(C) Common Dreams
This story was originally published by Common Dreams and is unaltered.
. . . . . . . . . .



Gabriel Zucman: Tax Policies Fuel Wealth Inequality [1]

['Kelly Candaele']

Date: 2019-11-14 14:15:00+00:00

The part of your list of proposals that has received the most attention is the wealth tax part of it, perhaps because Elizabeth Warren and Bernie Sanders have embraced some version of it. What would a wealth tax do?



The wealth [tax] is the proper way to tax billionaires. Because these extremely wealthy individuals can own a lot of wealth while reporting little taxable income. Warren Buffett is worth $80 billion, but he instructs his company Berkshire Hathaway to not pay dividends, so his taxable income is low compared to his true income or his wealth. So even if we increase the marginal tax rate to 90 percent it makes no difference to Warren Buffett’s effective tax rate. He would pay maybe $3 million in taxes, which is nothing compared to his true wealth. So the proper way to tax the super-wealthy is through a wealth tax. The wealth tax is not going to replace the income tax, but it has a role to play in the overall tax system along with more progressive income taxation, along with better corporate taxation and estate taxation.



Let’s deal with the arguments against progressive taxation and wealth taxes. The wealthy will simply find more complex ways of avoiding paying these taxes, too heavy of a tax on capital and wealth will actually hurt the economy and workers, and conservatives like to say progressive taxation is confiscating people’s money who earned it and giving it to people who didn’t.



The moral case against taxing the rich is very weak because while wealthy entrepreneurs have great ideas and work a lot, the reason they have become wealthy is because in many cases they have been able to use the public infrastructure, they had workers who were trained by public education institutions funded by taxes, and they became wealthy because government institutions allow robust economic markets to exist – so you don’t create a billion-dollar fortune just by yourself. It is something that is created by society to a large extent. In terms of how much revenue there is, we have a calculation in the book that says, here is how much revenue that could be collected from the top one percent if we really wanted to maximize tax collection. Today the top one percent earns about 20 percent of U.S. income and they are taxed at a rate of about 30 percent, so they pay about six percent of the national income in taxes. And what we are saying is that they could pay as much as 10 percent. So just by taxing the one percent more we could generate four percent in extra tax revenue.

[END]
---
[1] Url: https://capitalandmain.com/gabriel-zucman-tax-policies-fuel-wealth-inequality-1114

Published and (C) by Common Dreams
Content appears here under this condition or license: Creative Commons CC BY-NC-ND 3.0..

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/commondreams/