Should we have trillionaires? Should we even have billionaires? According to at least one recent analysis, the economy is on track to mint its first trillionaire — that is one thousand billion — within a decade. Such staggering accumulations of wealth are made possible in large part by the fact that America’s federal tax burden is so comparatively light. After a long period of seeming to venerate the 1 percent, or the 1 percent of 1 percent of 1 percent, American sentiment is swinging hard against this imbalance.
Now Joe Biden, behind in many polls and presiding over an economy that is objectively strong but politically unpopular, is hoping to boost his re-election bid with a policy idea that would once have been almost unthinkable: For this portion of the population, at least, he is vowing — almost gleefully — to raise taxes.
Even for a popular president, this would seem like a huge risk. For a Democrat with low job approval ratings and precarious poll numbers on his handling of the economy, it’s a shocking rebuke to conventional wisdom — and practically an invitation to critics to call him a tax-and-spend liberal. But on the politics as well as the policy, Mr. Biden is making the right call. Economic ideas that were once dead on arrival are now gaining traction on both the left and the right. The moment has arrived for changes in the tax code — and maybe beyond.
For at least the last half-century, raising taxes has been the third rail of American politics. Ronald Reagan rode the wave of the late-1970s “tax revolt” into the Oval Office. I was a kid in California then, and I remember how fierce the anti-tax sentiment was. Howard Jarvis and his followers, mostly older white property owners, pushed for the ballot initiative known as Proposition 13 because they were, in their own words, “mad as hell” that their rising taxes would help educate immigrant families. The anti-taxers won by a nearly two-to-one ratio.
Time magazine put Mr. Jarvis on its cover and called Prop. 13 the “most radical slash in property taxes since Depression days.” The movement devastated schools and social services. But it was political gold and spread nationwide.
During his first year as president, Mr. Reagan cut the highest personal income tax rate from 70 percent to 50 percent. He cut taxes for low-income Americans, too, decreased the maximum capital gains rate from 28 percent to 20 percent and cut corporate taxes. These tax cuts caused such deficits that Mr. Reagan had to reverse some of them throughout the rest of his time in office, but that is not how history remembers his presidency. By the end of his second term, the top individual rate was only 33 percent.
Anti-tax activists made cutting taxes an explicit political litmus test. In 1988, George H.W. Bush famously pledged “read my lips, no new taxes.” Twenty-five years later, Barack Obama did modestly raise taxes on the highest-earning Americans, but he kept quiet about it, instead touting middle-class tax cuts that, he said, left middle-income families with a lower tax rate than at “almost any other period in the last 60 years.”
Fast forward to Joe Biden, who is making $5 trillion in tax increases central to his re-election campaign. During his State of the Union speech this month, he even made fun of Republicans for favoring cuts. Getting the rich to pay their share is right up there with getting greedy companies to stop charging you junk fees and, he says, shrinking your Snickers bars.
What explains the pivot? The president is following the money. Over the last decade, and even more since the pandemic, wealth concentration has shot up astonishingly. Elon Musk was worth about $25 billion in 2020 and at the end of 2023 was worth almost 10 times that. In 1990, there were nearly 70 American billionaires. Today, there are nearly 700. To what earthly end are we encouraging trillionaires?
The trend toward extreme inequality has fueled tremendous populist outrage, like the tax revolt in reverse. It may have been the Bernie Sanders left that started the “billionaires are a policy failure” meme, but poll after poll shows that between two-thirds and three-quarters of Americans want higher taxes on the wealthy and corporations.
It isn’t all outrage, though. A lot of it is common sense. As one of the wealthy nations with the lowest tax rate, the United States has put off investing in our families and children. This deferred maintenance is costly: Our child care, health care, family leave and higher education systems are, as a result, among the most expensive and least accessible in the world. Making these arenas a priority is affordable and effective, and they have waited far too long.
Raising high-end taxes can be good for business, too. In the 1960s, George Romney, Mitt’s father, regularly turned down his bonuses from his auto executive job, perhaps in part because his marginal tax rate would have been about 90 percent. It made more sense for companies then to invest excess profits back into their businesses rather than in C.E.O. pay packages. Today, C.E.O. pay at the largest companies has skyrocketed while businesses have invested less in research, physical plant and other capital assets.
“Tax and spend” wasn’t always an epithet. Reagan Republicans and 1970s-era right-wing populists weaponized the label every chance they got. “You could be talking about the Mets versus the Dodgers,” the former U.S. Representative Steve Israel of New York recalled, “and good Republican operatives would be able to weave in tax-and-spend.”
But the term, as Mr. Biden and his team clearly know, no longer stings in quite the same way, especially not if taxes are linked to a vision that would make Americans’ lives less anxiety-ridden and more stable. Donald Trump’s hallmark legislative achievement, the 2017 “Tax Cuts and Jobs Act,” which cut more than $1 trillion in taxes — mostly for the wealthy and corporations — has major provisions that are set to expire next year. A partisan battle will ensue. Mr. Biden’s 2024 push on taxes is a shot across that bow. Can we imagine an even bigger shift on taxation than the one Mr. Biden is making?
Could we get past the sense that taxes are what the government takes, and toward an idea of taxes as a means of patriotism, a kitty we all pay into to build something for community use: a school, a library, a road, a college, a hospital? What if taxation could bring us all together? It’s not that wild an idea. As the political scientist Vanessa Williamson notes, both liberal and conservative Americans view paying taxes as a moral duty. Just think of the pride with which people refer to themselves as taxpayers.
Of course, taxes are only a civic good if the tax rules are perceived as being fair. Which is why Mr. Biden’s calculated risk could pay many dividends come November.
Felicia Wong is president and chief executive of Roosevelt Forward, the advocacy partner of the progressive think tank the Roosevelt Institute.
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