This week, House Democrats released their proposed tax increases to fund Joe Biden’s $3.5tn social policy plan.

The biggest surprise: they 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 Democrats would be eager to tax America’s 660 billionaires whose fortunes have increased by $1.8bn 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.

Elon Musk’s $138bn in pandemic gains, for example, 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 $4bn richer than he was before Covid.

But senior House Democrats decided to raise revenue the traditional way, taxing annual income rather than giant wealth. They aim to raise the highest income tax rate and apply a 3% surtax to incomes over $5m.

The dirty little secret is the ultrarich 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 DC which has 25 bathrooms.

House Democrats won’t even close the gaping “stepped-up basis at death” loophole, which allows the heirs of the ultrarich 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 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.

Biden wanted to close this loophole but House Democrats balked.

You might also have assumed Democrats would target America’s biggest corporations, awash in cash but paying a pittance in taxes. Thirty-nine of the S&P 500 or Fortune 500 paid no federal income tax at all from 2018 to 2020 while reporting a combined $122bn in profits to their shareholders.

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. Democrats even kept scaled-back versions of infamous corporate loopholes such as private equity’s “carried interest”. And they retained special tax breaks for oil and gas companies.

What’s going on? It’s not that Democrats lack the power. They’re in one of those rare trifectas when they hold the presidency and majorities, albeit small, in the House and Senate.

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, healthcare 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.

Republicans sold their souls to the moneyed interests long ago, 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 because there’s far less of it on the other side. Through the first half of 2021, business groups and corporations spent nearly $1.5bn on lobbying, compared to roughly $22m spent by labor unions and $81m by public interest groups, according to OpenSecrets.org.

Progressive House Democrats will still have a say. Senate Democrats haven’t weighed in. But there’s reason for concern.

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

Behind it will be this simple but important question: Which party represents average working people and which shills for the rich? Democrats, take note.

• Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com