.

You’ve probably heard the term “progressive taxation.” That’s when the government claims a larger chunk of each successive tier of a person’s income as they move up the ladder. In theory, our federal government does so now, but with caveats you could drive a vintage Ferrari through.

Only families with excess income can accumulate wealth, of course. And those with extraordinary incomes accumulate an extraordinary share of the wealth. Which brings us to our first caveat: The government’s definition of income is wrong. When I say “income,” I’m not talking about the number on the W-2 form that reports your wages to the IRS, but rather your true economic income, which is known as Haig-Simons income.

Tax analysts Robert Haig and Henry Simons developed the concept early in the 20th century. It’s simple: Haig-Simons income is the increase (or decrease) in your pre-tax wealth from the start of the year to the end of the year assuming you haven’t spent a penny. This definition accounts not just for work earnings, but also for changes in the value of a family’s assets and investments (real estate, a business, artwork, stocks and bonds, jewelry, etc.) even if those assets haven’t been sold. Gains on unsold investments, often referred to as “paper profits” or “unrealized gains,” are as real as any other form of income when it comes to measuring wealth.

Barring government intervention, the wealth derived from Haig-Simons income—which I’ll just call “income” going forward—always concentrates in the hands of the rich. To understand this, picture 2,000 working-class families with annual earnings of $50,000 each—$100 million all told. Suppose those households live very frugally and spend only 90 percent of their earnings. That leaves them with pre-tax savings at year’s end of $5,000 per family, or $10 million total.

Now consider a single ultra-rich family with the same total income—$100 million, mainly from investments. Even if this absurdly fortunate family burns through $10 million living in luxury, they end the year up $90 million. So, our working-class group and our ultra-rich family have the same overall income, but the rich family pockets 90 percent of the resulting wealth.

These figures are pretax, so let’s tax them.

What if we imposed an across-the-board flat tax, as Republicans often have advocated? Make it 10 percent. Our working-class households, after taxes and living expenses, break even. The ultra-rich household ends up with less money—$80 million—but its share of the overall wealth gain rises to 100 percent.

Winner takes all.

In theory, an income tax, if sufficiently progressive and combined with an enforceable inheritance tax, can prevent an oligarchy from arising in the first place. And for a while the federal tax system actually accomplished this. During the post-World War II period—when family wealth derived largely from earnings that were subject to annual taxation at progressive rates, and when the country’s income distribution wasn’t so heavily skewed in favor of those at the top—it did a decent job of preventing undue wealth concentration. But the system’s fatal flaw, the oligarchy virus, always lurked just beneath the surface in the way the IRS defines income.

The income tax was first enacted by Congress early last century in response to the Gilded Age, which began soon after the Civil War ended and lasted until World War I. Then came the Great Depression and the robust tax-the-rich initiatives of the World War II years, which brought about an unprecedented de-concentration of wealth in America. From 1945 through the 1970s, the top marginal tax rate on wages—that is, the rate that applied to the topmost portion of a high-earner’s income—fluctuated between 70 and 94 percent, which helped maintain a relatively egalitarian wealth distribution as the GI Bill and other government programs contributed to a thriving (if overwhelmingly white) middle class.

The system only worked because economic conditions were not yet conducive to the emergence of the virus. The 1956 federal minimum wage was worth more than $12 an hour in today’s dollars, for example, versus $7.25 now. Antitrust laws were strictly enforced to block mergers in a wide variety of industries, including banking, brewing, consumer products, groceries, shoes, and steel. Strong unions kept wages on track with the nation’s rising GDP while the S&P 500 lagged. These and other factors prevented the most affluent families from realizing the full regressive potential of the tax system and, for nearly four decades, stopped wealth from re-concentrating to Gilded Age levels.  

Graphic describing "7x combined wealth of the 19 richest US households vs the 95 million least-wealthy ones."

We’ve now overshot those levels. The Great Re-Gilding commenced in 1981, when President Ronald Reagan oversaw the first of two major tax-cut packages and Congress left the minimum wage to the hungry teeth of inflation, such that its buying power today is less than half of what it was in the year the Rolling Stones released “Jumpin’ Jack Flash.” Relentless attacks on organized labor by conservative politicians eroded private sector union membership from a mid-1950s peak of 35 percent to about 6 percent in 2025. Decades of trade policies that made it cheaper for US firms to manufacture products overseas curbed demand for domestic labor, constraining wage growth. These wage-reducing strategies didn’t merely reduce the quality of life for millions of Americans, they also shifted a significant portion of workers’ wages into corporate profits—boosting the bosses’ stock portfolios and creating ripe conditions for the oligarchy virus. 

The impact of stagnant wages on the fortunes of the rich wasn’t a one-off. Economic policymakers increasingly based their decisions almost solely on protecting and boosting the value of investment assets owned by relatively few affluent Americans. The government all but gave up on antitrust enforcement, granting near monopolistic power to major players in industry after industry—airlines, energy, groceries, media.

A 1982 regulatory change allowed public corporations to buy back their shares en masse from the market. When a company does this, its value is divided among fewer shares, thereby boosting the share price and giving a tax-free bonus to the remaining investors—who would have been taxed had that money instead been distributed as dividends. In 2018, Republican lawmakers slashed the corporate tax rate from 35 percent to 21 percent. That generous rate cut, and the unprecedented buyback binge it fueled, drove stock prices up while doing nothing to enhance the productive value of the companies.

And who owns stock in America? The richest one-tenth of 1 percent of the population owns nearly one-quarter of it. The remaining nine-tenths of the top 1 percent owns another quarter. In fact, the average household in that topmost tier holds almost 500 times as much stock as the average household in the bottom 99 percent.

How did a supposedly progressive income tax system fail so miserably? That’s the oligarchy virus at work. The virus ensures that when investment gains become too prominent in the nation’s overall income mix, the system flips regressive. That’s because the federal government taxes investment gains at a fraction of the rates it applies to other income (like your salary)—and that’s when those gains are taxed at all.

Haig-Simons income, to remind you, includes the gains on unsold investments, which are by far the biggest source of income for America’s wealthiest families. But the IRS won’t touch that income. And even when the gains are “realized” via the sale of the underlying investment, the government touches that income lightly.

Look at Nvidia founder Jensen Huang, who holds more than $100 billion in unrealized profits from his company holdings. He need never sell those shares, because, like other wealthy investors, he can simply borrow against them at low interest rates, avoiding income tax almost entirely. And if Huang does sell those shares, his windfall is subject to the maximum capital gains tax (23.8 percent), already far lower than the rate he would pay on a CEO’s conventional salary (roughly 41 percent, with payroll taxes).

But Huang would get a far better deal than a mere halving of his tax rate, because it turns out that allowing unrealized gains to compound tax-free for decades drastically lowers the effective annual rate at which they are taxed when the investment is sold.

Confused? Check this out: Suppose you invest $1 million in a company that grows at 10 percent per year. If you sell that stock after 20 years and pay the 23.8 percent tax, you end up with the same amount of money as you would if your paper gains had been taxed at 12.4 percent annually, and you sold just enough stock every year to pay the tax. That’s only about a third of the top rate a high earner pays on wage income, and even less than a typical worker—say a plumbing contractor making $80,000 a year—is charged on their earnings.

But wait! The math gets even more advantageous for a guy like Huang, thanks to an often-overlooked aspect of federal tax regressivity. Namely, the faster an investment grows, the lower the effective tax rate when it is eventually sold. If, in 2006, you had put your $1 million into Nvidia stock—which had a staggering average return of 37.7 percent per year through 2025—and then sold it at the end of those 20 years and paid the tax, your effective annual tax rate would be less than 5 percent. Nice, huh?

By rewarding the most fortunate long-term investors with the lowest tax rates, federal policymakers have virtually guaranteed oligarchic levels of wealth and power. If you hit a home run, as in our initial example, you pay only half the already favorable capital gains tax rate. But if you’re Huang, or Jeff Bezos, whose company’s value has risen roughly a millionfold over 32 years—a real grand slam—your effective tax rate when you finally sell those shares dwindles to a paltry 4 percent. 

From 1945 to 1982, the virus remained dormant. The inflation-adjusted S&P 500 index roughly doubled in value over that 37-year period. From 1982 to today, it has ballooned fifteenfold. As the gap between the true incomes of the wealthiest households and other Americans widened, and the share of upper-crust incomes comprised primarily of investment gains swelled, our ineptly designed tax system produced the opposite of a desirable outcome—a pernicious oligarchy class, which is now fighting tooth and nail to extend its economic and political advantage.

What if we had put up guardrails? Something like the Buffett Rule—an unsuccessful proposal to tax annual incomes of $1 million or more at a minimum of 30 percent, inspired by Warren Buffett’s observation that it was unfair he paid lower tax rates than his secretary. Had that rule been applied to Buffett’s Haig-Simons income—if his Berkshire Hathaway gains were taxed at 30 percent annually, and he sold just enough each year to cover the bill—he would have been worth $9.5 billion as of January 2026—not $149.5 billion. And had he been charged the same rate each year that the IRS charges on the top wage tier for a married couple, his Berkshire wealth, excluding state taxes, would today add up to about $1.4 billion, less than 1 percent of its present value—which resulted from his true income going largely untaxed for six decades.

The same applies to other members of the 12-figure club. Taxed properly, they could never have accumulated such colossal, democracy-distorting piles of treasure. In 1982, per Zucman’s analysis, the average top 0.00001 percent household (just 11 families) had 14,000 times the wealth of the average household. Now they have 200,000 times more.

The virus in action.

Is there hope for a vaccine? Some cure for this societal affliction? 

Theoretically, yes. To address the Haig-Simons income gap, you could raise the minimum wage, enhance legal protections that allow workers to organize, update overtime laws, and properly fund the agencies that enforce the antitrust statutes. You could pass laws to reverse pro-monopoly court decisions and repeal the 1982 SEC ruling that enabled unlimited stock buybacks.

Simultaneously, you could overhaul the tax code to create a truly progressive income tax. This would require abandoning the fiction that investment gains aren’t real until the investments are sold, and that income from sales of stocks and bonds and gold bars and stud horses and rare sports cars deserve to be taxed at lower rates less than the compensation we earn by hauling garbage or painting houses—or writing magazine articles. 

All of that would all be a step in the right direction. Yet given the damage the virus has already wrought to our body politic—and this might well require a constitutional amendment—we need a wealth tax as a circuit breaker. For this very purpose, I helped write the Oligarch Act of 2025, introduced in the House last April by Rep. Summer Lee (D-Pa.).     

The Oligarch Act taxes excessive wealth progressively, at a maximum rate of 8 percent on fortunes in excess of 1 million times the median US household wealth. (This rate would apply to more families today, five, than at any time since the Gilded Age.) By taxing relative—not absolute—wealth, the legislation serves as a firewall against extreme wealth inequality. When inequality is moderate, fewer households would be subject to it. But in an oligarchic era such as today, it would put brakes on the undeserved growth of the most obscene fortunes and help shift political power back to whom it was once promised: the people. 

So yes, we know what’s needed, but the odds of accomplishing it? Mighty slim. Oligarchy feeds on itself. Wealth begets power—which begets more wealth, which begets additional power. Disrupting that vicious cycle by peaceful means becomes increasingly difficult and, at some point, maybe impossible.

If political efforts prove futile, could a popular uprising—like the French Revolution—dethrone our oligarchs? Fun idea, but consider how, in the hands of King Louis, mass surveillance and armies of AI-controlled drones and robots might have changed the outcome.

When you’re battling a virus, the longer the infection festers, the worse your chances of survival. Have we waited too long to treat this one? No doubt. But confronting American oligarchy now—before it’s entirely unstoppable—is the only rational choice.

Bob Lord, a former tax attorney, is senior vice president of tax policy for the group Patriotic Millionaires.


Methodology: Estimates of billionaires’ stock holdings in their primary company on January 1, 2026, were based on publicly available sources. For simplicity, the graphic only considers the effect of taxing each billionaire’s unrealized (paper) gains annually from the year the stock was first publicly traded. The calculations assume the billionaire sold just enough of the stock each year to cover the tax owed. Had we also taxed their gains in valuation during the pre-IPO years, the effect would be more profound. For example, had Jeff Bezos’ January 1 Amazon holdings been taxed at the prevailing ordinary wage rate (income plus payroll taxes) each year during the pre-IPO period and subsequently each year thereafter, they would have been worth roughly $7 billion in January—not more than $200 billion.

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