The millionaires who want to tax the rich

I don’t want to add to my personal net worth at the expense of my fellow Americans. I can pay more, I should pay more, and I reject the false concept that we wealthy Americans are the job creators who will leave the country with our money if we’re asked to pay our fair share.Karen Stewart, Patriotic Millionaire and Angel Investor

You might not have heard of the Patriotic Millionaires, although they've been around for more than ten years. It's a nonprofit group that has lobbied Congress to raise the minimum wage and to raise taxes on the rich—on themselves.

"It's the inequality, stupid" is perhaps the group's mantra. After ticking up during Ronald Reagan's presidency, inequality exploded after Bill Clinton took office. Today, there are 735 billionaires in the US (who can get away with paying no federal income taxes at all).

If you don't quite understand how staggeringly huge a billion is in terms of money, then I suggest you read my previous piece "On defending billionaires." As the group notes, "Elon Musk, Larry Ellison, and Jeff Bezos hold wealth more than 1 million times (!) the median American household wealth. Meanwhile, nearly 60% of Americans live paycheck to paycheck, 1/3 of workers make less than $15 an hour, and roughly 38 million Americans live below the poverty line."

The US has one of the highest rates of inequality among developed nations and this should be a concern for everyone (not least because it hurts social mobility and GDP growth). Despite what some might claim, free market capitalism doesn't close the inequality gap. A report has also found that the US has more intergenerational poverty than several peer countries. 

Patriotic Millionaires say they want to sort this mess out. Their goal is to ensure that the country’s political economy is structured to meet the needs of regular Americans, rather than just millionaires. They hope to do this by focusing on three first principles: a highly progressive tax system, a livable minimum wage, and equal political representation for all citizens.

The raising of taxes would first and foremost be a way to tackle inequality. Though this is popular with the American public, it is not, as you can imagine, so popular with the rich. And since the 2010 Supreme Court Citizens United ruling, the floodgates to unlimited spending by Super PACs have been opened. This is particularly problematic since the rich, who have got richer, have also contributed more to political campaigns. In other words, the rich might be manipulating the political system for their own benefit.

Who knew.

Does anyone remember Trump's 2017 Trump tax cuts? Economists calculated that the richest 400 families in the US paid an average tax rate of 23% while the bottom half of households paid a rate of 24.2%. The controversial tax cuts meant that the top 0.1% of US households were granted a 2.5% tax cut that pushed their rate below that of the lower 50% of US earners.

Given that this group of high-net-worth Americans share a profound concern about the destabilizing level of inequality in America, they have struggled to effect meaningful change. "We hit a wall," Erica Payne, the group's founder, told NPR. "We have hammered them on both sides of the aisle for 12 years, OK. It's time to go to the people who hand them their power."

A change of tactic was required.

44% of the US labor force are in low-wage jobs. And yet, Payne says, "They are the most powerful people in the United States of America, if only they realized it."

In 2022, in the small town of Whiteville, NC, people were asked in different ways (in person, cold calls, flyers) to come and talk about the economy. With millionaires. Patriotic Millionaires. The town was selected because it sits in a swing state with a minimum wage of $7.25 an hour, that of the required federal rate, and one that hasn't been raised since 2009. Worse still, the state has disallowed its cities from raising it.

Over a month of meetings, dozens of Whiteville residents were treated to a crash course in economics, learning about inequality and why the Patriotic Millionaires are so interested in reversing the trend. The group is hoping to push these meetings out online and to Wisconsin and Pennsylvania, too.

With the meetings starting up again, it has given a chance for those who have previously attended to work out where to go from here, and has allowed others into the fold.

When you have someone telling you, in a presentation, "So 71% of Americans think the economy is rigged against them. We've got news for them...they're right," then it helps if that person is a millionaire. This is not someone who can be accused of jealousy, who wants to take money off the rich because they are not in that position themselves. This message is so much more appealing when it is delivered by someone who has benefitted from the system against which they rail.

NPR reports on how these meetings have transformed ordinary working-class people's outlook on how the system is stacked against them, with a number of millionaires pointing out tax loopholes, system characteristics, and basic economics.

But with change come challenges:

Even so, Stevenson says there is strong public support for raising the minimum wage. But — another hurdle — lower-income Americans are far less likely to vote. She says they're hit disproportionately by voting restrictions and that casting a ballot can come at a cost.

"For some of us, giving up a day's worth of work to stand in a line to vote could mean not being able to pay your rent, or not eat," [economist Betsy] Stevenson says.

Minimum wage isn't such a priority in Congress because it has been raised in over half the states, leaving 20 unchanged. Added to this that the GOP has become a party of taxation dogma—long gone are the days of Reagan and George H.W. Bush raising taxes—and you get the sense that seeking change is like trying to turn a tanker. And that tanker is full of black gold, on its way back to port to earn its owners a big payout.

This grassroots approach aims to invigorate attendees, with a hope to soon train them in activism. It's certainly a start, and a noble one, but one that has a daunting uphill struggle to look forward to. Trying to change the American political-economic system is to pit oneself against power and money.

And that's no easy task.

On their website, the group has detailed how the Supreme Court has recently ruled against workers and unions in Glacier Northwest v. International Brotherhood of Teamsters. But they are also clear on what policies they endorse to get the system moving in the right direction. There is even now a UK-based Patriotic Millionaires:

Patriotic Millionaires UK, sister to Patriotic Millionaires in the US, exists to change the current economic system which is failing us all. We believe extreme wealth must contribute more so working people and those on low incomes aren’t endlessly picking up the pieces of a broken economy. The country deserves proper investment; what better way to do this than through taxing the richest people?

It certainly is a bold question. Let's hope that the momentum gains pace and has the courage of its convictions because I am not sure the current direction of travel is at all sustainable.