America’s wealthiest families held an astounding $8.5 trillion in untaxed profits in 2022. According to a report from the nonprofit Americans for Tax Fairness, which analyzed Federal Reserve data, “one in every six dollars (18 percent of the nation’s unrealized gains is held by these roughly 64,000 ultra-wealthy households, who make up less than 0.05 percent of the population.” The report comes as the Supreme Court gears up to decide a case that could preemptively block any efforts to tax the wealth of billionaires.
The data looks at “quiet” income generated by “centi-millionaires,” Americans holding at least $100 million in wealth, and billionaires through unrealized capital gains. Those gains accumulate, untaxed, as assets and investments like stocks, real estate, bonds, and other investments increase in value. If those assets are not sold — or “realized” — they are not taxed, yet America’s wealthiest families can leverage that on-paper value increase to secure favorable loans with low-interest rates in lieu of using taxable income to finance their lifestyle.
“Of the $139 trillion in America’s national wealth, almost three-quarters (73 percent) is held by the richest 10 percent of households, over one-third (35 percent) by the richest 1 percent, and an astounding 11 percent — $15.2 trillion — is held by the handful of fortunate households that make up the billionaire and centi-millionaire class,” the report says. “The wealthiest 1 percent of households hold 44 percent of national unrealized gains ($21.2 trillion), with billionaires and centi-millionaires alone controlling 18 percent ($8.5 trillion).”
Growing wealth disparity in the United States, and a system that allows the wealthiest to exploit loopholes to minimize their tax contributions, has motivated calls for increased financial accountability for the ultra-wealthy. But proposals to codify major tax reforms for centi-millionaires and billionaires could soon be dead in the water.
This term, the Supreme Court will decide Moore v. United States, a case which — according to the plaintiff couple’s lawyers —- “stands to slam shut the door on a federal wealth tax.” The Moores, a married couple, are challenging a “mandatory repatriation tax” created under former President Donald Trump’s 2017 tax bill, which required some Americans with business holdings outside of the United States to pay a one-time tax on income generated by their foreign earnings. The Moores argue that since their earnings had not been distributed as dividends, there should be no tax.
While that may sound obscure, the case could preemptively undermine dual proposals by President Joe Biden and Sen. Ron Wyden (D-Ore.) to tax unrealized gains made by billionaires.
“The petitioners in Moore are hoping the Supreme Court will toss out a Ninth Circuit ruling along with potentially decades of settled tax law and bipartisan agreement on Congressional authority, all for the benefit of the ultra-wealthy,” Wyden said in a statement responding to the court’s decision to take up the case. “If the Republicans on the Supreme Court take the petitioners’ side, they’d be handing a massive windfall to multinational corporations and could potentially lock in a right for billionaires to opt out of paying anything remotely close to a fair share in taxes.”
According to a report by The Lever, the Moores’ case has been backed by billionaire think tanks and conservative dark money groups. One such group is the Manhattan Institute, whose board of trustees includes Kathy Crow, the wife of billionaire Harlan Crow, a central figure in the financial ethics scandals that have plagued Supreme Court Justice Clarence Thomas over the past year. The institute’s board is headed by billionaire Paul Singer, who once footed the bill to fly out Justice Samuel Alito on a private jet to a luxury fishing trip in Alaska. According to a report from ProPublica, in the years that followed, Singer’s hedge fund, Elliott Management, was involved in at least 10 cases that were argued before the court.
The ultra-rich are closing ranks to protect their ability to hoard massive amounts of wealth while contributing less than the bare minimum to the societies that make their business empires possible. As Americans for Tax Fairness wrote in the conclusion of its report, without the “necessary reform to our system of taxation, the growth of untaxed income at the very top of our economy will continue to accelerate, to the benefit of a tiny few and the detriment of everyone else.”
