Why Can't We Fund Universal Public Goods? Blame the Tax-Dodging Billionaire Nepo Babies

 "In 2024, these billionaire families used their enormous wealth to make record-breaking political contributions to secure a GOP trifecta," reads a new report.

Eric Trump

The children of the richest families in the U.S. are well-known for spending their vast wealth on frivolous luxuries—constructing a replica of a medieval church on their acres of property, in the case of banking heir Timothy Mellon, or starting a brand of T-shirts described by one critic as "terrible beyond your wildest imagination," as Wyatt Koch, nephew of Republican megadonors Charles and David, did.

But a report released by Americans for Tax Fairness (ATF) on Thursday shows how "billionaire nepo  (nepotism) babies" don't just waste their families' fortunes. They also benefit from "a rigged system" that allows them to "pass that wealth down over generations without being properly taxed–often without being taxed at all."

In addition, the heirs of the country's biggest fortunes spend vast sums "to elect politicians who protect their unearned wealth and manipulate the country's economy in their favor," said ATF.

Along with Mellon and Koch, the report profiles Samuel Logan of the Scripps media dynasty; Nicola Peltz-Beckham, daughter of billionaire investor Nelson Peltz; Gabrielle Rubenstein, whose family has made its fortune in private equity; and President-elect Donald Trump's son, Eric Trump.

The nepo babies are part of a small group of billionaire families in the U.S. who benefit from tax loopholes that ensure little of their immense wealth ever goes to benefit the public good.

At least 90 billionaires have passed away over the last decade, leaving their beneficiaries $455 billion in collective wealth.

But according to ATF, "$255 billion (56%) of that amount was likely entirely exempt from the capital gains tax because of a special break called 'stepped up basis.'"

"Trump and his allies in Congress are doing their donors' bidding by rigging the system in their favor and pushing a $4 trillion giveaway to wealthy elites and giant corporations."

Without loopholes included the stepped up basis tax cut, the current estate tax on billionaires and centimillionaires would yield enough revenue to fund universal childcare, preschool, and paid family leave for U.S. workers, with hundreds of billions of dollars left over, according to ATF's report.

The wealthy heirs profiled in the report and their families are some of the Republican Party's top donors—contributing hundreds of millions of dollars to candidates including Trump in the hopes of securing even more tax cuts.

Mellon, for example, is Trump's "biggest supporter, giving $140 million to a pro-Trump PAC in 2024 alone," reads the report.

A previous analysis by ATF found that as of late October, just 150 billionaire families had spent $1.9 billion on the 2024 elections.

As the Center for American Progress found earlier this year, Trump's plan to extend the tax cuts that he pushed through in 2017 would cost $4 trillion over the next decade.

"The vast wealth inherited by centuries-old billionaire families is staggering. While these heirs and their billions go undertaxed, enormous sums are squandered on lavish mansions, private jets, and vanity projects instead of funding crucial public investments," said ATF executive director David Kass. "In 2024, these billionaire families used their enormous wealth to make record-breaking political contributions to secure a GOP trifecta. Now, Trump and his allies in Congress are doing their donors' bidding by rigging the system in their favor and pushing a $4 trillion giveaway to wealthy elites and giant corporations—all while advocating for cuts to vital programs that working and middle-class Americans depend on."

The report calls for Congress to pass "proven, pragmatic proposals to unrig the tax system that enjoy high levels of popular support," such as the Ultra Millionaire Tax Act that was proposed by Sen. Elizabeth Warren (D-Mass.) and Reps. Pramila Jayapal (D-Wash.) and Brendan Boyle (D-Pa.) this year. The bill would tax fortunes between $50 million and $1 billion at 2% and wealth above $1 billion at $1 billion.

The small tax on enormous wealth would generate "a whopping $3 trillion over 10 years," said ATF.

The estate tax could also be "restored so that it can play a meaningful role in promoting fairness and equal opportunities" through the passage of the For the 99.5% Act, which was introduced in 2023 by Sen. Bernie Sanders (I-Vt.) and Rep. Jimmy Gomez (D-Calif.).

Under the bill, the estate tax exemption would be lowered to $7 million per couple and the current 40% flat rate would be replaced with a sliding scale that would charge higher rates as a family's wealth grows.

"None of these tax reforms would impoverish the ultra wealthy, nor even inconvenience them in any meaningful way–but they would reduce the concentration of wealth that is so corrosive to society," reads the report. "At the same time, they would raise trillions of dollars that could be used to reduce inequality and improve the lives of families that can only dream of the kind of security and opportunity enjoyed by the nation’s richest clans."

"And if rich families ever did need to tighten their belts a bit to pay their taxes," the report continues, "the economizing might begin by reducing the flow of money funding the extravagant lifestyles of America's Billionaire Nepo Babies."

https://www.commondreams.org/news/what-billionaires-avoid-taxes