Last month, ProPublica highlighted the gross inequities of the US tax system with an exposé that drew on the leaked tax returns of the country’s billionaires. It showed that the wealth of the twenty-five richest Americans grew by a combined $401 billion from 2014 to 2018, but that they paid only 3.4 percent of that sum in federal income taxes. Over the same period, the average American paid more in federal taxes than they gained in wealth.

ProPublica’s president called the tax investigation the “most important story” in the outlet’s history. The report went viral on social media and received coverage in virtually every major news outlet. Many observers predicted the story would spur legislation. As the Center for Budget and Policy Priorities’ Chuck Marr tweeted, “There should and will be strong pressure on policymakers to act to respond to what the public will correctly perceive as a gross unfairness.”

ProPublica’s piece — which actually understated the regressivity of the US tax code — should be a political gift to Democrats that spurs meaningful policy change. But the past century has seen similar exposés every decade or so, and they’ve rarely produced a substantial legislative response. Time and again, the ultrarich’s well-funded army of sycophants and bipartisan gallery of politicians have come to the rescue to ensure America’s plutocrats continue to escape taxation.

Will this time will be different?

The Pecora Hearings

Perhaps the earliest precursor to ProPublica’s article — and the only instance of tax revelations triggering meaningful legislation — came in the early years of the Great Depression. In the course of investigating Wall Street’s role in the stock market crash of 1929, the Senate Committee on Banking’s chief counsel, Ferdinand Pecora, discovered that J. P. Morgan Jr — one of the richest men in the country and a poster boy for unearned, dynastic wealth — paid no federal income taxes in 1931 and 1932.

The revelations made front-page news in the New York Times and across the country. The New Republic summarized the reaction: “What has rankled most in the hearts of the vocal public is that when millions of persons with small incomes were straining every nerve to meet their income taxes, these princes of wealth, who personally enjoyed luxuries denied to almost everyone else, did not pay any income tax at all.”

Among those cheering on Pecora’s vivisection of Morgan and the tax laws that enabled his profligacy was President Franklin Roosevelt. In response to the Pecora hearings (and the political challenge represented by Huey Long’s “Share Our Wealth” program), Roosevelt proposed what became the Revenue Act of 1935. In announcing his proposals, FDR cast the legislation in populist terms:

Our revenue laws have operated in many ways to the unfair advantage of the few, and they have done little to prevent an unjust concentration of wealth and economic power. . . . Wealth in the modern world does not come merely from individual effort; it results from a combination of individual effort and of the manifold uses to which the community puts that effort. . . . A tax upon inherited economic power is a tax upon static wealth, not upon that dynamic wealth which makes for the healthy diffusion of economic good. . . . Therefore, the duty rests upon the government to restrict such incomes by very high taxes.

Opponents decried FDR’s proposals as “soak-the-rich,” but the criticism only underscored their populist appeal. Ultimately, the Revenue Act of 1935 increased the top federal income rate on incomes over $1 million from 59 percent to 75 percent, created a graduated corporate income tax, and raised estate taxes.

While modern critics of FDR’s policies argue that these measures were largely symbolic, they did meaningfully boost effective rates on the ultrarich and initiated the cascade of progressive taxation that reigned through the 1950s — curbing the political and economic power of the rich and raising the incomes of the working- and middle-classes more than those of the affluent.