One Simple Way to Save American Democracy: Get Serious About Taxing the Mega-Rich

At what point does great wealth held in a few hands actually harm democracy, threatening to turn a democratic republic into an oligarchy?

This week, Forbes Magazine released its

In the last few years, we've spoken at length about inequality and political corruption and corporate tax dodgers, but we haven't had a real debate about this topic in our nation for nearly a century. 

In a letter to Joseph Milligan on April 6, 1816, Thomas Jefferson explicitly suggested that if individuals became so rich their wealth could influence or challenge government, then their wealth should be decreased upon their death. He wrote, "If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree..."

In this, he was making the same argument that the Framers of Pennsylvania tried to make when writing their constitution in 1776. As Kevin Phillips notes in his masterpiece book Wealth and Democracy: A Political History of the American Rich, a Sixteenth Article to the Pennsylvania Bill of Rights (that was only "narrowly defeated") declared: "an enormous proportion of property vested in a few individuals is dangerous to the rights, and destructive of the common happiness of mankind, and, therefore, every free state hath a right by its laws to discourage the possession of such property."

Despite what some conservatives will argue—which I will get to in a moment—the Founders felt so strongly that oligarchy was a threat to democracy that they proposed a solution, which still holds true today: a wealth tax. To combat today's powerful oligarchy, we need a 100% tax on income over $1 billion.

Unfortunately, many Americans believe our nation was founded exclusively of, by, and for "rich white men," and that the Constitution had, as its primary purpose, the protection of the super-rich. They would have us believe that the Constitution's signers didn't really mean all that flowery talk about liberal democracy in a republican form of government.

But the signers didn't hold a candle to the wealth and power of men like the Koch brothers, and most were never “rich” in the way we think of that term today. In fact, many of the Founders themselves gave up everything, even risking (and losing) their lives, their life's savings, or losing their own homes and families to birth this nation.

The myth/theory of the "greedy white Founders" was first widely advanced by Columbia University professor of history and self-described socialist Charles Beard, who published in 1913 a book titled An Economic Interpretation of the Constitution of the United States.

Numerous historians, on both the right and the left, have since cited his work as evidence that America was founded solely for the purpose of protecting wealthy interests. His myth unfortunately helps conservatives come up with their talking points about the “job creators” and the "death tax" and other myths they perpetuate so that the very richest few can rule America.

Every generation sees the past though the lens of its own time. Beard, writing as the great financial Robber Baron empires of Rockefeller, Gould, Mellon, and Carnegie were being solidified, looked back at the Framers of the Constitution and imagined he was seeing an earlier, albeit smaller, version of his own day's history.

But Beard was wrong.

The majority of the signers of the Constitution were actually acting 

 their own best economic interests when they put their signatures on that document, just as had the majority of the signers of the Declaration of Independence.

Beard thought he saw his own era's Robber Barons among the Colonial economic elite. And, had the Revolution not happened, he might have been right. But, during and after the Revolutionary War, the great fortunes loyal to the Crown were dispersed or fled, and while some of the wealthy British families of 1776 still hold hereditary seats in the British House of Lords, nobody can point to a Rockefeller dynasty equivalent that survived colonial times in the United States.

While there were some in America among the Founders and Framers who owned a lot of land, Pulitzer Prize-winning author Bernard Bailyn suggests in his brilliant 2003 book To Begin the World Anew: The Genius and Ambiguities of the American Founders that their wealth was a pittance in comparison to the true aristocrats of England. With page after page of photographs and old paintings of the homes of the Founders and Framers, Bailyn shows that none of those who created this nation were rich by European standards.

After an artful and thoughtful comparison of American and British estates, Bailyn concludes bluntly: "There is no possible correspondence, no remote connection, between these provincial dwellings and the magnificent showplaces of the English nobility..." After showing and describing to his reader the mansions of the families of power in 18th-century Europe, Bailyn writes: "There is nothing in the American world to compare with this."

In Wealth and Democracy, Kevin Phillips notes that: "George Washington, one of the richest Americans, was no more than a wealthy squire in British terms." Phillips says that it wasn't until the 1790s—a generation after the War of Independence—that the first American accumulated a fortune that would be worth one million of today's dollars. The Founders and Framers were, at best, what today would be called the upper-middle-class in terms of lifestyle, assets, and disposable income.

Even Charles and Mary Beard granted that wealth and land-ownership were different things. Land, after all, didn't have the scarcity it does today, and thus didn't have the same value. Just about any free man could find land to settle, either where Native Americans had been decimated by disease or displaced by war.

In fact, with his Louisiana Purchase adding hundreds of millions of acres to America, Jefferson even guaranteed that the value of his own main asset—his land—and that of most of his peers, would drop for the next several generations. I can't see Charles and David Koch ever supporting such an action, but I could see them spending a fortune to lobby against anything that threatened their wealth, even if it was best for the nation.

When George Washington wrote his will and freed his slaves on his deathbed, he didn't have enough assets to buy the slaves his wife had inherited and free them as well. Like Jefferson, who died in bankruptcy, Washington was rich in land but poor in cash.

In 1958, one of America's great professors of history, Forrest McDonald, published an extraordinary book debunking Charles Beard's 1913 hypothesis that the Constitution was created of, by, and for rich white men. McDonald's book, We the People: The Economic Origins of the Constitution, bluntly states that Beard's, "Economic interpretation of the Constitution does not work."

Over the course of more than 400 meticulously researched pages, McDonald goes back to original historical records and reveals who was promoting and who was opposing the new Constitution, and why. He is the first and only historian to do this type of original-source research, and his conclusions are startling.

McDonald notes that a quarter of all the delegates to the Constitutional Convention had voted in their own state legislatures for laws that would have helped debtors and the poor and thus harmed the interests of the rich. "These [debt relief/bankruptcy laws] were the very kinds of laws which, according to Beard's hypothesis, the delegates had convened to prevent," says McDonald. He adds: "Another fourth of the delegates had important economic interests that were adversely affected, directly and immediately, by the Constitution they helped write."

While Beard theorized that the Framers of the Constitution were largely drawn from the class of wealthy bankers and businessmen, McDonald showed that, "The most common and by far the most important property holdings of the delegates were not, as Beard has asserted, mercantile, manufacturing, and public security investments, but agricultural property." Most were farmers or plantation owners, and owning a lot of land did not make one rich in those days.

"Finally," McDonald concludes, "it is abundantly evident that the delegates, once inside the convention, behaved as anything but a consolidated economic group."

McDonald then goes into an exhaustive and detailed state-by-state analysis of the state constitutional ratifying conventions that finally brought the U.S. Constitution into law. For example, in the State of Delaware, which voted for ratification, "almost 77 percent of the delegates were farmers, more than two-thirds of them small farmers with incomes ranging from 75 cents to $5 a week. Only slightly more than 23 percent of the delegates were professional men—doctors, judges, and lawyers. None of the delegates was a merchant, manufacturer, banker, or speculator in western lands."

In other states, similar numbers showed up. Of the New Jersey delegates supporting ratification, 64.1 percent were small farmers.

In Maryland, "the opponents of ratification included from three to six times as large a proportion of merchants, lawyers, and investors in shipping, confiscated estates, and manufacturing as did the delegates who favored ratification."

In South Carolina it was those in economic distress who carried the day: "No fewer than 82 percent of the debtors and borrowers of paper money in the convention voted for ratification." In New Hampshire, "of the known farmers in the convention 68.7 percent favored ratification."

But did farmers support the Constitution because they were slave owners or the wealthiest of the landowners, as Beard had guessed back in 1913?

McDonald shows that this certainly wasn't the case in northern states like New Hampshire or New Jersey, which were not slave states. But what about Virginia and North Carolina, the two largest slaveholding states, asks McDonald rhetorically. Were their plantation owners favoring the Constitution because it protected their economic and slaveholding interests?

"The opposite is true," writes McDonald. "In both states the wealthy planters—those with personality interests [slaves] as well as those without personality interests—were divided approximately equally on the issue of ratification. In North Carolina small farmers and debtors were likewise equally divided, and in Virginia the great mass of the small farmers and a large majority of the debtors favored ratification."

After dissecting the results of the ratification votes state by state McDonald sums up: "Beard's thesis... is entirely incompatible with the facts." The Framers were not just “rich, white men” upholding their own interest, and the basis for many of today's Conservative talking points is simply false.

So what did motivate the Framers of the Constitution?

Along with the answer to this question, we may also find the answer to another question historians have asked for two centuries: Why was the Constitutional Convention held in secret behind locked doors, and why did James Madison not publish his own notes of the Convention until 1840, just after the last of the other participants had died?

The reason, simply put, was that most of the wealthy men among the delegates were betraying the interests of their own economic class. They were voting for democracy instead of oligarchy. They knew that those who had accumulated too much wealth posed a threat to the budding republic.

As with any political body, a few of the delegates, "a dozen at the outside" according to McDonald, "clearly acted according to the dictates of their personal economic interests."

But there were larger issues at stake. The people who hammered out the Constitution had such a strong feeling of history and destiny that it at times overwhelmed them.

They realized that in the 7,000-year history of what they called civilization, only once before, in Athens—and then only for the brief flicker of a few centuries—had anything like a democracy ever been brought into existence and survived more than a generation.

Their writings show that they truly believed they were doing sacred work, something greater than themselves, their personal interests, or even the narrow interests of their wealthy constituents back in their home states. 

Thus the secrecy, the locked doors, the intensity of the Constitutional Convention. And thus the willingness to set aside economic interest to produce a document—admittedly imperfect—that would establish an enduring beacon of liberty for the world.

As George Washington, who presided over the Constitutional Convention, wrote to the nation on Sept. 17, 1787 when "transmitting the Constitution" to the people of the new nation: "In all our deliberations on this subject we kept steadily in our view, that which appears to us the greatest interest of every true American, the consolidation of our Union, in which is involved our prosperity, felicity, safety, perhaps our national existence."

He concluded with his "most ardent wish" was that the Constitution "may promote the lasting welfare of that country so dear to us all, and secure her freedom and happiness...."

Since the so-called Reagan revolution more than cut in half the income taxes the multimillionaires and billionaires among us pay, wealth has concentrated in America in ways not seen since the era of the Robber Barons, or, before that, pre-revolutionary colonial times. At the same time, poverty has exploded and the middle class is under economic siege.

And now come the oligarchs, the most wealthy and powerful families of America, buying our members of Congress so that they should retain their stupefying levels of wealth and the power it brings, generation after generation. They say that democracy doesn't require a strong middle class, and that Jefferson was wrong when he said that "overgrown wealth" could be "dangerous to the State." They say that a permanent, hereditary, aristocratically rich ruling class is actually a good thing for the stability of society.

The solution is as simple as it was when it was proposed by our Founding Fathers: a tax. A 100-percent tax on all income over $1 billion to limit the power of the super rich while and strengthen the rest of us. If you can't live on a billion dollars a year, you've got much bigger problems.

The Founders of our republic fought a war against an aristocratic, oligarchic nation, and were very clear that they didn't want America to ever degenerate into aristocracy, oligarchy, or feudalism/fascism.

We must uphold their vision of an egalitarian, democratic republic, and a “No Billionaires” tax would be a great start.