On May 5, 1789, King Louis XVI of France inaugurated the Estates-General. The institution met that year with the aim of addressing the problem of rampant inflation and bankruptcy in the monarchy’s accounts, deeply in debt due to lack of income. Neither the nobility nor the clergy paid taxes. Not because they lacked money. They did not pay for a simpler and more absurd reason: it was their privilege.
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The prerogative had much to do with the discontent of 98% of French citizens who suffered from food shortages and rising prices and were not part of the nobility or clergy, the so-called Third Estate. Not only because of the injustice of taxes that fell on citizens with fewer resources to pay them. Also because of the asymmetry of political power that these privileges revealed.
More recently, on June 8, 2021, the ProPublica portal published an investigation into the taxes of American billionaires. After accessing their tax records, they found in several annual declarations of Jeff Bezos, Elon Musk, George Soros, and Warren Buffett that they had managed to pay absolutely nothing in income tax without committing a single irregularity. These were the most notorious cases, but the average income tax rate paid by the 25 richest people in the country between 2014 and 2018 was also puzzling: 15.8%. “Less than the taxes that a single worker earning $45,000 a year [about €38,400 at the current exchange rate] could pay,” wrote ProPublica. Although in Europe the difference is not as notable, the same golden rule applies in Belgium, Spain, Italy, France, and the Netherlands: the effective taxes paid by the richest 1% are always lower than those of the average taxpayer.
Seen today, the privileges enjoyed by the pre-revolutionary Church and nobility seem even trivial. Wasn’t the privilege reserved for some estates supposed to have ended centuries ago, precisely because of the advances achieved after the French Revolution? As Max Lawson, who leads inequality studies at Oxfam, says, billionaires have minimized taxes and other regulations that limit their earnings using a series of tools that transform economic power into political power. Among the classic levers to achieve this are campaign and party financing, the threat of moving money elsewhere, traditional lobbying, and the appropriation of public conversation with investments in media, networks, and the hegemony of artificial intelligence (AI).
While in parts of the Western world middle-class parents find it increasingly difficult for their children to match their quality of life, the world’s billionaires have gained new superpowers to twist the arm of politics. Some examples? The power to decide a country’s military fate by granting or denying access to its satellites (Musk’s Starlink is an example); the power to contribute or not to spreading disinformation that threatens democratic coexistence (cases like Facebook and X, for example); or the power to revolutionize the world of work and communication with AI without many countries managing to pass even the slightest regulation.
Their voice being heard more than others would not be so problematic if the interests were the same. But the short-term incentives of billionaires, whose wealth derives from capital income, usually do not coincide with those of the bulk of the population, whose income depends on labor income. Greater regulation of financial markets, for example: it protects society from cyclical crises, but reduces billionaires’ chances of skyrocketing their fortunes. There are also conflicting interests on sensitive issues such as the future of public health and education.
According to economist Branko Milanovic, breaking the link between economic and political power is difficult because those who exercise it know how necessary that influence is to maintain their position. “But a smart plutocrat would do the same as capitalists did after World War II: faced with the possibility of communism, they accepted many equality demands to preserve their power,” he explains. “If the great plutocrats do not moderate their appetite, and their ambition becomes too obvious, the reaction against them may end up undermining the pillars on which they stand,” he warns.
“There is probably no historical precedent for the wealth inequality that exists today, and there is also no precedent for the level of global wealth,” Milanovic continues. In his opinion, two reasons why they seem to keep accumulating without qualms have to do with the “lack of recent precedents in which their power was challenged,” and with the visibility that social networks give them. “Before, the names of billionaires were not well known; now they appear every day, everyone recognizes them, I don’t know if that also makes it harder for them to limit their appetites.”
Throughout 2025, the fortunes of the world’s billionaires tripled the annual growth they had been recording on average during the previous five years. “The measures adopted so far during Trump’s term (…) have benefited the richest people in the world, either by defending greater deregulation or by blocking the implementation of agreements that would mean higher effective taxation of large corporations,” according to an Oxfam report published in January.
Billionaires’ investments are further evidence of the transmission belt that transforms economic power into political power. In the 2024 U.S. elections, only 100 families contributed one in every six dollars spent by candidates, parties, and committees. They invested $2.6 billion that year, more than double the $1 billion they had invested during the 2020 elections; and 160 times what they invested before the U.S. Supreme Court removed limits on campaign financing in 2010. The public conversation is similar: more than half of the world’s major media belong to billionaires, according to Oxfam’s calculations; 8 of the 10 largest AI companies are led by billionaires, and 9 of the 10 most important social networks as well.
In December 2024, the National Academy of Sciences magazine published research by Eli G. Rau and Susan Stokes on the pernicious effects of inequality: the probability of experiencing democratic erosion was seven times higher in the most unequal countries, they concluded. According to Rebecca Gowland, who works in the UK as a spokesperson for Patriotic Millionaires (formed by millionaires aware of the inequality problem, the organization campaigns for governments to raise their taxes), that degradation ends up delegitimizing the entire system. “The problem is not only that billionaires design policies that benefit themselves and affect us all, but that they are doing it in plain sight, and that also makes us lose faith in democracy,” she says. The millionaires themselves admit it in anonymous surveys. “In the last January survey we conducted in G-20 countries, we asked if they believed extreme wealth served to buy political influence; almost 80% answered yes and that it shouldn’t be that way,” she explains.
According to the latest Oxfam data, the 12 richest people in the world collectively hold wealth greater than that of more than 4 billion people. The growth of billionaires’ fortunes is not solely due to the fact that taxes do not dent their wealth. According to Francisco Ferreira, head of inequality studies at the London School of Economics, they have also gained much from the weakening of rules that protect free competition. According to him, the steel industry, or even the oil industry, had to face more competition than today’s big tech companies, “which can operate with much higher margins and generate extraordinary profits.”
Blow or suck
“We can have democracy, or we can have wealth concentrated in the hands of a few, but we cannot have both,” said U.S. Supreme Court Justice (1916-1939) Louis Brandeis, a key figure in the fight against monopolies. His jurisprudence and laws enacted in the early 20th century helped contain monopolistic tendencies until the 1980s, when a reinterpretation of those laws limited monopoly regulation to cases where there were price increases or production reductions. This laid the groundwork for the creation of giants like Amazon, Meta, or Google, which charged little or nothing to their users in exchange for market power that has allowed them to dictate rules and neutralize rivals.
Former U.S. President Joe Biden tried to revive Brandeis’s spirit by appointing Lina Khan to fight monopolies from the Federal Trade Commission, but Trump dismissed her as soon as he took office. “It is not possible to reverse a trend toward concentration in just four years,” says Ferreira. “If Khan’s regulatory strategies had lasted 20 years, it would have meant something; but mergers and acquisitions do not happen every year.”
Although regulations are not perfect, the defense of free competition and campaign financing are better regulated in the European Union, says Belgian philosopher and economist Ingrid Robeyns, author of a book around the idea of limitarianism — putting a cap on the maximum amount of wealth a person can accumulate. “In media, for example, in Europe we have a whole series of agencies that must authorize company growth operations, while in the United States we see how the Ellison family [owners of Oracle and now also Paramount] is taking over all the big ones, the last thing they bought was CNN,” Robeyns emphasizes.
Pernicious effects
Besides endangering the functioning and legitimacy of the democratic system, the accumulation of wealth by billionaires has pernicious effects on the economy. If that wealth were better distributed, activity and employment could increase thanks to consumption growth. The global excess savings generated by this concentration of wealth in fewer hands, or Global Saving Glut, as former Federal Reserve Chairman Ben Bernanke called it in English, does not help either. Seeking profitability, all that accumulated liquidity searches for new investment refuges in sectors such as education, health, or housing. Basic rights that have drifted away as they entered the market logic.
That’s the bad news. The good news is that humanity has not suffered this drift toward power concentration for the first time and it is possible to learn from past solutions. As Guido Alfani, professor of Economic History at Bocconi University, says, the ancient Greeks already warned us of the incompatibility between democracy and wealth concentration. “Aristotle wrote that in a context of great inequality, the super-rich would be like gods among men,” says Alfani. “The Republic of Venice is a clear example,” he explains. “In the 15th century, humanists said it was the perfect model for a stable republic because its structure prevented the richest from taking political control, yet by the early 17th century, the rich could buy a seat on the Great Council of Venice, and all their descendants were part of the ruling family.” According to Alfani, the plutocratic drift usually coincides with the moment when elites notice a worsening of the conditions that allowed their enrichment.
But perhaps the wealth concentration with the most useful lessons is also the closest: the so-called Gilded Age that the United States experienced during the last three decades of the 19th century. These were the years of the railroad and rapid industrialization, with the rise of gigantic fortunes like the Rockefellers, Vanderbilts, Carnegies, and Morgans. “The Civil War had ended and citizens were not prepared for what was coming,” explains Richard White, professor of Economic History at Stanford. “They came from slavery, where plantation owners were also the greatest fortunes, and expected to enter a world of small producers competing with each other: they did not foresee industrialization and the world of poor wage earners that was coming because none of that had existed before in the country.”
Just as Trump announced $500 billion in joint investments for AI a year ago, Gilded Age governments helped those first entrepreneurs with subsidies and tariffs arguing that industrialization would be good for the whole country. “But who benefited from that industrialization?” White asks. “When you look at things like wages, life expectancy, and health, in that era, what you find is a decline for the vast majority of Americans,” he adds. “Conditions deteriorated so much that all kinds of signs of an imminent class war began to appear in the country, with protests in the streets and an overwhelming majority against monopolies, regardless of political affiliation.”
“[U.S. President William] McKinley was assassinated in 1901 by a socialist and even conservative publications said something had to be done to solve the problem of monopoly power and wealth concentration,” explains American Ray Madoff, professor at Boston University School of Law. Madoff recalls how the tax system shifted from being based on tariffs to the introduction of a tax system that would lay the foundations of the current one.
In 1913, the progressive income tax arrived and in 1917 the wealth tax, levies that achieved unprecedented wealth redistribution and inequality reduction for most of the 20th century. A period that coincides, in White’s words, “with the most prosperous stage in American history.”
Although the structure of the two taxes remains today, says Madoff, they have been “secretly eroded” in favor of the richest over the last 40 years. She describes several techniques such as personal trusts and foundations to avoid wealth and inheritance taxes, among other tools. “What they do rests on the following principle: banks need to lend money, because that is their business, and billionaires have a huge amount of wealth to guarantee those loans, so they live in debt, refinancing the debt over and over,” explains Madoff.
The solution is technically simple, says Madoff. Make sure that wealth is taxed as soon as its ownership is transferred, to whoever, by sale, donation, or inheritance, with no more exemptions than those decided by a democratic majority. “Of course, there is a desire to help children, especially now, when inheritance has become the only way to help them maintain a middle-class life, but that is solved by exempting the first million or second million dollars; whatever society decides democratically,” explains the Boston professor. “But that has nothing to do with justifying that Zuckerberg’s or Musk’s descendants do not pay inheritance taxes.”
According to analyses by French economist Gabriel Zucman, to prevent billionaires from maintaining the privilege of paying less tax than workers, it would be enough to ensure that fortunes exceeding 100 million euros pay at least a 2% annual tax, regardless of the mechanisms used to recategorize and reclassify wealth.
In Spain, researchers from the University of Alcalá de Henares Olga Cantó and Francisco García-Rodríguez concluded in a recent study that reforming the wealth tax to align it with proposals by economist Thomas Piketty, or the wealth tax in force in Norway, would have exceptional revenue power: it would be enough to finance a universal child-rearing benefit of more than 2,000 euros per child, achieving a 5% improvement in the Gini inequality index.
Another solution is to impose especially onerous taxes on activities that transform economic power into political power. This is what Branko Milanovic suggests for any billionaire who wants to finance political campaigns or get involved in media, networks, and other attempts to direct public opinion. “I don’t know if it will sound a bit crazy, but it seems to me that taxes on these activities should be confiscatory, so if they want to have media or contribute to political parties, they should pay 2% of their wealth in taxes, for example,” he concludes.