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Ethics & Religion
Column #2,082
July 7, 2021
The Rich Should Pay More Tax
By Mike McManus

The 25 richest Americans, such as Jeff Bezos, Michael Bloomberg, George Soros and Elon Musk - paid little or nothing in federal income taxes from 2014 to 2018 according to an analysis by Pro Publica, a news organization based on a study of Internal Revenue Service data.

The study reported that the nation's richest executives paid just a fraction of their wealth - $13.6 billion - in federal taxes during a time when their collective net worth soared by $401 billion, according to a tabulation by Forbes.

The wealthiest benefitted from a complex web of loopholes in the tax code - and its emphasis on taxing labor income versus wealth.

President Biden has proposed raising the top marginal rate from 37% to 39.6%, which would reverse the reduction ushered in by President Trump's 2017 tax cuts. However, I believe that is too tiny of an increase.

What's needed is a genuine wealth tax. From 2014 to 2018 the wealthiest Americans paid an average of 15.8% or $13.6 billion in personal federal income taxes.

Sen. Elizabeth Warren, Democrat of Massachusetts, has championed placing a 2% tax on an individual's net worth above $50 million - including the value of a person's stocks, homes, boats, etc., after subtracting any debts.

She asserted that government should be focused on taxing wealth, and not just income. "Increasing the personal income tax by 2% or 10% is not going to make a difference to these multi-billionaires," she asserted. "The real action" should be "on wealth, not income."

Although she praised Biden's proposal to increase capital gains taxes and targeting "real corporate profits" she hoped the White House would be "more ambitious." She asserted, "I want to see the Biden administration push harder on the wealth taxes."

A "wealth tax" is a new idea - and a good one.

The Biden administration has considered it unworkable - though it has not closed the door on the proposal. Instead, Biden has focused upon a proposed $80 billion increase in funding for the IRS to go after tax cheats. And he has proposed doubling the tax on capital gains - such as the proceeds of selling an asset like a stock or a house - for people earning more than $1 million.

"We know there is more to be done to ensure that corporations and individuals who are at the highest income, are paying more of their fair share," said Jen Psaki, the President's press secretary.

That sounds good. But why not flatly consider a "wealth tax," a certain percentage of the net worth of assets held by the very wealthy? Sen. Warren's proposal for a 2% tax on individuals with assets of $50 million or more - seems reasonable to me.

How much would it raise? I asked Sen. Warren's staff for an estimate, but was unable to get answer before my deadline.

I also called the White House to get a similar estimate for its proposal to increase the top marginal income tax rate to 39.6% from 37%. Again, I could not get a White House estimate of how much money that would raise.

The New York Times reported that Warren Buffet, the chief executive of Berkshire Hathaway, who has acknowledged that he paid just $23.7 million in taxes from 2014 to 2018 - though his wealth rose by $24.3 billion. He has long asserted that the tax code should hit the rich harder. He said, "I continue to believe the tax code should be changed substantially."

George Soros, the billionaire philanthropist and investor, paid no federal income tax for three consecutive years, according to the report. Spokesman for Soros told ProPublica that "between 2016 and 2018, Soros lost money on his investments, therefore he did not owe federal income taxes in those years.

In 2018, Michael Bloomberg, who controls the media giant, Bloomberg LP, reported income of $1.9 billion and paid $70 million in income taxes. That's a tax rate of only 2.71%.

Sen. Patrick Toomey, R-PA, said he felt the top earners were paying their fair share. He noted that the top 10% of American earners make almost half of all the income earned in America - and pay 70% of all the income taxes.

However, with an annual deficit of $2 trillion, the gap needs to at least be narrowed. Sen. Warren's proposal for a 2% tax on wealth seems reasonable to me.

_________________________

Copyright (c)2021 Michael J. McManus, President of Marriage Savers and a syndicated columnist. To read past columns, go to www.ethicsandreligion.com. Hit Search for any topic.

 

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