The Trouble With the Progressives’ Proposed Wealth Tax
13th February 2024
As the level of US debt zooms past the $34 trillion mark, it has become increasingly clear that the American left has no intention of trying to help control government spending. To the extent that annual deficits must be trimmed to protect the integrity of the nation’s currency, Democrats and their allies are instead planning to go beyond the current progressive tax on income and institute a new levy on citizens’ assets.
Some such as Senator Elizabeth Warren openly advocate taking the conventional idea of a property tax and applying it to everything a person owns — cash, savings accounts, stocks, jewelry and even art. Calling for what she has termed her “Ultra-Millionaire Tax,” Warren would start by imposing a 2 percent federal tax on every dollar of an individual’s net worth over $50 million, adding a percent more on every dollar above $1 billion in net assets. Over time, the tax rates could be increased, and the amounts they cover lowered, to fund new or expanded public programs.
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What the president and others talking tax fairness conveniently fail to mention is that their definition of the wealthy’s undertaxed income includes paper gains on investments, what neither Congress nor the IRS has ever considered real income until the underlying assets have been sold. According to a 2023 study by the Tax Foundation, the top 1 percent of taxpayers actually pay an average income tax rate of 26 percent, the top half an average rate of 14.8 percent, and the bottom half an average 3.1 percent tax rate.