Preview: 1) E. Saez
advocates a wealth tax
3) G. Mankiw reinforces the Summer's presentation
Government should help U.S. of America become a more "just society."
1. Extremely high wealth is not the only
source of political power/influence About $5 million will do the job.
B. Donations to non profits
who spend donations just moves political influence to people with similar values.
C. Is wealth of the NRA, Realtors, Corporations used to create lobbying influence is not addressed by the wealth tax.
2. Propensity to spend differs between Wealth vs. Permanent Income.
B. There post war increase in wealth as a percent of GDP was 300% to 500%
according to Triumph of Injustice.
3. Reform Goals
B. How do we want to tax the wealthy who have
exceptionally high income?
Scott Greenberg of the Tax Foundation
on work by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman,
Greenberg notes :the max tax rates on investment income were far
lower than on wages and salaries, and
But, the decrease from 6 percent points received by
one-presenters is on a vastly
larger share of the national income.
Making Social Security and Medicare more progressive looks at the goal of change.
Better Ideas than a Wealth Tax from
business Week 11/11/19 Finance section|
Bachelder and Kamin
the Cortez tax rate of 70 percent on income
Wealth tax problems
Composition of Reported Income by AGI Percentile Income Group, 2016 e
95 to 99%
99% to 99.9%
99.9% to 99.999%
|Long-Term Capital Gains & Qualified Dividends||3%||9%||17%||39%||71%|
|Business Income (e.g., partnerships)||4%||12%||26%||28%||13%|
|Share of All AGI||65%||15%||10%||7%||2%|
|Average Income Tax Rate||9%||19%||27%||28%||23%|
Taxing the Rich: Issues and Options
Lily Batchelder* and David Kamin⸸
September 11, 2019
Abstract: The U.S. economy exhibits high inequality and low economic mobility across
Selected Revenue Options within the Current System
Within the basic structure of the current tax system, policymakers have proposed a range of policies that would raise considerable revenue from those with the greatest resources. In Table 2, we list several of these proposals to provide a sense of scale. This section is not a comprehensive compilation of all such measures, as there are many.
All of the proposals listed focus either solely or disproportionately on those with the greatest resources or the businesses they own. For organizational purposes, the table is broken down between direct repeal or reform of elements of the 2017 tax legislation, along with further measures that could be taken. A number of these proposals would, in addition to raising revenue inprogressive fashion, reduce complexity and wasteful tax planning. We consider many to be good ideas. But since they have, for the most part, been discussed in other contexts and do not involve fundamental shifts in the system, we do not delve into the details or relative pros or cons of each here
|Table 2. Incremental Revenue Measures 2021-2030 (Billions)|
|Current Law||Current Policy|
|Repeal or Reforms of 2017 Tax Law|
|Return Top Individual Rate to 39.6% from 37% (1)||$90||$200|
|Reverse Doubling of Estate Tax Exemption (back to $11.4M per couple) (2)||$60||$110|
|Repeal Pass-Through Deduction (2)||$280||$620|
|Increase Corporate Rate to 28% from 21% (2)||$730|
|Raise Minimum Tax on Foreign Income to 21% + Apply Per Country (3)||$340|
|10% Surtax on AGI Above $2 Million (4)||$610|
|Tax Accrued Gains at Death and Increase CG/Dividends Rate to 28% (5)||$290|
|Broaden Base of Self-Employment Tax + 3.8% ACA Surtax (5)||$280|
|Cap Value of Itemized Deductions at 28% (6)||$410||$310|
|Estate Tax: $7M Per Couple Exemption, 45%-65% Rate, Limit Avoidance||$310|
|Return to 2009 Parameters + Anti-Avoidance Measures (5)||$210|
|Increase Rates on Largest Estates (Max = 65% on Transfers >$1B) (7)||$100|
|Eliminate Accelerated Cost Recovery for Largest Businesses (2&8)||$760||$920|
|% of GDP||1.6%||1.8%|
Is a Wealth Tax Constitutional by Greg Rosalsky
summary from Quick Notes
Twenty years before a wealth tax became a
serious consideration in national politics, two legal
scholars battled over whether the policy would be
The 1895 Case That Could Be Trouble For A Wealth Tax
In 1895, in a case called Pollock v. Farmers Loan and Trust Company,
the Supreme Court declared the income tax was a direct tax and it therefore
had to be apportioned by state to be constitutionally valid,” Jensen says.
A states tax burden is determined by the size of their population.
To work, the tax rates will have to be wildly different in each state.
It ruled all taxes on income from property are direct taxes.
The income tax went away until the amendment in 1913.
Bruce Ackerman argues we should reject Pollock use a view first articulated
by the Supreme Court in the early days of the republic.
Horse-Drawn Carriages To The Rescue?
In 1794, President George Washington signed into law what might be considered the first federal wealth tax. It was a tax on property: horse-drawn carriages. We have an entire episode about this tax and the subsequent legal battle over it.
The Supreme Court upheld the carriage tax. The justices called the apportionment rule “absurd” and “radically wrong.”