After nearly a century, America has rediscovered the wealth tax. This November, Californians will vote on Proposition 40, a union-backed initiative levying a one-time 5% tax on the net worth of the state's billionaires. Senator Bernie Sanders and Representative Ro Khanna have introduced a federal version; a dozen states have advanced millionaire or billionaire taxes this year; and Maine, Washington, Hawaii, and Rhode Island have all enacted one. Not since the Progressive Era has taxing the rich had this much momentum.

The energy is easy to understand. The 25 wealthiest Americans pay a “true tax rate” of just 3.4%—a fraction of what nurses and teachers pay—while holding about 2% of the nation's wealth. That’s nearly as much as the entire bottom half of the country combined.

This spring, Forbes counted a record 3,428 billionaires worth $20.1 trillion, up $4 trillion since last year. Elon Musk topped the list at $839 billion, and this summer he became history's first trillionaire. At the same time, workers' share of economic output fell to 52.8%, the lowest since records began in 1947. Today, billionaire wealth is at an all-time high while labor's share is at an all-time low.

One obvious response is to tax the fortunes at the top and redistribute those funds. But I worry that the wealth-tax movement is aimed at the wrong target. Billionaires create a lot of damage, to be sure. As Alex Gibney’s new documentary lays out, the Tesla and SpaceX CEO spent nearly $300 million helping elect a president and then slashed federal agencies, including several investigating his own companies. Still, he and his tech-bro pals are not themselves the underlying reason for our economic dysfunction.

In my view, the root cause is corporate power—the way modern corporations are owned, governed, and permitted to organize markets and politics to their own advantage—and how relentlessly that power has concentrated over the past 50 years. The evidence is everywhere. Since the late 1990s, three-quarters of American industries have grown more concentrated. Corporate margins have roughly tripled since 1980, and after-tax profits—below 10% of GDP for virtually all of 1950 to 2010—now exceed 12%, near the record. Economist Thomas Philippon calculates that weakened competition costs the typical household about $300 a month.

Since 1970, when Milton Friedman declared that a corporation's only social responsibility is profit, businesses have been re-engineered around delivering the most value possible to shareholders. Today, the bulk of many senior executives’ pay comes in the form of stock options and share buybacks (when a company spends its earnings to buy up its own stock and lift the price), which now send over a trillion dollars a year to shareholders rather than into wages or investment. Before 1982, this practice was viewed as market manipulation. In the following decades, the forces that once pushed back against inequality were gutted: union membership fell from 20% of American workers to 10%, and antitrust enforcement was consistently muted.

This is where billionaires come in. Nobody $839 billion from a paycheck. A fortune of that scale can only be made by accumulating equity. That is, gains from corporate profits. Profit is simply what remains after wages are held down, taxes are minimized, and costs are pushed onto workers, communities, and the environment. It makes little difference whether the claim to those profits comes from founding a company or, as with hedge-fund and private-equity fortunes, from the fruit of corporations other people built. Because the richest tenth of Americans own nearly 90% of household stock-market wealth, every dollar shifted from paychecks to profit flows almost undiluted to the top.

You don't have to look hard for examples. The Walton fortune rests on wages so low that a federal watchdog found Walmart among the biggest employers of workers on Medicaid and food stamps. In other words, taxpayers are subsidizing the payroll beneath a dynastic fortune. Amazon founder and CEO Jeff Bezos's wealth compounded over years during which Amazon paid no federal income tax on billions in profit while fighting its warehouse workers' union drives. In each case, the fortune is substantially extracted from workers and the public, not the market reward it is billed as.

None of this would last without help from Washington. Over the past half century, political spending has become a core business strategy and arguably the highest-return investment a large company can make.

In a 1971 memorandum, future Supreme Court justice Lewis Powell urged the Chamber of Commerce to put business on a political war footing. Today, lobbying has grown into a multibillion-dollar industry and business now outspends labor and public-interest groups 34-to-one. Since Citizens United removed the last meaningful limits on business political spending in 2010, every election has cost more than the last—nearly $16 billion in 2024, mostly corporate money.

Under President Donald Trump, the exchange has become impossible to ignore. Corporations lined up with seven-figure donations to his inaugural fund; oil executives, who were asked point-blank for $1 billion at a Mar-a-Lago dinner, have watched climate rules fall ever since; Paramount paid $16 million to settle a lawsuit legal experts dismissed while its merger awaited federal approval; and the crypto industry, having spent more than $130 million on the 2024 races, saw the enforcement cases against it evaporate, and this fall is spending hundreds of millions on 2026 midterm races.

This is why a politics aimed only at billionaires will miss the mark. I support wealth taxes, and I hope Proposition 40 passes. Yet wealth taxes only claw back winnings after the fact. This year's Forbes’ Billionaires list added 390 newcomers. Taxing Musk, Bezos, and other billionaires does not touch the executives, boards, investment funds, and political machines that keep minting new ones.

What would it mean to take aim at the root cause of inequality instead? First, we must recognize that the shareholder-primacy firm is a policy choice—the product of lobbying and lawmaking since the 1970s—and policy choices can be remade by rebuilding labor power through labor-law reform and sectoral bargaining, reviving antitrust, and getting corporate money out of politics. Early American corporate charters, after all, were granted for limited public purposes and could be revoked when abused.

It also means redesigning ownership itself. In my research on alternative corporate models, I have studied companies that are deliberately structured so that no one can extract a dynastic fortune, because the equity is legally locked to purpose. When Patagonia's founder moved the company into a purpose trust in 2022, such extraction became impossible by design; Bosch has been majority-owned by a foundation for decades and competes ferociously. Steward ownership, employee ownership, and benefit corporations are working alternatives operating in thousands of companies around the world and address wealth concentration at its source.

The wealth-tax debate, in other words, is about how to redistribute the gains that came from corporate power. But we need to redistribute corporate power itself.

None of this argues against Proposition 40 or its state and federal counterparts. Vote for them, pass them, let the revenue fund healthcare and schools. It is an argument about where attention needs to be focused next. History tells us that previous American confrontations with concentrated wealth, from Progressive Era trustbusters to the New Deal, succeeded not merely by taxing the winners but by restructuring corporate power through antitrust enforcement, securities regulation, and protecting labor rights.

The real question facing America is whether corporations exist to serve society, or society exists to serve corporations. A politics that stops at the wealth tax has already conceded the answer.