Another week, another plethora of proposals to tax the rich.
Most of these plans are from presidential aspirants, with an assist to outside groups who are more than happy to outline the various ways the taxation could be accomplished.
Just this week we got an infrastructure plan from former VP Joe Biden ($1.3 trillion), and a free college plan from Mayor Pete Buttigieg ($2.1 trillion) with claims that both would be paid for by the rich only.
And then we had Gabriel Zucman, the Berkeley economist who helped develop the wealth tax plans being offered by Senators Bernie Sanders (I-VA) and Elizabeth Warren (D-MA), offer up the selling points for a wealth tax and my second favorite quote of the week. “You had a good idea at 30, that’s great, you can be a multi-billionaire for 10 to 20 years,” according to Zucman. “What an annual wealth tax of 6 percent does is that it makes it harder to stay a multi-billionaire at age 70, 90, etc. It makes wealth circulate.”
The absurdness of this quote lets you know why he’s an economist and not a titan of industry. He doesn’t understand how the real world works and having the government confiscate your money doesn’t “circulate it” at all.
Kind of makes you wonder where all of these tax ideas come from, but they’re not that hard to find. This week the Center on Budget and Policy Priorities did a great job of outlining the wish list for progressive taxation changes in an article titled: Substantial Income of Wealthy Households Escapes Annual Taxation Or Enjoys Special Tax Breaks.
What are these hidden loopholes only the wealthy use to evade the taxman? Crazy things like timing of sales or retaining assets (like homes) that appreciate with inside gains and no yearly taxation. And let’s not forget about the low capital gains rate, which “unfairly” allows for the higher taxation of work over passive income. They also throw in the lie that these assets can escape taxation altogether if they get passed down, and step-up occurs, apparently forgetting the whole death tax thing!
Their solutions for “reform” won’t surprise anyone. Eliminate the capital gains rate, go to a mark-to-market system, eliminate the step-up in basis, and raise the top tax rate. On the positive side, they do a great job of selling how effective PATG has been in fighting the death tax! And I quote:
Despite the need for a robust estate tax, a decades-long political effort to undermine the estate tax has severely weakened it. Most recently, the 2017 tax law doubled the amount that a wealthy couple can pass tax-free to their heirs, from $11 million to $22 million, and indexed these thresholds for inflation going forward. Today, fewer than 1 in 1,000 estates are expected to owe any estate tax.
With your support, we’ll continue to make them unhappy!