Growing Arguments for Taxing the Rich
So far, many Democratic presidential candidates want to raise taxes on the rich to fund their political plans. But what does this actually mean?
There are two options: tax the money they make or tax the money they have. Let’s take a look at these options to see how they can affect our lives.
How Democratic candidates want to tax the rich
As a reminder, the top three candidates want to do to increase the revenues of their plans – to put it simply – to make higher education and healthcare more affordable.
Former Vice President Joe Biden: Wants to raise income tax for those in the highest tax bracket and capital gains tax for the richest 1%.
Senator Elizabeth Warren: Demands 2% annual tax for families over $ 50 million.
Senator Bernie Sanders: Possible options include raising the marginal income tax rate starting from income above $ 250,000. For example, the top 0.1% of taxpayers will pay 50% in tax on income over 2 million. Sanders could also tax capital gains and dividends in the same way as income. And / or he could impose a wealth tax on the top 0.1%. In fact, Sanders outlined several options, but did not stop at a specific one.
What an increase in the marginal income tax rate can do
You might be thinking, “This is not going to work at all. I ‘m going to pay more. “
But some researchers insist that it isn’t all that difficult to collect trillions from just the richest people in the country with a progressive tax – that is, when you earn more, you pay more in tax on the extra income you earn, rather than on the whole. the income you earn. This is what we have now, but candidates say the current version is not enough.
Now the richest 1% of families pay about 30% of income tax. A 10 percentage point increase in that figure would translate into $ 3 trillion in revenue over 10 years, writes Michael Linden, executive director of the Groundwork Collaborative, a progressive organization. This would be a tax rate similar to that paid by the top 1% of the population in the 1940s and 50s, Linden said.
With that $ 3 trillion, the country could “make colleges free at all public universities, make huge new infrastructure investments as proposed by Senate Democrats, and triple the National Institutes of Health budget,” Linden said in a statement. column in The Guardian .
In addition to raising these funds, Reed College’s Kimberly Closing explains to nonpartisan Econofact that raising taxes for the rich could partially mitigate the economic inequality created by stagnating wages over the past 35 years or so.
Economists Gabriel Zucman and Emmanuel Saez argue that you can raise the marginal income tax for the richest 1% of Americans to about 75% to maximize income and reduce income inequality without noticing a huge turn towards tax evasion or job loss for the richest people. country. , CNBC reports . Zucman and Saez, authors of The Triumph of Injustice – How the Rich Avoid Taxes and How to Make Them Pay , are also behind Tax Justice Now , an interactive site that compares candidates’ tax plans.
What a wealth tax could do
But that’s not all guys. How about raising taxes on people’s wealth — not just on their annual income, but on their assets as well?
Linden writes that taxing the wealth of the richest 1% will generate $ 4 trillion in 10 years. That’s “more than the federal government will spend over the next decade on foster care, school lunch, school breakfast, Child Health Insurance, food stamps, unemployment compensation, supplemental income for seniors, the blind, and people with disabilities. as well as all the tax breaks for working families combined, ”he says.
The potential wealth tax seems innovative because it is completely different from how wealth is taxed today. Right now, you are pretty much paying in taxes when you make money and when you sell your assets. Wealth tax essentially taxes the value of everything you own every year.
Any attempt by the president to impose new taxes would be a hard sell, because Congress , not the president, makes the policy .
But this does not mean that Congress is no longer thinking about this issue. Democrats on the Senate Finance Committee, led by Senator Ron Wyden of Oregon, are considering introducing a wealth tax that is estimated to generate $ 1.5 trillion to $ 2 trillion over 10 years. Wyden wants to use this money to support Social Security.
This tax will target people whose income exceeds $ 1 million or assets above $ 10 million for three consecutive years, and will tax their assets for each year that assets increase in value. Should your stock portfolio improve? Pay taxes. Should your home gain value? Pay taxes. Should your jewelry or artwork be appreciated? You get the idea.
Thus, while the idea that one candidate will try to tax the very wealthy seems unlikely, the concept is rapidly gaining support among Democrats. And even if one out of so many presidential candidates cannot get their own tax plans through Congress, chances are the Democratic Majority Congress can do something on its own.