U.S. billionaires have grown their collective wealth by $1 trillion since mid-March. That's more than it would cost to send a $3,000 stimulus check to every person in America. That points to one way of funding further relief, including the $1.9 trillion in assistance proposed by President Biden: Raise taxes on the wealthy. Indeed, Hope and Limberg proposed exactly that in mid-December. “Given the damage the pandemic has done to economies,” they wrote, “the notion of getting the most affluent to help foot the bill is one that has many supporters .... Higher taxes on the rich could help to fund the substantial and potentially long-lasting expansion of government spending and social protection seen during the pandemic. They could also help address health and economic inequalities, which have only been exacerbated by COVID-19 and its economic fallout.” The authors’ survey doesn’t encompass the massive U.S. tax cut enacted in December 2017 by the Republican-controlled Congress and signed by then-President Trump. But their findings conform with other research that does cover the 2017 cut, such as that of UC Berkeley economists Emmanuel Saez and Gabriel Zucman. As they pointed out in their 2019 book “The Triumph of Injustice,” the 2017 cut finally brought the U.S. to the point where the 400 highest earners in the U.S. paid lower tax rates than the working class. “This looks like the tax system of a plutocracy,” they wrote. Thanks to years of tax cuts for the rich, the 400 richest Americans now pay a lower tax rate than the bottom 50%. (Saez & Zucman, “The Triumph of Injustice”) Hope and Limberg, like Saez and Zucman, observe that cutting taxes for the rich not only increases economic inequality, but delivers ever more political power into the hands of the affluent while increasing their incentive to lobby for even more tax breaks. (Tax cuts enable them to keep more of their income gains.) “There is a large political science literature on the power of rich voters and organized business interests to shape public policies in their favor,” Hope and Limberg write. “Lower taxes on the rich encourage high earners to bargain more forcefully to increase their own compensation, at the direct expense of those lower down the income distribution.” Within their sample countries, they found, the economic effects of tax cuts were consistent. They tended to increase the GDP share of the top 1% by 0.8 percentage points within five years of the cuts. The lack of any discernible impact on economic growth or unemployment, moreover, debunks “supply-side theories that suggest lower taxes on the rich will induce labor supply responses from high-income individuals (more hours of work, more effort etc.) that boost economic activity.” This is the essence of the trickle-down theory and the lionization of rich people as “job creators.” At best, Hope and Limberg write, statistics show “very slight indications of a flash in the pan effect ... on unemployment,” but those indications are “neither statistically significant nor robust.” In fact, they write, their findings match those of other research indicating that “income tax holidays and windfall gains do not lead individuals to significantly alter the amount they work.” Rather, “our analysis finds strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment.” The rising tide of economic inequality in the U.S. spurred Sen. Elizabeth Warren (D-Mass.) to call for a wealth tax during her campaign for the Democratic presidential nomination last year, in essence taking back some of the handouts the rich received from Republicans under Trump. The evidence is clear that gifting the rich with more money does no good for the economy or workers. https://www.afr.com/world/north-ame...-the-rich-trickled-down-never-20210209-p570qj
Oy! Don't you Australian mice have some predator to run away from? Stop picking on the USA. We're like one of the youngest countrys on the planet! We'e still learning from our mistakes!
Taxation gas run wild...you can hear the envy and anger in the tone of your writing...you can't tax people in to equality, you can only tax people into poverty....I always think about these senarios like a bad divorce. The general population is ok to starve as long as the rich have their money taken
This is true, but the opposite is also true. Raising taxes also has no discernible impact on economic growth. Tax rates don't affect tax revenues. See https://en.wikipedia.org/wiki/Hauser's_law
Yes. I saw the claim in a video about government debt, and was amazed by the result. The guy goes on to claim that there are only like 2 which actually increase tax revenue, but they are regressive taxes:
The ever growing consensus that the population's existence revolves merely around government's ability and whim to maximize revenue can't end well.
The devil is in the details. 100% capital gains tax on rich individuals obviously doesn't work ("common sense"). 50% capital gains tax on rich individuals would actually work fine, except A) those people tend to migrate wherever they want, which causes issues to anyone wishing to tax rich people, B) not all tax systems let you deduct losses in a symmetric manner and can lead to high risk to e.g. traders. Something that should be common sense but almost always is conveniently ignored by low tax and gov intervention proponents is the exponential nature of capital gains, compared to the relatively fixed nature of living expenses. Put simply, once you have a million you are the master of your own destiny; a sizeable proportion of the population remain slaves to circumstances, living from paycheck to paycheck. When you're on low income and have a family to feed, you can't do shit w.r.t. investment even if you know how (buy & hold SPY). "People should educate themselves when young and get a job!" doesn't even work that reliably today. You have guys like Buffet who are practically begging to be taxed higher because they understand this and aren't selfish enough to propagate the trickle down myth.
The danger and intellectual laziness with the OP's premise is lumping everyone in with "billionaires". The vast majority of employers in the United States are small businesses with an LLC structure. That type of business owner will typically have the majority of his or her net wealth tied up in that business. And growing that business is their primary concern. For an LLC owner, you report all profits and losses on Schedule C of your 1040 return. For these small business owners, tax cuts can typically mean they can invest more into their businesses.