By Sarah Kellogg
On this anniversary of our nation’s Declaration of Independence, the enduring tension between democracy and economic power is again at the center of national discussions. The country’s founding was not simply viewed as a political revolution, but also as an economic experiment, and one that is still very much unfinished.
The following perspectives illustrate the profound economic evolution that has occurred over nearly 250 years and invite readers to consider how the relationship between citizens, markets, and government may continue to advance in response to new challenges and opportunities.
Economic Justice
Professor Jeremy Bearer-Friend
“There was a fascinating dilemma for our founders, which was how to build a society without kings,” said Professor Jeremy Bearer-Friend, an expert on tax law, tax administration, and tax policy. “They wanted a country that could work without royalty and without an aristocracy.”
That aspiration, however, quickly collided with a persistent challenge: how to distribute wealth in a way that sustains democratic governance. Drawing on early American thought, Bearer-Friend pointed to the writings of Thomas Paine, the founding father and philosopher whose writings argued for independence from Great Britain.
“Paine believed that the way to secure democracy for the future would be to have a 100 percent tax rate on the increase of any wealth above what would be a billion dollars today,” he noted, emphasizing how closely Paine’s threshold aligns with modern concentrations of wealth.
Bearer-Friend published his own research updating the rate structure proposed by Paine with his co-author Vanessa Williamson, a senior fellow at the Brookings Institution. The tax was originally proposed by Paine in 1792 in the second volume of Rights of Man.
"We have a lot of money in the hands of very few people, and that, I think, is our central dilemma,” Bearer-Friend said. “This concentration of wealth does more than distort markets; it reshapes the political landscape, frequently allowing a small group of oligarchs to divide our country in order to maintain its power.”
"We have a lot of money in the hands of very few people, and that, I think, is our central dilemma."
- Jeremy Bearer-Friend
At its core, taxation remains one of the most powerful tools for addressing that imbalance. Tax law is fundamentally about sharing resources, and taxes are how the United States uses the law to share wealth throughout society. This principle has evolved significantly over the nation’s history, from an income tax system that initially targeted only the wealthiest Americans to one that now touches the majority of U.S. households.
The United States has repeatedly reimagined its tax system in response to national challenges—from the temporary corporate income tax enacted to finance the Civil War to the permanent federal income tax enacted in 1913 after ratification of the 16th Amendment.
Yet the future of taxation in this country, particularly in an era defined by multinational corporations and artificial intelligence, may require new approaches by the federal government. Bearer-Friend highlighted his own recent proposal, with UC Davis School of Law Professor Sarah Polcz, to tax AI companies not in cash, but in the form of stock.
“The people who have the most money right now have it in the form of stock, so the public could piggyback on what billionaires are already doing and demand that AI companies pay a tax in new stock rather than cash,” he said. “This would substantially dilute the value of the shares held by tech billionaires.”
Beyond both reducing the wealth gap and raising federal revenue, such a system could fundamentally alter corporate governance. In an era when Goliath-sized technology companies shape everything from communication to national security, this shift could redefine the relationship between the public and private sectors.
“It would give the public a voice within the corporate governance structure of these firms that is distinct from ex-post regulations,” Bearer-Friend said, suggesting that taxpayers themselves could gain influence in ex-ante boardroom decisions that determine the future.
Bearer-Friend believes that reducing the wealth gap and increasing the power of public voice would contribute to the health of our democracy. “We are at this critical moment right now, and technology companies are only going to grow in their political influence,” he said. “We should act now.”
Democratizing Financial Markets
Professor Kristin Johnson
The financial history of the United States reflects a remarkable expansion of economic participation. Innovations that were once available exclusively to the wealthy and professional investors are now accessible to millions of individuals through smartphones, digital platforms, and emerging technologies.
Artificial intelligence, prediction markets, and social media-driven investing are accelerating this transformation, reshaping not only how markets operate but also who gets to participate in them. The rise of these tools represents one of the most significant democratizing forces in modern finance.
“It’s true that there is greater access to global financial markets than ever before,” said Kristin Johnson, the Lyle T. Alverson Professor of Law. “With just a few quick clicks on their smartphones, a more diverse population of investors can access a wide range of financial products and potentially look to artificial intelligence or AI-driven brokers and investment advisors to help them decide which investment opportunities to pursue.”
This broader access has fundamentally altered the relationship between individuals and financial markets. Everyday Americans can now act as investors, traders, and analysts, expanding their opportunities for wealth creation, information sharing, and economic engagement.
At the same time, democratization raises important questions about financial literacy, transparency, and responsibility. Johnson noted that many of today’s participants are entering increasingly sophisticated markets without the traditional gatekeepers that once controlled, but also guided, investment decisions.
"It’s true that there is greater access to global financial markets than ever before."
- Kristin Johnson
“While there are many benefits to greater inclusion in financial markets, it is imperative to guard against predatory actors who may target vulnerable groups of investors who are less sophisticated and who may face new challenges,” Johnson said, particularly for “the orphans and widows or, in today’s terms, teenagers with iPhones.”
The defining question for the next generation of financial innovation may be whether markets become more accessible, because they already have, but how institutions, technologies, and legal frameworks evolve to support a financial system that is more open than at any point in American history.
The growth of these markets also blurs longstanding distinctions between investing and gambling. American law has historically approached such activities with caution, regulating access and oversight. Yet today’s platforms often operate in a gray zone, raising new questions about transparency, accountability, and social impact. A vivid illustration of that tension is recent cases where individuals were charged with using “inside information” in prediction markets.
“Employees have a duty of loyalty to their employers,” Johnson explained. “Employees are not permitted to capture confidential information gained while working for their employers and use this information to financially benefit themselves by making successful bets or trades in financial markets.”
Long before Congress enacted federal anti-fraud protections for financial markets in 1934, common law recognized that employees could not use confidential information obtained through their work for personal gain. The 1934 securities law was built on this long-standing principle rather than creating it from scratch.
Tools such as prediction markets and crypto platforms allow individuals to trade on the likelihood of real-world events, generally outside traditional regulatory frameworks. From early merchant trading to modern derivatives and now digital prediction markets, each era has forced a reconsideration of how enduring principles apply in new contexts.
“The tools and technologies may change, but the foundational expectations of loyalty, fairness, and the responsible use of information remain constant,” said Johnson. “The challenge for the next 250 years will be ensuring that those principles are not only preserved but effectively enforced.”
Economic Policy in a Global Light
Professor Karen Brown
The United States has regularly used its financial and trade policies to shape alliances, influence international trade flows, and reflect how nations balance economic self-interest with global cooperation. Today, the intersection of law, economics, and diplomacy has become more consequential than ever.
Recent years have highlighted the growing overlap between taxation, trade policy, and geopolitics. The reemergence of tariffs in the Trump administration has demonstrated how economic measures can be used to pursue strategic objectives at home and abroad.
“While debates over taxation have long occupied a central place in American political life, today’s challenges are fundamentally international,” said Karen Brown, the Theodore Rinehart Professor of Business Law and a leading expert in international tax policy. “The movement of capital, goods, and multinational enterprises across borders has transformed tax policy from a domestic concern into a critical component of global governance."
Nations now compete for investment, cooperate to combat tax avoidance, and negotiate agreements designed to manage increasingly interconnected markets. Policy decisions made in one country often trigger economic consequences elsewhere, creating ripple effects throughout the international economic system.
“Tariffs often function as instruments of international negotiation, influencing relationships among nations while reshaping global supply chains and investment decisions,” said Brown.
Multinational corporations, operating across numerous jurisdictions, continually adapt to shifting tax and trade rules. Their responses illustrate a central reality of globalization. For businesses engaged in cross-border commerce, uncertainty has become one of the defining challenges of the current era.
“Companies really need certainty,” Brown emphasized. “They just want something reasonable that they can anticipate. Stable and predictable frameworks remain essential for investment, growth, and long-term planning in an interconnected world.”
"Companies really need certainty. They just want something reasonable that they can anticipate."
- Karen Brown
The current U.S. tax environment, shaped by regulatory retrenchment and political volatility, raises fundamental questions about whether the underlying structure can endure. The modern federal income tax is only 113 years old, but the deeper story is not about longevity but rather fragility. Recent years have seen a sharp shift in both tone and practice in domestic tax discussions, and the reemergence of tariffs as a central policy tool has injected new uncertainty into global markets.
“Congress does have the same power to levy tariffs as it does to levy tax legislation,” Brown explained, but in practice, that authority has increasingly been ceded or reshaped in ways that blur traditional boundaries. What was once a technical matter of trade policy has become, again, a “lightning rod,” carrying political and economic consequences in Washington.
The effects rarely stop at national borders. At the heart of these developments lies a fundamental tension between national sovereignty and global interdependence, Brown said. Governments seek to protect domestic interests and strengthen their competitive position, yet economic integration limits the effectiveness of purely unilateral action.
“We are all so connected that everything we do will trigger something somewhere else,” she said. “Decisions about taxation, tariffs, and regulation inevitably affect trading partners, investors, and consumers around the world.”
History demonstrates, however, that lasting international economic solutions often emerge through global cooperation. The post-World War II economic order, the expansion of bilateral tax treaties, and recent efforts to coordinate global corporate taxation all reflect attempts to balance national interests with collective stability. “You can’t be completely self-centered because of the interdependence of all economies,” she said.
The future will require a careful balance between national objectives and global responsibilities, said Brown. U.S. leaders must seek a cooperative framework stable enough to support economic growth, flexible enough to respond to change, and cooperative enough to sustain an increasingly interconnected international order.
Brown is clear on the key question of fairness: “Absolutely, we should expect corporations to pay their fair share. The challenge lies in achieving international consensus on what fairness means in a global economy.”
America's Economic Challenge at 250
For most Americans, the economy is experienced through everyday realities: a weekly paycheck, federal and state taxes, monthly rent or mortgage payments, and the price of groceries. Yet behind these personal experiences lies a vast and evolving story that stretches back nearly 250 years to the founding of the United States.
In 1776, the American economy was small, agrarian, and largely dependent on farming and manual labor. The federal government collected almost no direct taxes, had limited responsibilities, and exerted relatively little influence over daily economic life.
Today, Americans live in one of the world’s most complex economies, supported by a government that sets economic policy, collects trillions of dollars in taxes, regulates financial markets, and plays a central role in economic stability around the globe.
The transformation did not happen overnight. It unfolded through wars, industrial revolutions, political movements, technological breakthroughs, and changing ideas about the role of government itself. The creation of a national banking system, the introduction of the income tax, the rise of Social Security and Medicare, and the emergence of globalization each reshaped the relationship between Americans and their money.
Each generation has wrestled with these arguments. Tax rates have risen and fallen. Government programs have expanded and contracted. Financial systems have been built, dismantled, and rebuilt. Economic policies once considered radical became commonplace. The result is a nation whose economic institutions would be unrecognizable to Americans who lived at its founding.
America’s economic story is as much about its future as its past. The decisions made over the last two and a half centuries have created the opportunities and challenges facing the U.S. in 2026: rising national debt, demographic change, technological disruption, global competition, and growing questions about economic inequality and long-term prosperity. Understanding how America arrived at this moment provides more than historical perspective; it offers insight into the choices that will shape the nation’s economic future.