America’s first Gilded Age didn’t merely end. Progressives had to fight to end it. Our forebears did battle, decade after decade, for proposals that dared to “soak the rich.”
How quaint that phrase now seems. Progressives today do talk about making the superrich pay their “fair tax share”; but we no longer dare imagine an America without the superrich. We have become addicted to a politics that ignores the power of the fabulously wealthy to define–and distort–our nation’s political agenda.
How can we end this addiction? In the twelve-step spirit of dependency-busters everywhere, we offer a dozen policy approaches that can help slice America’s superwealthy down to democratic size. To help us rebuild our plutocracy-busting self-confidence, we begin with the somewhat more winnable.
Step 1: Admit we are powerless unless we learn more about how concentrated our nation’s wealth has become.
In 1907 Joseph Pulitzer ended his publishing career with a farewell that urged readers to forever beware “predatory plutocracy.” He had started that career, years earlier, exposing wealthy tax dodgers. Disclosure has been a prime weapon in the progressive arsenal ever since.
§ Require government contractors to reveal how much their executives make. The Securities and Exchange Commission requires publicly traded companies to reveal how much their top five executives are making. But privately held companies face no such mandate, and the CEO of private security giant Blackwater last fall refused to divulge how much he has pocketed from his company’s contracts in Iraq. A bill now before Congress, the Government Contractor Accountability Act, would force companies like Blackwater to disclose their top executive pay.
§ Require corporations to report CEO-worker pay gaps. CEOs now take in, as a share of corporate earnings, twice as much as they walked off with just a decade ago. The labor share of national income, meanwhile, has shrunk to record lows. Which companies are shoving the most cash up the corporate flowchart? If corporations were required to document annually the gap between their highest- and lowest-paid employees, we would know.
§ Require the superrich to make their tax returns public. In 1934 early New Dealers enacted legislation that made the incomes of wealthy people–and the taxes they pay–a matter of public record. But the superrich quickly launched a fervid PR campaign that attacked the statute as an open invitation to kidnappers. In an America still reeling from the infamous Lindbergh baby snatching, that claim gave lawmakers a convenient cover for repealing this tax sunshine mandate. In 2005 America’s top-earning 400 paid a paltry 18.2 percent of their income in federal tax. It’s time to let the sunshine back in.
Step 2: Trust in a power greater than CEOs and their buddies.
The top one-hundredth of 1 percent of America’s taxpayers have seen their collective income quadruple, after inflation, over the past two decades. Corporate executives account for about a fifth of that income. How have CEOs engineered their awesome take-homes? They essentially pay themselves. They sit on one another’s corporate boards and rubber-stamp executive pay plans that come from consultants who know where their bread is buttered. Democratizing corporate governance could help end this enabling.