Thursday, April 22, 2021
News + Politics Is the US finally talking about taxing the rich?

Is the US finally talking about taxing the rich?

In Congress, and in New York, progressive legislation is on the agenda. Still waiting for California.

-

Is it possible that the United States is – finally – getting serious about addressing economic inequality?

I’m not pushing this too far. The Biden Administration can’t even get Congress to agree on a $15 minimum wage. Which is a bit nuts: A $15 minimum wage is only $31,200 a year (assuming that everyone who gets it works 40 hours a week and gets paid for 52 weeks in a year). That will lift more than 1 million people out of poverty – but not much out of poverty.

During the pandemic, according to Americans for Tax Fairness, the 664 richest people in the United States saw their net wealth increase 44 percent.

Again, which is a bit nuts: Billionaires picked up an additional $1.3 trillion – almost as much as the entire national stimulus package that Biden is proposing – in just 11 months, while tens of millions of people in this country lost jobs, scrambled for food, lost housing, and endured suffering that ought to be unthinkable in the US.

Do the math: While everyone else was trying to get through the unemployment system or going to work and risking their lives, the average very, very rich person picked up nearly $2 billion in net worth.

Jeff Bezos: $76 billion richer. Bill Gates: $25 billion richer. Mark Zuckerberg: $41 billion richer.

This ought to be the number-one talking point of the Democratic Party and the Biden Administration. It’s not even a minor talking point.

But at least Elizabeth Warren has moved to impose a modest wealth tax on people who have $50 million (and a slightly larger tax on people who have $1 billion.) This isn’t a radical idea at all: Most communities in the United States use the revenue from property taxes to fund local government. Those taxes typically cover only real estate – houses and commercial buildings. But there’s no reason that property taxes can’t be expanded to cover, say, yachts and other luxury goods and stock and bond holdings and other securities.

About 60 percent of voters, including a majority of Republicans like the concept.

Meanwhile, New York is seriously considering removing the tax-break for expensive yachts, better taxing capital gains, lowering the floor of the inheritance tax, and raising taxes on the wealth of billionaires.

The governor of New York, who probably won’t be governor much longer, likes to say that if you raise taxes on rich people in New York, they’ll just move somewhere else.

We’re hearing that about California, too.

But Cristobal Young, a sociology professor at Cornell, studied more than 3 million tax returns of high earners, and concluded that the rich really don’t move:

Tax migration is not like other forms of tax avoidance. The main thing rich people do to avoid taxes is hire accountants, lawyers and wealth managers, who engage in paper games with the tax authorities. But migration is not something your accountant can do on paper for you — there is no avoiding the life disruption.

One reason the tax flight myth persists is confirmation bias. There is one-way interest in anecdotes about elite migration. When New Jersey billionaire David Tepper moved to Florida, there was a media frenzy over his tax flight story. When he moved back home a few years later, it was hardly reported.

The reality is that most millionaire migration, when it happens, has nothing to do with taxes. Some 85% of these moves are tax-neutral. Most of the anecdotes we hear are quietly counter-balanced by rich people moving to higher-tax places.

So it’s starting, slowly. But as the evidence of pandemic-related economic inequality continues to emerge, so perhaps will more calls for the only solution to that inequality that really works: High taxes on the rich.

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

6 COMMENTS

  1. Tom: progress occurs slowly in this country . Like I said, I don’t begrudge the billionaires their money but on the other hand they should be willing to make infrastructure investments in this country. Part of the stimulus package is an upgrade of the electric grid to be free from fossil fuels as well as upgrades to other failing infrastructure. The private sector can’t really build bridges and tunnels and provide high grade internet to underserved communities. Companies like Comcast and AT&T don’t act in the best interests of the public and can’t be trusted to upgrade the US high speed broadband. The private sector doesn’t provide housing to low income people unless there is a profit involved. A country with the super rich and struggling downtrodden masses won’t work in the long run.
    Biden really needs to take the so-called bully pulpit and go out and talk to people about passing a $15 minimum wage. Nothing like that gets done in this country unless people write angry letters to their Congressmen and march on Washington. You really have to fight for reform.

  2. simba, But the super-wealthy do create foundations that help others, most notably the Gates Foundation, which Buffett has also massively supported. Whilst more locally both Zuckerburg and Benioff have created new hospital facilities.

    The reality is that nobody can spend tens of billions on anything other than some form of charity The US is far better off allowing the creation of large amounts of wealth that then do good works, than taxing successful people up the wazoo and driving them elsewhere.

    I have stock positions in Berkshire, Amazon and Microsoft and Apple. Each shows a $10 grand gain, or so. So Gates, Buffett etc. have made millions of people like me wealthier than we otherwise would have been. Their success didn’t make me poorer – they made me richer. That is how our system works -wealth gets created and spread around.

  3. Tom: I am not a complete bleeding heart liberal. I don’t begrudge Buffet or Gates or Jeff Bezos their billions either. However there are some structural problems in the US that are literally killing us and need to be changed. Some of these issues like health care and education could be solved without taxation of the rich. Nationalization of health care in the US would save $5000 per person and result in a longer life expectancy. Colleges and graduate schools should not be allowed to graduate kids who are $150,000 to $250,000 in debt. It is setting them up for a lifetime of debt slavery. Paying off everyone’s student loans is not going to solve the problem for the next generation either.
    Nobody really wants to pay taxes, but the older generation of billionaires at the turn of the century like the original Rockefellers actually thought that investing in the United States was a good bet. The investments made in the society in terms of infrastructure and public works actually pay off by strengthening the dollar and boosting long term stock market gains. Who wants to invest in a crumbling society? That’s why the highest earners in this country shouldn’t complain about paying slightly more taxes to continue to invest in the US

  4. simba, It is annoying to me how debates about poverty have morphed into debates about “inequality” The former quite rightly puts the emphasis on the poor, and if people want to help the poor through charity, volunteerism, foundations and so on, then great.

    But when instead the focus is on “inequality” then suddenly it becomes a focus on the successful, and that inevitably leads to envy, which in turn leads to a populist desire to punish the successful e.g. a tax on the wealthy.

    So people like Tim end up not advocating for the poor, but advocating against the rich. And that falls into the trap that every Marxist does – the allegation of class warfare and the politics of envy.

    In reality nobody is poor because Buffett and Gates are rich. They created new wealth. They did not take existing wealth from others thereby making them poor.

  5. Tom for most of the last 100 years the US has had the best system so far in terms of a balance between capitalism and some social safety net – it was really the first time in history that a prosperous middle class existed and a mutually beneficial relationship between private industry and the government. The gross disparity between poverty and extreme wealth in the US is relatively new. There were always poor and rich people . Now you have the type of money never seen before, money in the hundreds of billions, and what seems like an increasingly dejected and downtrodden masses of people who have simply given up. Its not a healthy situation. Personally I think the minimum wage should have been $15 per hour 20 years ago.
    The truly rich in our society, like Buffet and Gates have devoted their lives to philanthropy , some of which has been highly effective. On the other hand, the Gates foundation has stated that almost everything they do around the world is in concert with some governmental organization. private philanthropy alone can’t cure society’s ills.

  6. Tim, in case you didn’t notice, the presidential candidates who support a tax on the wealthy, Warren and Sanders, both lost in the elections. So the idea that there is an electoral mandate for punitive taxes on the successful seems rather speculative.

    As an aside, various scholars have opined that the US would need a constitutional amendment to tax wealth rather than mere transactions, as it does at present. And the various layers of government currently have little idea what someone;s net worth is. So it would be complex and expensive to put in place procedures to assess wealth, and the taxman would have to rely on honesty on the part of the very people it is seeking to punish and demotivate.

Comments are closed.

More by this author

Money for ‘safe sleeping’ sites — or permanent supportive housing?

Legislation by Sup. Rafael Mandelman aims to get people off the streets -- but homeless advocates are not supporting it. That's The Agenda for April 18-25

Radical right group is trying to attack public-sector labor in SF

Anti-union mailers are going to workers home addresses -- but really, this group is looking pretty desperate.

Breed won’t promise to spend real-estate tax money on rent relief

The voters approved Prop. I last fall to support tenants and affordable housing, but the mayor says she will use the money for her own priorities.

Reese Erlich, foreign correspondent and radical reporter, is dead at 73

After a life of progressive politics, ground-breaking journalism, and social activism, a legendary writer loses battle with cancer.

There’s a lot more to the GG Park debate than cars v. bikes

This is part of a huge discussion the city needs to have about transportation -- and equity -- in a post-COVID world.

Most read

I finally paid off my student loans at 40. No one should go through this

Not even winning on 'Who Wants To Be A Millionaire' helped me outrun Navient and condescending bootstrapper-types

Reservoir Dogs: Coyotes find a home amid Sunset solar panels

A pair of animals settles in, offering lessons on our contemporary relationship to nature

Good Taste: Secrets to scoring crazy croissants, SF gets a Korean food court

Plus: Bitchin' Baklava, and Gay4U feeds trans POC for free

Mayor Schaaf needs to stop resisting the movement to defund the Oakland PD

A bloated police budget has not made the streets any safer; it's time for real alternatives.

The best albums of 2021 (so far)

All that time stuck indoors last year is paying off—2021 has been bountiful when it comes to new sounds, from Madlib's post-DOOM triumph to Brijean's tropicalia expansiveness.

You might also likeRELATED