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As promised, here are some of the key points from the important new @lilybatch & @davidckamin paper on taxing the rich.
Bottom line: we should be taxing the rich a lot more, and the @ewarren wealth tax is a really good way to do that. 1/
Bottom line: we should be taxing the rich a lot more, and the @ewarren wealth tax is a really good way to do that. 1/
@lilybatch @davidckamin @ewarren Let’s start with some sad facts. America has the second-highest level of income inequality among the 33 OECD countries and the highest level of wealth inequality. Inter-generational economic mobility – which is a fancy way of describing the American Dream – is very low. 2/
@lilybatch @davidckamin @ewarren Meanwhile, our current approach to taxing the super-rich is broken. The rates are too low. The taxes are easy to game and avoid. Enforcement has waned as audit rates have plummeted. 3/
@lilybatch @davidckamin @ewarren So what should we do about it? The paper reviews a bunch of options for taxing the rich more. All have at least something going for them. But I’m going to focus on the relative benefits of the wealth tax. 4/
@lilybatch @davidckamin @ewarren First, no other single tax produces as much revenue. The authors find the @ewarren wealth tax alone would bring in $2.6 trillion over 10 years, assuming a reasonable 15% avoidance rate. That backs up the existing Saez/Zucman revenue estimate. 5/
@lilybatch @davidckamin @ewarren While some have used estate tax revenue to extrapolate much lower wealth tax revenue, the authors point out flaws in that approach:
-The estate tax is imposed just once, upon death, and is therefore easier to avoid through tax planning
-Wealth tax applies to a broader base 6/
-The estate tax is imposed just once, upon death, and is therefore easier to avoid through tax planning
-Wealth tax applies to a broader base 6/
@lilybatch @davidckamin @ewarren Second, the wealth tax generates all that revenue from a tiny set of extremely rich families, and “relatively little of the burden should be shifted to other taxpayers.”
Remember: the @ewarren wealth tax applies only to the 75k families with a net worth above $50M 7/
Remember: the @ewarren wealth tax applies only to the 75k families with a net worth above $50M 7/
@lilybatch @davidckamin @ewarren Third, “it is far easier to administer and comply with an exemption from a wealth tax.” If your wealth is below the $50M threshold, it’s not taxed – if it’s above that, it is. That’s simpler than alternative approaches. 8/
@lilybatch @davidckamin @ewarren Fourth, because the @ewarren wealth tax has a broad base – meaning it applies to all assets, without exception – it reduces “tax avoidance opportunities and efficiency costs.” 9/
@lilybatch @davidckamin @ewarren Fifth, the wealth tax improves tax fairness. The bottom 99 percent of households pay about 7.2% of their wealth in federal, state, and local taxes, while the top 0.1 percent pay only 3.2%. Taxing the wealth of the top 0.1% closes that gap. 10/
@lilybatch @davidckamin @ewarren Full disclosure – the authors also raise potential concerns with a wealth tax, though the @ewarren proposal generally does a good job of addressing them. 11/
@lilybatch @davidckamin @ewarren Ultimately, the @ewarren wealth tax is a smart way to raise trillions in revenue we can use to invest in universal child care and early learning, universal free public college, student debt cancellation for 42M people, addressing the opioid crisis -- and more. 12/
@lilybatch @davidckamin @ewarren If you care about what’s going wrong with our economy, I highly recommend you read the paper for yourself: papers.ssrn.com/sol3/papers.cf… End/
