A Tax the Rich Can’t Avoid

New income is only a fraction of their fortunes—we need to target their wealth.

In These Times Editors

(Illustration by Terry LaBan)
wealth tax

noun

There’s real momentum to take on the billionaires once again.

1. A pol­i­cy to break up the enor­mous, unearned assets of super-rich families

It is a win-win idea for the Amer­i­can peo­ple, an idea no con­ven­tion­al politi­cian would have the guts to put for­ward.” —Don­ald Trump, propos­ing a one-time tax on wealth in 1999 

Can’t we just raise the income tax?

As bad as income inequal­i­ty is in the U.S., wealth inequal­i­ty is worse. The top 1% now own more wealth than the bot­tom 90 per­cent com­bined. Three fam­i­lies with multi­gen­er­a­tional wealth — the Wal­tons, the Kochs and the Mars­es — have a com­bined for­tune of $365.7 bil­lion, more than 5 mil­lion times the medi­an wealth of U.S. fam­i­lies. Increas­ing the income tax on the top brack­ets is good pol­i­cy, but it doesn’t tack­le the immense dynas­tic wealth hand­ed down from the ultra­rich to their descendants.

Don’t we already have an estate tax?

Yes, but it’s full of exemp­tions and loop­holes that have ben­e­fit­ed peo­ple like Shel­don Adel­son and Don­ald Trump. The Right has steadi­ly chipped away at its effec­tive­ness, paint­ing it as a death tax” on fam­i­lies who have just lost loved ones. Trump near­ly suc­ceed­ed in axing it entire­ly in the 2018 tax bill, and the final ver­sion passed by the GOP will reduce tax­a­tion on wealthy estates by an esti­mat­ed $83 bil­lion over the next decade. One alter­na­tive is sim­ply to extend the fed­er­al income tax to include large inher­i­tances. Dozens of devel­oped coun­tries, includ­ing Japan, the U.K. and France, tax wealth in this man­ner. While we’re at it, we could also tax the wealth before the rich die. An addi­tion­al 1 per­cent wealth tax on house­holds with more than $20 mil­lion in assets would bring in an esti­mat­ed $1.9 tril­lion in rev­enue over the next decade, accord­ing to the Insti­tute for Pol­i­cy Studies.

What could we do with all that money?

Full lead pipe replace­ment, uni­ver­sal hous­ing, stu­dent debt can­cel­la­tion, oh my! Since con­cen­trat­ed wealth also trans­lates to out­sized polit­i­cal pow­er — look at the Koch broth­ers — break­ing up these for­tunes gets us clos­er to a sys­tem of gov­ern­ment where don’t make the rich peo­ple mad” is no longer the dri­ving principle.

Is this actu­al­ly possible?

Not with that atti­tude! Con­sid­er this: Begin­ning in the 1890s, reform­ers used tax­es to expro­pri­ate the for­tunes of the Gild­ed Age. Mar­gin­al tax rates on the rich rose as high as 94 per­cent in 1944, result­ing in a steady decon­cen­tra­tion of wealth up until the 1980s — fol­lowed by a rapid shift back in the oth­er direc­tion with the advent of Reaganomics and neolib­er­al eco­nom­ic pol­i­cy. In the after­math of the 2008 finan­cial cri­sis — and thanks to Occu­py, Bernie and a renewed move­ment for demo­c­ra­t­ic social­ism — there’s real momen­tum to take on the bil­lion­aires once again. 

This is part of The Big Idea,” a month­ly series offer­ing brief intro­duc­tions to pro­gres­sive the­o­ries, poli­cies, tools and strate­gies that can help us envi­sion a world beyond cap­i­tal­ism. For past In These Times cov­er­age of wealth tax in action, see, Just Tax­ing the 1 Per­cent as Much as We Tax the Poor Would Yield Bil­lions for Cash-Strapped States, The GOP Tax Bill Is Every­thing That’s Wrong With Our Democ­ra­cy, Why Don’t the Amer­i­can Peo­ple Want to Tax the Rich? Oh Wait, They Do.

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