Democracy on the Ballot: Taxing the Oligarchs

Next Tuesday, and most assuredly for several months thereafter, the wheels of America's creaky constitutional democracy will -- through elections and a gazillion legal challenges thereto, all of which could be upended by military and paramilitary violence -- determine whether or not the Democratic Party will become the majority party in one or both houses of Congress.  And even if the Democrats ultimately take control, we will then have to wait and see whether Donald Trump will simply defy them at every turn.

It is not a great situation to be in, but given how much worse I have long thought things would be by now, this is beyond the top of the range of possibilities that seemed possible only a year ago.  None dare call it optimism, but it is in the same area code.

But if the Democrats do break the Republicans' full control of the federal government, the next question will be whether it will only be a fleeting victory, soon to be followed by an ugly restoration of the current status quo.  Although Brazil avoided that fate over the weekend, Lula's upset win there was all but miraculous.  In the US, one could easily imagine that 2028 could reverse any sunlight that might emerge from 2026.  After all, 2024 certainly wiped out any hope that an electoral defeat and a failed insurrection would bury Trumpism forever.

With that as the context, we need to ask what will make it possible to continue to fight back against the de facto oligarchy (n., "a form of government in which all power is vested in a few persons or in a dominant class or clique; government by the few") and return to something at least slightly resembling a one-person-one-vote democratic constitutional republic.  How can the system be immunized from being overrun by people who think that they know best because they possess the most?

The answer, obviously, is taxes.  Specifically, progressive taxes.  Still more specifically, meaningful taxes on very high incomes and wealth.  And that is not merely my opinion, because the heirs to the class of men that Franklin Delano Roosevelt accurately derided as the "malefactors of great wealth" know this to be true.  They are frantically fighting every effort to rebalance the US tax system, and we should take their panic as evidence that they know how much is at stake.

All of which is to say that extremely unequal income distributions are no longer a problem limited to the economic sphere.  This is not to minimize the damage caused by a Republican policy agenda that takes food and health care away from people to pay for regressive tax cuts, which means that people are literally dying because because of Republicans' greed that has morphed into an insane anti-government cult.  Reverse Robin Hood never looked so grim.

But whereas there once was a time when we might have been able to console ourselves with the idea that income and wealth inequality were economic but not political problems, those days are long gone.  If regular people are going to have any hope of electing and living under representative governments, we must stop billionaires from buying elections and putting their eager valets and courtiers in charge of setting policy.

There are two ways for people to exercise their rights to reduce the power of the hyperrich.  One is to elect politicians who will pass and enforce a tax system that allows us to save what remains of our democracy and try to rebuild it.  See above.  The other is to directly pass tax laws that would reduce the power of the hyperrich.  Note that I say "power" and not "money" because money is the means to the end of wielding power.  Power will, in turn, allow further plunder and thus the amassing of more money, but the stakes are about power pure and simple, as they have always been.

Again, however, those malefactors do indeed know how this game is played.  Acting on the federal level is relatively easy for them, because our system provides no levers of direct democracy that would allow the voters directly to impose taxes on high incomes and wealth.  Moreover, the conservative movement's long-term project to take over the federal courts has resulted in the appointment of a Supreme Court that is likely soon to hold not only that federal wealth taxes are unconstitutional but that -- if the issue is ever presented directly (as it was not in a case two years ago) -- it is even unconstitutional to tax income that rich people hide inside capital assets.

That is yet another reason for Democrats to neuter the current corrupt Supreme Court, should they ever be in a position to do so.  But that is very much an argument for another day.

Instead, my interest here is all about the other way in which people can impose taxes on the oligarchs, which is through sub-federal governments and direct democracy via ballot initiative.  This is why the title of this column avers that democracy is indeed on the ballot, by which I mean on next week's ballot.  Some state-level referenda are directly on point, asking voters whether they want to pass tax-the-rich laws that would (slightly) rebalance the playing field.

I hesitate only slightly to write this: If the billionaire class is able to kill off the taxes that I will discuss below and in my next column, then even a win by Democrats in retaking Congress this year will be undermined.  The two -- winning legislative elections and taxing the rich -- necessarily go together.

In my most recent column in Jotwell, which I recommended to Dorf on Law readers here last week, I began by saying that "California and New York City are the current epicenters of efforts to slightly increase the taxes paid by the extremely rich."  I initially drafted that Jotwell piece five months ago, so it will be useful to offer two updates to that opening line.

As an initial matter, a long-time reader sent me an email pointing out that there is a major ballot initiative fight going on in Washington State, in which carpetbagger billionaires filed and are pushing an effort to use the referendum process to reverse a progressive tax that the state's legislature passed via the usual law-making process.  This is a useful reminder that the hyperrich are going to use whatever methods they can to nullify taxes on their incomes and wealth.  I mention this here because I assume that people reading this column (or at least those that have gotten this far) might be as surprised as I was about what is happening in the Pacific Northwest.  I might be able to educate myself about that law and the would-be repeal sufficiently to write some substantive comments about it soon, but for now, I will simply have to satisfy myself by pointing out that NYC and CA are not the only states in which this battle is being waged.

Developments in California deserve their own column, which I plan to publish tomorrow or Thursday.  Here, however, I will explain that the situation in New York has changed in ways that -- although wealth taxes there are not up for a vote in this election -- are nonetheless important.

As I wrote in the Dorf on Law column that I republished here last Thursday (originally published this past May), Mayor Zohran Mamdani had long committed himself to passing a so-called "pied-à-terre tax," which uses a deliciously snobby term to describe a plan to tax the City's hyperrich, specifically those who have been notably lacking in noblesse oblige and instead are buying up super-luxury digs as a form of what can only be called competitive oligarching.

In the time since I wrote that column, the Mamdani Administration succeeded in putting through such a tax, to take effect on July 1 of this year.  Predictably, that new law was immediately challenged in court, and a Staten Island judge temporarily set aside the law, finding that law was implemented improperly and ordering the City to do it correctly.

That was surely an unwanted outcome for the Mamdani side, especially because it delays the collection of some of the money that would have by now arrived in the City's coffers.  Still, it was a procedural ruling, saying nothing about the merits of the law's opponents' outlandish claim that Mamdani was "discriminating" against the rich.  Even so, a New York Times sub-headline described the ruling as "a blow to Mayor Zohran Mamdani."  Really?  "You have to cure these procedural errors" seems a long way from "a blow," but what would we expect?

And when I ask what we would expect, I have something more specific in mind than the usual (accurate) complaint that mainstream news organizations can be lazy and misleading, especially when it comes to economic issues.  In my piece on the pied-à-terre tax in May, I went on at great length about the depressing fact that a New York Times reporter had consigned herself to being a stenographer for the anti-tax side.  And it was truly astonishing.

Without rehashing my entire column, it is accurate to say that, among other obvious errors, the reporter relied on the old "economists say" hook.  That is sloppy in implying that one cannot find two economists to say anything, and it is much worse in quoting only economists who work for real estate companies!  The article compared a real estate tax in London to the proposed New York law, and the reporter actually wrote this about the London tax: 

There are additional factors to consider. The new taxes came just as Britain exited the European Union, a move that bruised its own economy and made foreign investment more uncertain than ever. Research from real estate firms like Knight Frank, however, have pointed to the new taxes as having a more direct impact on housing prices than Brexit.

Again, consider the sourcing: "real estate firms."  Even more damningly, note the weaselly phrasing: "more direct impact on housing prices than Brexit."  What in the world does "more direct impact" mean there?  I place an ice cube on the counter, which means that the heat from the countertop might cause it to melt.  But if I hold a blowtorch six inches away, would we say that the countertop was having "a more direct impact" on the soon-to-be-former ice cube, because it is directly touching it?  Silly does not begin to describe it.  The words "direct" and "significant" do not mean the same thing.

What was especially odd about that puff piece for the oligarchs was that the "about" page for the Times reporter in question starts with this: "I’m an investigative reporter for the The New York Times, focusing on wealth, power and corruption in New York City."  So maybe "focusing" means "celebrating"?  Evidently not, because the auto-bio also includes this: "My work focuses on exposing the misconduct that can occur where affluence and influence overlap — corruption, cronyism and abuse — and questioning those in positions of power to reveal how their decisions affect New Yorkers up and down the social ladder."  Maybe it was Opposite Day at The Times.

Yes, I am being especially harsh here, but goodness gracious.  Even the extremely neoliberal, cautious, anti-progressive op-ed page at The Times published its own editorial in favor of the Mamdani plan: "The Second Home Tax Is a Win for New York."  But somehow a reporter -- not an opinion columnist -- who claims to care about "decisions affect New Yorkers up and down the social ladder" became a mouthpiece for the City's hyperrich.

Why am I ending this column on what might seem like a digression about journalistic ethics? Because there is an extremely cynical explanation for why a reporter (or anyone else) might not take these tax proposals seriously.  That is, for all of my bravado in today's headline and at the beginning of this column about using these taxes to defang the oligarchs, it is both sad and worrying that these taxes will barely be a baby step toward restoring democracy.  As an article in Forbes put it in July: "New York’s Pied-À-Terre Tax Will Barely Dent Billionaires’ Fortunes."

So perhaps one could become convinced that it is all pointless.  If so, why not act as a spokesperson for the people who want to own hundred-plus-billion-dollar flats in New York?  We'll all be dead in a hundred years, anyway, right?

As cynical as I can be, however, I find it impossible to believe that these fights over wealth taxation are pointless.  As I noted above, the oligarchs certainly do not think so.  In my next column, I will detail some of the more outrageous aspects of the dishonest anti-tax campaign that is being waged in California in advance of next week's vote.

- Neil H. Buchanan