Concentrated Markets, Concentrated Wealth: Billionaire Blockholders, the Interlocking Rise of Wealth and Market Concentration, and the Role of the US Tax Code

Introduction: Taxing Monopoly and Taxing Wealth

Today, large incumbent firms dominate industries across the United States economy—from meat to medicines, finance to tech, and retail to telecoms. This pivot away from a more dynamic, multiplayer, participatory business sector to a stagnant one stunted under the shadow of a few mega-oligopolies has real consequences for people. Corporate concentration works to extract wealth from consumers and communities and direct that wealth to corporate shareholders, CEOs, and senior executives. Excess market power—and the drive for short-term shareholder returns underlying it (Palladino 2019a)—allows corporations to drive prices up and wages down, leading to fewer good jobs for workers, less innovation and productivity, compromised supply chains and a reduced supply of goods, and greater levels of racial wealth inequality both for individual households and communities as a whole (Brumfield et al. 2020). In turn, supersized firms (and their shareholders) exert supersized political influence—by using their immense lobbying power and resources to crowd out popular participation and citizen decision-making in our democracy. Perhaps sensing all of this, the US public feels more negatively toward big business than at any other point in the last five decades (DiVito and Sojourner 2021).

While policy thinkers and policymakers have sought to address these problems by strengthening antitrust law and competition mechanisms, as well as by building out public options to compete with dominant private firms, tax policy remains overlooked both as a driver of current levels of market concentration and as a possible tool to remedy this problem.

Indeed, tax policy—especially corporate tax policy—has historically played a complementary function in trust-busting (Kornhauser 1990; Avi-Yonah 2020). Yet today, taxation is wielded as a legislative tool in narrow ways: primarily, as a revenue-raiser for vital public goods and services. And while taxation is critically important to raise revenue for public goods, this restrictive narrative fails to recognize tax policy’s effects on corporate concentration—and its potential as a tool to correct it.

The Roosevelt Institute’s Taxing Monopolies series explores how today’s tax policies strengthen dominant, incumbent corporations at the cost of workers and small businesses. This series explains how a rethinking and rewriting of the tax code can work alongside other antimonopoly tools to curb the excessive economic and political power of large corporations and their owners. The first issue brief in this series, by Stacy Mitchell and Susan Holmberg from the Institute for Local Self-Reliance, chronicled Amazon’s tax break-financed rise to retail dominance and proposed a number of ways to rewrite the tax code to level the playing field (Mitchell and Holmberg 2023). The second brief in the series, by Sandy Hager and Joseph Baines, zoomed out to provide an updated empirical analysis of how the US tax code affects the profit share of the top 10 percent of public companies compared to the rest (Hager and Baines 2023). The authors reveal a striking—and still growing—tax advantage for big business at the state and federal level, and abroad.

This brief—the third in the series—builds on a previous essay (Lusiani and DiVito 2022) to explore the interlocking rise of corporate concentration and wealth concentration as well as the monopoly origins and decisive power of the top 50 American billionaires over their corporations. It then sketches out some possible effects reforming the US personal and corporate income tax code might have on the excess market power of these billionaires’ businesses. While more research is needed, we present a plausible case that decreasing the intensely concentrated personal returns of the individuals controlling the business strategies of some of the country’s most dominant firms could help disincentivize the drive for market concentration.