Elon Musk’s wealth has surpassed $200 billion. It would take the median U.S. worker over 4 million years to make that much.

Wealth inequality is eating this country alive. We’re now in America’s second Gilded Age, just like the late 19th century when a handful of robber barons monopolized the economy, kept wages down, and bribed lawmakers.

While today’s robber barons take joy rides into space, the distance between their gargantuan wealth and the financial struggles of working Americans has never been clearer. During the first 19 months of the pandemic, U.S. billionaires added $2.1 trillion dollars to their collective wealth and that number continues to rise.

And the rich have enough political power to cut their taxes to almost nothing — sometimes literally nothing. In fact, Jeff Bezos paid no federal income taxes in 2007 or in 2011. By 2018, the 400 richest Americans paid a lower overall tax rate than almost anyone else.

But we can not solve this problem unless we know how it was created in the first place.

The Basics

Wealth inequality in America is far larger than income inequality.

Income is what you earn each week or month or year. Wealth refers to the sum total of your assets — your car, your stocks and bonds, your home, art — anything else you own that’s valuable.Valuable not only because there’s a market for it — a price other people are willing to pay to buy it — but because wealth itself grows.

As the population expands and the nation becomes more productive, the overall economy continues to expand. This expansion pushes up the values of stocks, bonds, rental property, homes, and most other assets. Of course recessions and occasional depressions can reduce the value of such assets. But over the long haul, the value of almost all wealth increases.

Lesson: Wealth compounds over time.

Next: personal wealth comes from two sources.The first source is the income you earn but don’t spend. That’s your savings. When you invest those savings in stocks, bonds, or real property or other assets, you create your personal wealth —  which, as we’ve seen, grows over time.

The second source of personal wealth is whatever is handed down to you from your parents, grandparents, and maybe even generations before them — in other words, what you inherit.

Lesson: Personal wealth comes from your savings and/or your inheritance.

Why the wealth gap is exploding

The wealth gap between the richest Americans and everyone else is staggering.

In the 1970s, the wealthiest 1 percent owned about 20 percent of the nation’s total household wealth. Now, they own over 35 percent.

Much of their gains over the last 40 years have come from a dramatic increase in the value of shares of stock.

For example, if someone invested $1,000 in 1978 in a broad index of stocks — say, the S&P 500 — they would have $31,823 today, adjusted for inflation.

Who has benefited from this surge? The richest 1 percent, who now own half of the entire stock market. But the typical worker’s wages have barely grown.

Most Americans haven’t earned enough to save anything. Before the pandemic, when the economy appeared to be doing well, almost 80 percent were living paycheck to paycheck.

Lesson: Most Americans don’t make enough to save money and build wealth.

So as income inequality has widened, the amount that the few high-earning households save — their wealth — has continued to grow. Their growing wealth has allowed them to pass on more and more wealth to their heirs.

Take, for example, the Waltons — the family behind the Walmart empire — which has seven heirs on the Forbes billionaires list. Their children, and other rich millennials, will soon consolidate even more of the nation’s wealth. America is now on the cusp of the largest intergenerational transfer of wealth in history. As wealthy boomers pass on, somewhere between $30 to $70 trillion will go to their children over the next three decades.

These children will be able to live off of this wealth, and then leave the bulk of it — which will continue growing — to their own children … tax-free. After a few generations of this, almost all of America’s wealth could be in the hands of a few thousand families.

Lesson: Dynastic wealth continues to grow.

Why wealth concentration is a problem

Concentrated wealth is already endangering our democracy. Wealth doesn’t just beget more wealth — it begets more power.

Dynastic wealth concentrates power into the hands of fewer and fewer people, who can choose what nonprofits and charities to support and which politicians to bankroll. This gives an unelected elite enormous sway over both our economy and our democracy.

If this keeps up, we’ll come to resemble the kind of dynasties common to European aristocracies in the seventeenth, eighteenth, and nineteenth centuries.

Dynastic wealth makes a mockery of the idea that America is a meritocracy, where anyone can make it on the basis of their own efforts. It also runs counter to the basic economic ideas that people earn what they’re worth in the market, and that economic gains should go to those who deserve them.

Finally, wealth concentration magnifies gender and race disparities because women and people of color tend to make  less, save less, and inherit less.

The typical single woman owns only 32 cents of wealth for every dollar of wealth owned by a man. The pandemic likely increased this gap.

The racial wealth gap is even starker. The typical Black household owns just 13 cents of wealth for every dollar of wealth owned by the typical white household. The pandemic likely increased this gap, too.

In all these ways, dynastic wealth creates a self-perpetuating aristocracy that runs counter to the ideals we claim to live by.

Lesson: Dynastic wealth creates a self-perpetuating aristocracy.

How America dealt with wealth inequality during the First Gilded Age

The last time America faced anything comparable to the concentration of wealth we face today was at the turn of the 20th century. That was when President Teddy Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power” could destroy American democracy.

Roosevelt’s answer was to tax wealth. Congress enacted two kinds of wealth taxes. The first, in 1916, was the estate tax — a tax on the wealth someone has accumulated during their lifetime, paid by the heirs who inherit that wealth.

The second tax on wealth, enacted in 1922, was a capital gains tax — a tax on the increased value of assets, paid when those assets are sold.

Lesson: The estate tax and the capital gains tax were created to curb wealth concentration.

But both of these wealth taxes have shrunk since then, or become so riddled with loopholes that they haven’t been able to prevent a new American aristocracy from emerging.

The Trump Republican tax cut enabled individuals to exclude $11.18 million from their estate taxes. That means one couple can pass on more than $22 million to their kids tax-free. Not to mention the very rich often find ways around this tax entirely. As Trump’s former White House National Economic Council director Gary Cohn put it, “only morons pay the estate tax.”

What about capital gains on the soaring values of wealthy people’s stocks, bonds, mansions, and works of art? Here, the biggest loophole is something called the “stepped-up basis.” If the wealthy hold on to these assets until they die, their heirs inherit them without paying any capital gains taxes whatsoever. All the increased value of those assets is simply erased, for tax purposes. This loophole saves heirs an estimated $40 billion a year.

This means that huge accumulations of wealth in the hands of a relatively few households can be passed from generation to generation untaxed — growing along the way — generating comfortable incomes for rich descendants who will never have to work a day of their lives. That’s the dynastic class we’re creating right now.

Lesson: The estate tax and the capital gains tax have been gutted.

Why have these two wealth taxes eroded? Because, as America’s wealth has concentrated in fewer and fewer hands, the wealthy have more capacity to donate to political campaigns and public relations — and they’ve used that political power to reduce their taxes. It’s exactly what Teddy Roosevelt feared so many years ago.

How to reduce the wealth gap

So what do we do? Follow the wisdom of Teddy Roosevelt and tax great accumulations of wealth.

The ultra-rich have benefited from the American system — from laws that protect their wealth, and our economy that enabled them to build their fortunes in the first place. They should pay their fair share.

The majority of Americans, both Democrats and Republicans, believe the ultra rich should pay higher taxes. There are many ways to make them do so: closing the stepped up basis loophole, raising the capital gains tax, and fully funding the Internal Revenue Service so it can properly audit the wealthiest taxpayers, for starters.

Beyond those fixes, we need a new wealth tax: a tax of just 2 percent a year on wealth in excess of $1 million. That’s hardly a drop in the bucket for centi-billionaires like Jeff Bezos and Elon Musk, but would generate plenty of revenue to invest in healthcare and education so that millions of Americans have a fair shot at making it.

One of the most important things you as an individual can do is take the time to understand the realities of wealth inequality in America and how the system has become rigged in favor of those at the top — and demand your political representatives take action to unrig it.

The Biden administration has a plan that is estimated to cut child poverty in half. And it’s already in place.

It’s called the Child Tax Credit.

Here’s how it works. Parents of children aged 6 and younger across the country are receiving direct payments of up to $300 per month per child, or $3,600 per year per child. The payments drop to $250 a month for children between the ages of 6 and 17, and phase out for families with higher incomes.

It’s an historic expansion of the original credit that’s already helping millions of working families.

The direct payments are coming because the Child Tax Credit is a refundable tax credit. Normal, non-refundable tax credits simply cut your taxes. But a refundable tax credit, like the Child Tax Credit, helps you even if you don’t earn enough for it to reduce your taxes — so it’s a direct payment to you.

Say you owe $3,000 in taxes. A non-refundable tax credit of $3,600 won’t be worth $3,600 to you. It would just reduce your taxes to zero. So you wouldn’t get the full benefit. And if you don’t owe any taxes to begin with, a non-refundable tax credit wouldn’t do you any good at all since you can’t reduce your taxes to less than zero dollars.

But a refundable tax credit would help you. You’d get the money no matter what, the full $3,600. That’s why this expansion is such a big deal: it ensures that the money gets to lower-income families.

The early results show that this policy is a game-changer. Over 3 million more households with children now report having enough to eat  after just the first two payments. More report being able to make rent, stay in their homes, and afford basic necessities. And 3 million children have been lifted out of poverty.

It’s reduced racial disparities, as well. Hunger has fallen by one-third among Latinx families and by one-quarter among Black families.

It bears repeating that if the credit is made permanent, and reaches everyone it should, it could cut child poverty in half.

Yet the Republican Party — the so-called “party of family values” — is dead set against it. That’s because the program works.

Every single Republican in Congress voted against the American Rescue Plan, which contained the initial expansion of the Child Tax Credit. You can bet they’re all going to vote against making that expansion permanent as part of the Democrats’ $3.5 trillion budget plan. It’s obvious: they do not care about helping working families.

Democrats must get this done, no matter how staunch the Republican opposition. In the richest country in the world, it is inexcusable that millions of our children are living in poverty.

For decades, almost all economic gains have gone to the top, leaving working families behind. This historic expansion of the Child Tax Credit is a crucial step towards righting this wrong.

Poverty is a policy choice. Congress must make the Child Tax Credit permanent.

There’s an asymmetry at the heart of American politics

I have to get this off my chest. Last week, the House Ways and Means Committee released its proposed tax increases to fund President Biden’s $3.5 trillion social policy plan.

Here’s the big thing that hit me: Democrats didn’t go after the huge accumulations of wealth at the top – representing the largest share of the economy in more than a century.

You might have thought they’d be eager to tax America’s 660 billionaires whose fortunes have increased $1.8 trillion since the start of the pandemic – an amount that could fund half of Biden’s plan and still leave the billionaires as rich as they were before the pandemic began.

I mean, Elon Musk’s $138 billion in pandemic gains could cover the cost of tuition for 5.5 million community college students and feed 29 million low-income public-school kids, while still leaving Musk $4 billion richer than he was before Covid.

But House Democrats on Ways and Means decided to raise revenue the traditional way, taxing annual income rather than immense wealth. They aim to raise the highest income tax rate and apply a 3 percent surtax to incomes over $5 million.

Yet the dirty little secret – which House Democrats certainly know — is the ultra-rich don’t live off their paychecks.

Jeff Bezos’s salary from Amazon was $81,840 last year, yet he rakes in some $149,353 every minute from the soaring value of his Amazon stocks – which is how he affords five mansions, including one in Washington D.C. with 25 bathrooms.

House Democrats won’t even close the gaping “stepped-up basis at death” loophole, which allows the heirs of the ultra-rich to value their stocks, bonds, mansions, and other assets at current market prices — avoiding capital gains taxes on the entire increase in value from when they were initially purchased.

This loophole allows family dynasties to transfer ever larger amounts of wealth to future generations without it ever being taxed. Talk about an American aristocracy. We’re on the cusp of the largest inter-generational transfer of wealth in American history, as rich boomers pass it on to their millennial heirs. Closing this loophole may be our one big opportunity to stop this new aristocracy in its literal tracks.

Biden wanted to close this loophole, but House Democrats balked.

You might also have assumed they’d target America’s biggest corporations, awash in cash but paying a pittance in taxes. But remarkably, House Democrats have decided to set corporate tax rates below the level they were at when Barack Obama was in the White House. Hell, Democrats even kept a scaled-back version of private equity’s “carried interest.” And listen to this: they retained special tax breaks for oil and gas companies.

What’s going on here? It’s not that House Democrats lack the legislative power. They’re in one of those rare trifectas when they hold a majority of the House plus a bare majority of the Senate and the presidency.

It’s not the economics. Americans have been subject to decades of Republican “trickle-down” nonsense and know full well nothing trickles down. Billionaires hardly need to have their fortunes grow $100,000 a minute to be innovative. And as I’ve stressed, there’s more money at the top, relative to anywhere else, than at any time in the last century.

Besides, Democrats need the revenue to finance their ambitious plan to invest in childcare, education, paid family leave, health care, and the climate.

So what’s holding them back?

Put simply, Democrats are reluctant to tax the record-breaking wealth of the rich and big corporations because of … the wealth of the rich and big corporations.

Many Democrats rely on that wealth to bankroll their campaigns. They also dread becoming targets of well-financed ad campaigns accusing them of voting for “job killing” taxes. (For the record, there’s no evidence that tax increases have “killed” jobs, especially when those tax increases have been targeted at higher incomes.)

Republicans have been in the pockets of moneyed interests at least since they championed Reagan’s tax cuts, regulatory rollbacks, and dismantling of labor protections. But the timidity of House Democrats shows just how loudly big money speaks these days even in the party of Franklin D. Roosevelt.

That’s partly because there’s so much less money on the other side. Through the first half of 2021, business groups and corporations spent nearly $1.5 billion on lobbying, compared to roughly $22 million spent by labor unions, and $81 million by public interest groups, according to OpenSecrets.org. Plus, the anti-taxers are well-organized. Thousands of industry groups, platoons of trade associations, every large corporation in America, along with small business associations — all are marching in step against corporate tax increases. There’s no similar pressure on the other side. How many pro-corporate-tax organizations can you name?

Progressive House Democrats will still have their say (AOC and other progressives will demand something more from the super-rich) and Senate Democrats haven’t yet weighed in (I’m sure Elizabeth Warren will continue to push her wealth tax).

But so far, the House Ways and Means Committee is where it all begins.

Let me step back a bit. The looming debate over taxes is really a debate over the allocation of wealth and power in America. As that allocation becomes ever more grotesquely imbalanced, this debate over wealth and power will loom ever larger over American politics.

Behind it will be this simple but important question: Which party stands up for average working people?

Democrats, take note.

Right now, Democrats are working to pass a $3.5 trillion package that will provide long overdue help for working Americans.

The final bill hasn’t yet been determined, so we don’t know the exact dollar amounts for all its policies. We’ll probably find that out in late September or early October. For now, the Democrats’ budget resolution frames what’s in the bill.

First, on families:

The bill would make permanent key benefits for working families, including the expanded child tax credit in the pandemic relief plan that sends families up to $300 per child each month but is now set to expire in December, and is estimated to cut child poverty by half.

It would also establish universal child care, for which low- and middle-income households would pay no more than 7 percent of their incomes.

And provide a national program of paid leave — worth up to $4,000 a month — for workers who take time off because they are ill or caring for a relative.

Next, on education:

The bill would reduce educational inequality by establishing universal pre-K for all 3- and 4-year-olds, benefiting an estimated 5 million children, and providing tuition-free community college – essentially expanding free public education from 12 years to 16 years.

It will also invest in historically Black colleges and universities and increase the maximum amount of Pell grants for students from lower-income families.

On health care:

The bill expands Medicare to include dental, vision, and hearing benefits and lowers the eligibility age. It also expands Medicaid to cover people living in the 12 states that have not yet expanded Medicaid, and makes critical investments to improve healthcare for people of color.

The big question is how far it will go to reduce prescription drug prices by, for example, allowing Medicare to negotiate prices with pharmaceutical companies. That could reduce Medicare and Medicaid spending, and free up more money for other parts of the bill. But Big Pharma is dead-set against this.

Big corporations and the rich picking up the tab:

In another step toward fairness, all of these are to be financed by higher taxes on the rich and big corporations.

The bill would also increase the Internal Revenue Service’s funding so the agency can properly audit wealthy tax cheats, who fail to report about a fifth of their income every year, thereby costing the government $105 billion annually.

In addition, the bill tackles the climate crisis, which also especially burdens lower-income Americans:

There are a range of solutions – subsidizing the use of solar, wind, nuclear and other forms of clean energy while financially penalizing the use of dirty energy like coal; helping families pay for electric cars and energy-efficient homes.

The bill might include something known as a carbon border adjustment tax — a tax on imports whose production was carbon-intensive, like many from China.

The bill would also establish a Civilian Climate Corps, and invest in communities that bear the brunt of the climate crisis.

And the bill helps American workers:

It will hopefully contain much of the PRO Act, the toughest labor law reform in a generation.

Finally, the bill includes a pathway to citizenship for undocumented immigrants. This is all about making America fairer.

Remember: we won’t know the exact details of the bill for at least a month, but these are the main areas that it will focus on. The big challenge will be ensuring Senate Democrats remain united to get it passed. All of us will need to fight like hell.

Don’t listen to spending hawks who claim it’s too expensive or too radical. For far too long, our government has ignored the needs of everyday Americans, catering instead to the demands of corporations and the super-rich. No more.

It’s time to get this landmark bill passed and build a fairer America.

Government deficits have gotten a bad rap, says economist Stephanie Kelton. In this groundbreaking talk, she makes the case to stop looking at government spending as a path towards frightening piles of debt, but rather as a financial contribution to the things that matter — like health care, education, infrastructure and beyond. “We have the resources we need to begin repairing our broken systems,” Kelton says. “But we have to believe it’s possible.”