Let's consider a different approach to Who pays taxes. The upper income brackets already pay the vast majority of income taxes in the US - please see:
https://www.ntu.org/foundation/tax-page/who-pays-income-taxes
We are all citizens (other than if you are not, different issue). Each of us enjoys the benefits of citizenship. The upper income brackets already pay the vast majority of the taxes - not calculated as percentage of income, but the absolute amounts. Do the better-off enjoy more benefits from the government into which they pay the majority of taxes? Maybe so, maybe not. What if each Citizen were asked (required) to pay the same amount to support our military, and the basic functions of government - each of us enjoys the same benefits, theoretically, why should some citizens pay more, just because they can.
Obvious arguments against this - income inequality, wealth inequality, generational discrimination and bigotry. Because a person is talented/productive, they are asked to solve these long standing problems of our society? I don't agree.
The "rich" already pay most of the taxes, let's get everyone to pitch in, maybe we would be a better society/community overall - everyone carries some weight.
28
It is a myth that, for a healthy economy, we need the rich to stay that way and ‘trickledown’ their wealth. The rich aren’t creating new jobs. Their fortunes are made on the backs of those less well-off. They pay lower tax rates and enjoy more tax loopholes than those with less money.
It’s time for fair, responsible fiscal policies, no apologies.
966
@NM Thanks for reading my column. I'm not as hostile as you to the super wealthy. I think some make their money through lobbying, manipulation and exploitation, but others make it through raw talent while providing services that benefit us all. But one point I try to make is that you don't need to dislike the rich to believe that we need to adjust the tax code so that the rich pay more. It's ridiculous that the 400 richest billionaires pay a lower tax rate than the bottom 10 percent. And in any case, we have real needs to raise money for infrastructure, to cover Trump's deficit, to invest in kids and give them an equal start in life, and it makes much more sense to raise that money from the top 0.1 percent than from widows struggling to pay their taxes already.
449
@Nicholas Kristof ...yes, some corporate wealthy provide services we need. Not all are bad.
I commented re 'Millionaires for Higher Taxes' and billionaire Nick Hanauer's Ted Talk.
But too often we hear that any reduction in profits is 'Redistribution'---thus 'big govt', thus unAmerican. Corporations think they own the proceeds of our national productivity.
Then if elected govt, representing the people, tries to correct our economic imbalance it's called 're-distribution'. But who decided how our national wealth is 'distributed' in the 1st place?
Association of ideas---high taxes--govt confiscation---tyranny.
Low taxes--American freedom---anti tyranny.
But if corporations weaken elected govt, then they call the shots for all of us. They are unelected.
57
@NM We Democrats are absolutely right to be worried about the candidates’ sharp turn to the left.
We need to make sure we don’t turn off all those voters who are independents, undecideds and even Democrats who don’t want socialism.
Here’s what some, many or all of the current Democratic presidential candidates are promising in return for votes: Free college tuition. Medicare for all, including illegal immigrants. College loan forgiveness. Reparations for blacks and gays. Guaranteed basic income. Federal job guarantees. Open borders.
All of the fabulously wealthy individuals and corporations put together do not have enough money to pay for all of these goodies year after year, and even Bernie Sanders has admitted that taxes will have to be raised on the middle class just to pay for free college, not to mention all of those other freebies.
As Margaret Thatcher aptly noted, the problem with socialism is that sooner or later you run out of other people’s money.
Remember, folks, our goal is to elect a Democratic president in 2020, not to make Karl Marx smile in his grave.
41
Mr. Kristof you raise a point I seldom hear in this argument-- that the rich will remain fabulously wealthy even after paying a MUCH higher tax rate than they do now. And with what they have left, they pay the same price for a dollar of gasoline, a loaf of bread and a sheet of plywood as everybody else.
I'm tired of hearing defenders tout the dollar amount paid by the wealthy. Using that argument, we should speak of the dollar amount leftover as well, as you did with Mr. Bezos.
And on a slightly different topic, I don't know how the lower income southern and flyover states continue to advocate for policies that make themselves poorer and the rich richer.
Keep shining your light on this Mr. Kristof. We can't give up hope that things can change.
161
How much of your money do you give to the less fortunate?
20
There is a disease spreading in America that has gotten worse since Reagan was president. We treat addictions to gambling, drugs, sex. But where is the treatment for GREED.
That seems to be something we should consider when considering the wealth at the top state we are in right now.
70
I can't understand why people in the U.S. are so paranoid of curbing or capping wealth or taxing it for that matter. Would it somehow diminish our power as a country? What is the big fear?
50
Realistically, how much money does anybody really need to live comfortably?
Personally, I believe there is a sickness among the wealthy who are driven to gain ever more wealth.
The rest of us need to assert our rights and fair share. Without us, the worker bees, these wealthy people would not be able to increase their wealth. Yet many of them view us with contempt. I remember an interview on PBS with a person who used to work for Robert Mercer. That person said that Robert Mercer felt that he was inherently more worthy than poor people simply because he held more wealth. Robert Mercer felt that his voice and demands are more important just because he was incredibly rich. Now that attitude is very very sick and unworthy of anybody living in the US. But then, no wonder his daughter was instrumental in helping Trump win the presidency.
66
Make taxes great again! And while we are at it: make government great again! Along with greater tax funding, government — at all levels — needs greater legitimacy, respect, prestige and love. There may be problems with government and governance, but Ronald Reagan, the genial face of proto-rabid neoliberal Republicanism, was fundamentally wrong in quipping that government IS the problem. I love Big Government!
38
Tax the Rich 100%.. It still won't be enough .. Warren and Company will still come after the middle class..
23
Ok, so if you do the math, take the $1T from the rich and give to all the other workers, you get ~$7k per household per year; it’s not nothing but hardly changes the game. The only way to grow is for our education system to be second to none (incl some more money) and for the business climate to be the best in the world for job creation. If Trump were not a lunatic, he would win easily next year based on the economy. As it is, we will still have a debate about whether the economic pie is fixed and how it should be divvied up or we should build policy to continue to grow the pie in a higher amount than others in a truly free global economy, which has more value for everyone and lifts the most people out of poverty.
11
Should we tax the rich more ? YES
Why don't we ? Because the rich control the politicians with campaign contributions
Here is a case study
In 2007 the top federal income tax rate was 35%. However, Hedge Fund Managers, income was taxed at 15% because of the infamous "carried interest loophole". The House had voted to eliminate it, and the bill was in the Senate
From the NY Times
"Mr. Schumer has been busy with hedge fund and private equity managers, an important part of his constituency in New York. He has been reassuring them that he will resist an effort led by members of his own party to single out the industry with a plan that would more than double the taxes on the enormous profits reaped by its executives.
Mr. Schumer has considerable say on the issue. "
And yes, Mr. Schumer succeeded. To this day, the hedge fund managers' income is taxed at the capital gains rate, now 23.8%
As the NY Times noted
"He has regularly portrayed himself as a progressive politician who identifies with the struggles of the middle class and is sharply critical of the selfish “plutocrats” who he says control the Republican Party."
Charles Schumer Top Campaign contributors 1989 - 2020
Goldman Sachs
Citigroup Inc
Paul, Weiss et al
JPMorgan Chase & Co
Credit Suisse Group
Morgan Stanley
54
I’m a life long Democrat, and I’m not rich. There need to be major changes in our tax policy and enforcement, beyond any doubt. But cheerleading “let’s soak the rich” is not the way to promote this goal. It’s sophomoric, perpetuates class warfare, and gets the desired knee jerk response from the rabid left (just read the comments). Not remotely the way to bridge the divide and build a consensus — that what’s needed today if we are to move forward. Cmon folks we need to do better.
55
America's federal income tax code provides deductions, credits, subsidies and lower tax rates.
But only for certain industries, persons, transactions, sources of income, business entity structures, contracts and securities favored by special interests lobbyists buying legislative, executive and judicial complicity conspiracy collaboration.
.
What should really embarrass, enrage and shame Americans is what is legal.
The robbing hoods in the new gilded age robber baron malefactors of great wealth belong in prison.
12
The massive transfer of wealth to the 1% has been underway since 1980 with Reagan's election, whether a Democrat or Republican has occupied the White House.
The gap between rich and poor has widened more under Obama than under any other president.
In fact, during Obama's presidency, the greatest transfer of wealth in the history of the world occurred. Some $4.5 trillion was given to Wall Street banks through its Quantitative Easing program, with the American people picking up the IOU.
Jobs, wages, and the GDP took a back seat to the “too big to fail” Wall St. banks, because they couldn’t trust the plebes with all that money for fear of inflation. As a result, the various schemes these banks engaged in with the free money—including mortgage-backed securities, company mergers, company debt offerings, stock buybacks—did nothing but secure that wealth for the 1%.
Eventually there is nothing left to steal any more and that is the reason our Chicago hustler approved the printing out of trillions of dollars of worthless money, passed it to Wall Street and no one got indicted in the process for looting and financial crimes!
If the presidency of Obama teaches us anything, it should be that presidents are nothing but tools of the elite to concentrate wealth and power, and that the words Democrat and Republican are absolutely meaningless.
#But..Trump! isn't going to cut it.
Bernie's plan is precisely what Piketty the economist and Chomsky the humanist both say is the correct plan.
19
In the words of the immortal Leonard Cohen:
"Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows"
23
Let's assume that Saez and Zucman are correct, which is ... debatable if you look at the immediate critiques (no doubt there are more to come). But let's assume they're right (which we must, especially if we WANT them to be right). Notice the response: "Raise taxes on the rich!" But why not: "Let's lower everyone else's taxes so this isn't the case anymore."?
Half of what you earn should go to D.C.? Wouldn't the economy be more productive and dynamic if MOST people could keep more of what they earn? The government will invest this better? Every time this is said, the response is, "Well, what about roads and bridges and public schools?" Well, it's clear that the attenuation of individual achievement ("You didn't build that!") is a prerequisite for socialism, as George Will says.
There's no way you can read Deirdre McCloskey's work, for example, and come away thinking she doesn't care about the poor, or somehow cares less about them than Nicholas Kristof does. When government is bloated, it is easily distorted by the wealthy for their own benefit, locking others out of opportunities. Anytime regulatory rollback occurs, liberals whine. Is there no such thing as too much government, too many bureaucrats?
Let's not pretend the world of today can be transformed into that of 1955. Government should do less things, but do them BETTER. And when we speak of the poor, we're talking RELATIVE. There's good reason to think today's poor live better than the middle class did in the 1970s.
10
Republicans made no bones about the intent of the Trump tax cut. They openly admitted that without it campaign contributions to the GOP would dry up. There is no logic in tax policy, only the drumbeat of "we want more" in the donor class.
15
Those who benefit the most and draw the most wealth from a society are obliged to shoulder the burden for insuring the health of that society.
Wealth that insulates people from the realities of their fellow citizens should be used to lift all boats and make more affluence possible for those of ordinary means. And of course the wealthy will also continue to prosper.
The conservative mirage that the wealthy pursuing their own best interest will benefit everyone else is just wrong. Scraps from their pile of leftovers isn’t trickling down and courageous voices like the one in this column should be applauded.
Thank you Mr. Kristof.
15
The thing is that many of the very rich would still be rich even if taxes at 50% or higher. It's the difference between...what? Being able to afford an extreme luxury like a work of art or 5th house or not? When is enough enough? And who decides? For me, higher taxes could be the difference between a very secure retirement and a not so secure one. Or more college debt for my kid. Some might argue that those are "luxuries" I can just as well do without. Where is the line?
10
More than soaking, can we just try NOT having tax preferences and tax hatred? Equal protection under the law doesn't mean you can create variations for every good/bad you think once free people are allowed to engage in.
Once we have a simple and fair system that doesn't treat us unequally, we can then fix the rates needed. Over-taxation and under-taxation are both problems.
3
It seems obvious no American should have more money than they can spend in five or six lifetimes. But first you have to get elected. The politicians who get elected appeal to people's aspirations.
Another reason to not soak the rich until one is in office is the amount of money the super wealthy will spend to assure Trump's re-election. A dollar spent on a politician who will return $1000 in tax breaks is a mighty fine investment.
3
Interesting that WAPO editorial board opinion has some Obama economists disputing this finding as the equality got much worse under Obama but they are saying questioning this methodology of concluding that the the top 1% are paying the same effective rate. And today on Fareed Zakaria GPS show, Steve Scharzman Blackstone CEO pointed out for the first time in a long time the workers growth in pay were ahead of the inflation.
But one would think the rich have more money to buy goods so will be paying sales taxes also. The VAT tax that some Europeans use is supposed to be equalize the taxes through sales taxes. So surprise conclusion here.
The rich should pay more for sure. May be they should be allowed to deduct money invested for job creation as job creation is a big gamble that only the rich have to lose. It is a gamble as a large % of businesses fail. People dont realize that.
2
We must soak the rich and stop the plunder of our planet.
According to the Guardian, the world’s largest investment banks have provided more than $700bn of financing for the fossil fuel companies most aggressively expanding in new coal, oil and gas projects since the Paris climate change agreement, figures show.
The financing has been led by the Wall Street giant JPMorgan Chase, which has provided $75bn (£61bn) to companies expanding in sectors such as fracking and Arctic oil and gas exploration, according to the analysis.
10
Tax the corporations, completely and thoroughly.
Governor Newsom, a so-called Democrat, just vetoed a California bill that would have prohibited cities from giving back the California sales tax that online retailers or other such entities collect from sales, to the corporations that have collected, such as Amazon.
The whole idea of California's high sales' tax is to benefit the individual citizen with city, county, state or Federal resources funded by these taxes that would not be well administered without the government.
Our country is deluded with the great corporate CEO as a substitute God. We have made our economic methods which lead to an income producing livelihoods, beholden to the great corporation.
So, it's not just taxing the individuals who have accumulated wealth with financial tools, it's taxing the corporations that must happen, simultaneously with taxing the rich. The State should not give back the taxes it has collected for the benefit of the people to the corporations.
Several years ago, at a City Hall meeting in Cupertino, California regarding Apple's plans to build a space ship like building now in existence. CEO Steve Job was in attendance. A council woman challenged and asked him, to the effect, Why Cupertino should permit the building? Steve Jobs answered because Apple paid taxes. Anything Apple does is justified because purportedly it pays taxes. And yet, US corporations don't pay tax but they can in California take our sales' taxes.
10
And when the few rich are no longer enough. Using Gates and Buffet is hardly the point.
The definition of wealth will creep to the millionaires and then to those above 500k. Soon 250K will be judged a bit too above the " Just Society" line and pay to professionals will drop as everyone knows we pay more for our physicians and lawyers than most other countries.
After all who is going to pay for the new safety net in the AOC and Warren proposal calculating that 40% of all New Yorkers will be reclassified as poor.
By the way, public corporations have a fiduciary responsibility to maximize profit for share holders....as in people with pension plans and 401K. So , let redistribute all the pension plans from those who saved to those who did not.
And as for vacations ...well, no one should be able to travel further than anyone else...or food or restaurants ...just one size for all.
We can call them re-education camps.....
18
@Joel Levine
$250K? .. How about $150K! That's where Warren wants to start!
10
And when the few rich are no longer enough. Using Gates and Buffet is hardly the point.
The definition of wealth will creep to the millionaires and then to those above 500k. Soon 250K will be judged a bit too above the " Just Society" line and pay to professionals will drop as everyone knows we pay more for our physicians and lawyers than most other countries.
After all who is going to pay for the new safety net in the AOC and Warren proposal calculating that 40% of all New Yorkers will be reclassified as poor.
By the way, public corporations have a fiduciary responsibility to maximize profit for share holders....as in people with pension plans and 401K. So , let redistribute all the pension plans from those who saved to those who did not.
And as for vacations ...well, no one should be able to travel further than anyone else...or food or restaurants ...just one size for all.
We can call them re-education camps.....
7
Why are so many Americans who can't accumulate $800 in an emergency willing to vote against their own interests?
In the 1950s, US corporations contributed 33% of the gross taxes collected in the US. Now it's less than 8%.
This savings of taxes has benefited corporate treasuries rather than the workers. When you see that the wages of CEOs have increased to 350 times the pay of the average workers, you can see how a plutocracy is being formed.
The problem with allowing a small percentage of people to obtain the largest percent of the profits is creating an oligarchy, which is antithetical to a democracy. If you have a system of government that allows this discrepancy in income distribution you are destroying our democracy.
These oligarchs are creating a world-wide movement to take over major countries with their wealth and the power that is derived from it. That's why the latest news about interference in our government involved oligarchs in Russia to oligarchs in the United States.
You either have an oligarchy or you can have a democracy, but you can't have both.
We are now at the point in our history where we must defeat these oligarchs who want to take the place of our democracy.
13
One thing that strikes me as I read this article (and people's
responses) is just how little I understand the very complicated US tax codes/laws. I'm sure this is true of millions of others—and this is precisely why the administration can get away with pulling the wool over our eyes. I've even spent endless hours trying to understand--and yet was shocked when, for example, I recently learned that the rich only pay Social Security taxes on a small part of their incomes. As taxes are so critical to our financial lives, can we not start teaching more about them in school?
10
The series of articles following the sensational data from Saez and Zucman makes several logical leaps. The most significant assumption in the current piece is that changes in taxes, the tax distribution, and thus the income distribution, would remain unchanged once tax rates on the wealthy would rise. There is no theoretical or empirical evidence that the mean and the variance of economic growth are independent.
Don't get me wrong, I think that the US will be better served by sacrificing the size of the economic pie for a more equal distribution. But let's not be confused by the the numbers and fancy graphs. To assume that there is no tradeoff between growth and relative tax burden is politics, not economics.
5
I had my own small manufacturing company employing around 40 people.
The only reason to hire additional employees was if I had more business.
Tax cuts went into my pocket for a new BMW and European vacations.
But after the first $10 Billion or so, it is hard to imagine an additional $Billion is going to change the way someone lives.
In addition, I lived in Brazil where a plumber in a mid-sized city makes US$10,000 per year.
That same plumber in a similar mid-sized city, same skills and work, makes $40,000 per year.
Similar for all other professions, nurses, computer programmers, accountants, etc.
GM sells a lot more cars per capita in the US than in Brazil.
It is a lot more trickle-up than trickle-down.
2
The article with the graph yesterday showed that it was only the top 400 households that paid a lesser rate from the bottom percentiles. There is a big difference between high salaried professionals and people who make money on investments and pay a lesser rate due to carried interest. The rhetoric in these recent op-ed pieces will terrify doctors and lawyers who make high salaries, have high student loans, and who may already be paying a surcharge in states like California. Every state has different income tax and sales tax rates. The national graph does not take that into account.
11
Thank you for putting the stark numbers up there -- 1950s' versus today's. I'm linking this to my GOP-voting friends.
2
I am by no means rich but it is an absurd and illogical idea that wealthy people do not create jobs through the companies they own and by investments. Tax wealthy people enough and they will just keep what they have and not invest in or expand their existing businesses just to give money away This is not economic theory but pure common sense What would you do? They are already rich why would they care?
12
Yes, we have a problem with inequality. Electing democrats is NOT the answer. If it was then inequality would not have INCREASED during the eight years while Obama was in office. The political system is rotten at its core. Biden’s son may not have broken any laws, but it is obvious he used his father’s office. Period! If politicians from both parties used the power they have to improve the lot of their fellow countrymen the way they use it to help themselves and their families and their friends we would not have the anger and bitterness you see in this country.
15
Attacks against any changes in taxation or income distribution are already being made by framing any changes as "socialism". How do you propose getting past that?
6
The rich have had it easy for decades like Trump never paying taxes avoiding going to war and the best health care. It Is time to make them pay and stop giving welfare to the rich. We could have a affordable health care and affordable housing but these greedy people were not paying taxes to help provide it. Also we must tax the Catholic and Evangelical churches they have been having a free ride and if no one pays taxes a country ceases to exist.
4
Suppose in a fantasy come true, Elizabeth Warren becomes president. The Democrats not only keep the House, but also re-take the Senate, as a rebuke to the those senators who steadfastly supported Trump. Warren and Congress soon pass her egalitarian tax bills, despite the onslaught of lobbying from big business and the ultra-rich. Time to celebrate? Not so fast.
Several of big business’s powerful lobbying organizations immediately file suit in a friendly federal court district, packed with McConnell’s pro-business, pro-rich judges. And even in another fantasy, let’s say the case makes it all the way to the Supreme Court. What really are the odds that the McConnell-Trump Court will side with any of Warren’s bills? Food for thought, perhaps.
2
We should 'soak the rich', not because it will make the rest of us better off economically (it will), but because it is the only way to get the rich to release its' strangle hold on our government. When we, the people, have the power to control our own government, then, only then, we can stop raising taxes on the rich. So rich people, choose your wealth or your control of our government; you can no longer have both.
9
One aspect of raising taxes on the wealthy is often overlooked, it would dramatically reduce their ability to contaminate our political system and bribe legislators for preferential treatment. If they don’t have the money they can’t pervert society to their whims.
While we’re at it a total examination of corporate and political deductions needs to occur, if Acme Widgets Inc wants to lobby Congress let them do it on while bearing the full cost.
9
How about we remove the Term "fair share" from all these discussions about taxation (I note that Mr. Kristof did not use it). There will never be a consensus on what "fair" is, so it only labels those who disagree as "unfair" without trying to win the day through a reasoned case. Mr. Kristof paints a very clear picture of the issue and a solution without resorting to his own interpretation of what would be "fair".
1
I think Mr. Kristof misses one of the key points of the Trump tax cuts: EVERYONE who paid Federal taxes got them. High and low income alike (though, unlike Europe, a large chunk of our population pays no Federal taxes at all, leaving a lot of folks with no skin in the game, or worse, a lot of foxes and few hens discussing what's for dinner tonight). Whether you got a big tax cut or a small one, it was better than no tax cut at all, which is what we've been living with for the previous 10 years.
9
The wealthy class are fighting a war against working Americans and they are winning as Warren Buffett proclaimed. We need to go back to the tax rates before Reagan and reduce inequality.
Republicans only create talking points from their weekly index cards as diversions from the policies they are pushing which are crushing average Americans.
5
This is a great example of how statistics can be used to distort reality. It is indeed true that the 400 wealthiest Americans paid an average 23 percent, compared to 25.6% for the bottom tenth. But for the entire bottom half, it averages to about 24.6%, while for the top 1%, excluding those 400 individuals, it ranges between 28.9% and 33.2%. So those people - a lot more than 400 - are paying considerably more than their "fair share", because the tax system is already progressive. In fact, they pay marginal rates (in high tax states) of more than 50%. So the inequity coming from those 400 wealthiest individuals is being used to tar the much, much larger number of less wealthy who are actually paying much more.
Moreover, under Warren's 2% wealth tax, using the numbers in the Leonhardt article, the wealth coming from those 400 people would amount to about $300 per person in the bottom half. In other words, it would reduce inequality without substantially helping those on the bottom. Soak the rich without helping the poor to make things "fair"? I'm not so sure that's the best strategy.
15
Income and wealth inequality are a reasonable basis for taxing the wealthy more heavily, but I think the more compelling argument is the need for additional revenue. We have an aging population that requires a solvent social security and medicare system with better benefits at the lower income levels. We have a need for better infrastructure. We need better schools in poor neighborhoods. The unmet needs of our society are pilling up. We need more revenue and no amount of cutting of "waste and fraud", often cited as a precondition for higher taxes, will meet these needs. As a society, we need more revenue. Full stop.
10
@Leonard Santos: Republicans propagate a lie that public employment produces a lower multiplier effect than private employment.
Piketty has shown that wealth was much better distributed in the country up until the 70s because of high tax rates on the wealthiest. Labor has been severely damaged as high paying manufacturing jobs have been targeted by this war of the wealthy and their political allies. Money is not wholly owned by the entity that earns it. They must pay for the well being of the people of the country. Social safety net, education, infrastructure maintenance and health care are all areas where the financial bounty of the few must be taken into account when viewing the lives of the rest of the country's citizens. During the Clinton years there was a determination to end Glass-Steagall and promote the end of the small local bank that caters to the people in their areas. Now banking is dominated by national corporations that plays big finance. They kicked off their new status with running the country into a huge recession. Which was capped off with a huge tax payer bailout. Now with Trump it has the feel that the plutocrats have won complete victory in the class war.
4
Too much to address. Bad idea to create a wealth tax. A boon for the legal, accounting and appraisal professions that will shift wealth offshore or to difficult to appraise holdings. A tax shelter boom. Better to tax income and put real teeth in inheritance tax above a high threshold. Rates should increase to 90% as income increases over AOC's proposed $50 mil threshold. Let the wealth work for America.
Tax all income on the same basis. Ridiculous to give preferred rates for capital gains & dividends over actual work. This includes "payroll tax." Apply it to interest income, rents, dividends & cap gains. Suspect the rate could be greatly reduced. Retirement & medical care are expenses to the commonwealth, not just workers & should, like defense, be paid for by all.
Put transfer tax on stock sales. Perhaps 2/10ths of 1%. Will inhibit speculation, middlemen/computer skimming, churning & promote stability. A requirement for companies to be public and sell stock should be that 30% of the board are employees. Top pay for any employee, including stock options, etc. should be limited to a multiple of average paid to employees.
$2 billion tax cut ÷ all US income tax payers = a cost of $14,500 per income tax payer or $29,000 for joint filers. Pundits, taking a page from pawn brokers & pay-by-the-week furniture salesmen analyze its cost by breaking it down to cash flow "cost" or benefit" over next few years to individuals. The COST is $29K for joint filers. No more room–
3
I dislike the term “soak the rich”. It is inflammatory to both sides. Why can’t we tax the rich more fairly ( not “soak” - striving to get rich is the American way ) and means test for Social Security/Medicare and lower those same tax rates for the middle class, these are the taxes that are hurting them, not their “income” tax rate.
4
The problem here is that the definition of "rich" usually reaches down into the professional class. I have a feel that the group that's really going to get soaked is the upper middle class, just as they are today. The upper middle derives its income largely from work, rather than investments, and is subject to the highest taxes of any group by far.
The ultra wealthy? They have ways to legally (and sometimes illegally) hide their assets, and thus pay much lower rates. Witness the recent report that billionaires truly do pay lower taxes than anyone else.
21
@John Exactly!! And this is how we know that Buffet and all his billionaire buddies are full of it. They keep advocating for higher taxes on *income*. Because they have none. Their wealth keeps growing without becoming "income" because it is all assets. They just want to pull the ladder behind themselves so that the professional class could never accumulate any wealth. Everything we make is already being confiscated by exuberant cost of living and taxes. We need wealth tax, like yesterday. Go Liz.
12
I have profound concern about how a wealth tax would *work* in practice. To be effective, it would require all Americans to calculate their net worth. That's not exactly straightforward for probably most folks, even with online calculators. Unless that practical angle is addressed concretely (candidates, show us your calculators and required assumptions, and invite voters to use them in anonymized fashion), I fear it's just another thing that the Rich will evade and will just burden the less half of the country (in wealth terms) and anger them.
4
"Lawrence Summers, the economist and former Treasury secretary, has calculated that if we had the same income distribution today as we had in 1979"
That sounds like a naive calculation that should not be taken seriously. If the tax rates were that much different, assuming the income distribution and size of the economy are the same is absurd. There is no telling how the economy would have developed had the tax system been very different.
7
Mr. Kristof: Thank you for this excellent and interesting piece and for taking the time to engage and respond to comments. Very helpful to us readers who want to have these conversations in our communities!
1
The wealthy in America are wealthy because they live in America. They owe a social debt because their wealth has come from our society with its laws, judicial system, education system, infrastructure, etc.
Since St. Ronnie broke the unions, the middle class has declined and their ability to support the infrastructure changes needed to repair and replace as well as build new and better has declined. The royal rich are creating a new feudal society right under the noses of the middle class.
The middle and lower classes have more voters than do the top 1%. They need to use this power or they will continue the decline in living standards that they have seen over the past 40 years.
Over 40% of the country did not vote in the last election. The key is to mobilize this 40% and then start legislating and overseeing. We also need to throw a few white collar criminals into jails with concrete beds and walls and barred doors and windows.
8
While I am for soaking the rich, this cynical voice inside my head keeps telling me that the most likely outcome of this movement will be soaking double-income high earning couples on the coasts. You know, the ones trying to pay off six figure student loans from grad schools while saving for a down-payment on a $2m 1000sf starter home that needs to be gutted. Because it is way easier to call them "the rich", sic the social justice mob on them, and catch them at their paycheck, than to go after the truly rich and powerful with assets and influences.
20
Yes billionaires and millionaires did not need financial relief a retired single woman on social security does. The middle class would find better jobs with a trillion $ infrastructure program increasing tax revenue from workers and help income inequality which is at its worst ever and never good for a democratic society. An fossil fueled economy enriches the rich and pollutes the planet's air and water , there is no Planet B .
IKE taxed at 70% for high earners and built our interstate highway system based on his experiences in WW2 Europe. Trump does not read he thinks the 1776 revolution involved the airport at Newark. Say what"?
2
I like Steve Bullock's slogan: "A Fair Shot For Everyone."
The emphasis needs to be on our individual responsibility to chip in to support our nation so that it has the infrastructure and public services that we can all be proud to call our own.
Everyone needs a clear accounting of where their taxes go and what they support. Many Americans don't understand that a local bridge is collapsing because someone in Washington choose to spend their tax money on a bridge in Afghanistan instead of on a bridge in Alabama.
Those who are very wealthy are able to chip in more and should be getting satisfaction out of knowing exactly what their money has built rather than only getting satisfaction out of having their accountant tell them that they don't owe any taxes this year.
President Trump has complained loudly about the state of the infrastructure of New York City at the same time that he boasts about being a genius because he pays little or no tax. That makes no sense. If he doesn't pay for first world infrastructure, he shouldn't complain about our infrastructure being third-world shabby.
6
The following statement in the third paragraph of this essay - concerning the year 2018 - is patently and grossly incorrect:
" ... the bottom 10th of households paid an average (total rate) of 26% ..." According to the United States Census Bureau report of 2018, the bottom 20% of USA households had income of $22600. (The bottom 10%, or course, was lower, but I couldn't find stats for that low a percent.) A married couple with a gross income of $22600 in 2018 had a taxable income of $0, since the standard deduction for such taxpayers was $24000. In other words, their tax rate was ZERO, not, as Kristof says, 26%. A single taxpayer with a gross income of $22600 in 2018 had a taxable income of $10000, since the standard deduction for such a taxpayer was $12000 ($13600 if said taxpayer was 65+ years old). Such taxable income incurred a tax of $1085 ($903 if 65+). In other words the tax rate for such individual would be 4.8% (or 4.0% if 65+), not 26% as Kristof says.
Assertions like those of Mr. Kristof here are fodder for President Trump's accusations of "fake news."
12
@Tim Crombie
The key words are "total rate": this includes not just federal income taxes but Social Security, Medicare, all state, local and sales taxes. Read the Oct 6 opinion piece linked at the bottom of Kristof's column.
5
@FCI I don't buy your argument. The key assertion - in the first sentence of the second paragraph - is that Trump "pushed through a tax cut" that made things worse. This refers solely to the federal income tax law. The very next sentence speaks of the allegedly lower "average tax rate" paid by the 400 richest households. Is Kristof switching gears here, going from a reference solely to the federal income tax law to a reference to all taxes? I think not. In the next sentence he speaks of the "average total tax rate." Again, I have no reason to believe he is speaking of anything other than the federal income tax. There are terms of art in the tax law, such as "gross income" and "taxable income." I am not aware that "average tax rate" and "average total tax rate" have any accepted meanings. If Kristof means what you say he means, he should have been clearer.
3
If you had actually looked at the charts in the links, you would see that Saez and Zucman are looking at TOTAL taxes paid - state, local, payroll, as well as federal. Most state and local taxes are highly regressive.
2
This is an excellent piece, and I agree wholeheartedly with all of Mr. Kristof's points. -- I would like to add, however, that the Citizens United decision of the Supreme Court, led by Chief Justice Roberts--which allows unlimited political donations without identifying the source--has contributed enormously to the buying of our political system by the wealthy--and the subsequent imbalance in assets and opportunities.
10
Donald Trump may have feuded with the Helmsley's over Atlantic City and a failed attempt to gain control of the Empire State building, but Leona famous statement is key for Republican tax policy and the party head who hides his tax returns: "We don't pay taxes. Only the little people pay taxes."
7
It's even worse than we think, because tax rates do not include unrealized capital gains as income. The rich are making much more money than we think they are.
We had marginal tax rates as high as 91% in the post World War II era when the great middle class arose and thrived.We need to return to a true progressive income tax scale and introduce a wealth tax as well.
3
Avoid the marriage penalty? My husband passed away in January of 2018. Now that I am single with no dependents, my taxes have skyrocketed compared with what we paid jointly. Otherwise, a terrific essay!
2
Paraphrasing Nobel Prize-winning economist Amartya Sen, "What counts is what an economy does with the fruits of economic growth." How many Americans could be educated for the price of a single mega-yacht? How many homeless could be sheltered for the price of one 10,000 square foot summer cottage?
8
As Elizabeth Warren has famously said: No one ever got rich on their own in this country. Every billionaire has taken advantage of the educational system, laws and law firms, accounting firms, tax loopholes, infrastructure, etc. In fact, with the exception of a few like Warren Buffet, billionaires consume extraordinary amounts of limited resources.
"Trickle-down economics" is the greatest myth and fraud ever perpetrated on the American people.
8
@David
Thank you! So very well said...can we shout that out please!
Republican arguments for lower taxes for the rich ignores the historical economic evidence that when the highest marginal tax rates for very high incomes was 90%, under both Eisenhower and Kennedy, the U.S. economy took off and provided economic benefits that created the middle class able to send children to college, take a vacation, have health care and decent housing. Of course it was not just the marginal tax rates that caused the economic prosperity of the 1950s and 1960s, as union contract negotiations helped achieve greater income distribution. Also many corporations then had a commitment to their communities and not just to their shareholders.
With higher marginal tax rates, the wealthy knew that if they squeezed more income for themselves it would only result in higher taxes, so they were satisfied with less while plowing corporate profits back into their businesses causing economic expansion that made their businesses and investments more valuable. The Republican-Trump 2017 Tax Act drastically cut the corporate tax rate and lowered marginal rates for the wealthy. And what was the result: corporations spent their new found untaxed retained earnings on share buybacks reducing the total number of shares resulting in higher stock prices for remaining shareholders. The tax savings have not been spent on economic expansion, but rather on higher dividends and CEO compensation.
196
@Harold Berk
It is inaccurate to tie post WWII prosperity to 90% tax rates and unions. The biggest factor was the U.S. had the market to itself as Europe was decimated and trying to get back on its feet, China and the rest of Asia were still isolated from the rest of the world, and Russia's Communist experience was failing. The U.S. had no competitors.
The U.S. was making historically high investments in returning servicemen (housing, GI Bill), the interstate highway system and a baby boom was underway. All of these fueled economic growth.
The sky high tax rates were rarely paid by anyone as tax shelters proliferated.
22
@Harold Berk
Oh, there is way more evidence than that. Scandinavia has a 50% tax rate. Happiest countries in the world. It is much easier to argue that high taxes help an economy and a society than the other way, based on real world results.
And 85% voting participation, too.
Must be the 4 weeks paid vacation by law for every worker.
or the annual balanced budgets.
29
@Harold Berk
It is up to the Dems to make that argument and they don't. Go figure.
14
Indeed! It is mind boggling to read: "Jeff Bezos would have $87 billion...rather than $160 billion." We're not talking dollars and cents here; we are talking money that the majority of Americans combined could not accumulate over entire life times.
I want to add something to this conversation. My husband has advanced Parkinson's Disease. I thank the Lord that he had the wisdom to purchase long-term care insurance when it was affordable and he was healthy. To date, his care has cost more than half a million dollars. Think about it. How on earth could people on a pension and social security manage without losing everything they worked for their entire adult lives? To add to this, the Trump/Republican tax law has lowered the amount one can use for medical write-offs. Listen...it is past time to increase taxes on the wealthy. And we have got to find a way to do it. 2020....
12
America has been victimized in the past few decades by a combination of bad faith and bad math. Bad faith is the use of bad math to make points that run counter to the overall facts, and convince people of a "fact" that actually isn't so.
The best example of this concept is exploiting people's lack of understanding of aggregate taxes vs. tax rates. The other is a lack of understanding of our graduated tax rates.
When I first began discussing taxes with a friend of mine, he pointed to IRS reports that indicate that the richest Americans already pay the lion's share of the overall tax bill. I pointed out that even 10% of a billion dollars is far, far greater than 90% of $100,000, so of course they pay the bulk of the tax bill. It's like pointing out that the guy who owns 9 out of 10 houses in your neighborhood pays 90% of the property taxes for that neighborhood - how can you say that's not fair?
And then there is the "top marginal tax rate" notion. When #AOC says we should return to a 70% top marginal tax rate, many Americans believe she wants to "steal" 70% of the income of rich people. They don't seem to understand that the 70% tax rate would only apply to income above $10 million per year.
There are so many people in America who spread nonsense about the goals of progressives like Warren, Sanders, #AOC and others, using either bad faith, bad math, or both. We desperately need to have this discussion, but most important we need the discussion to be honest.
384
@TLMischler it does seem fair that those with most of the income pay most of the taxes.
26
@Jim LoMonaco
Much agreed. If they don’t want to pay taxes, give me that money, I’ll gladly pay those taxes.
31
@Jim LoMonaco
What is not fair is that the workers do not make enough to qualify to pay taxes. EITC are corporate subsidies. Medicaid is a corporate subsidy. Workers should get paid enough to buy their own food, their own HC, pay taxes.
32
If we are going to make America great again by returning to how it was then let’s return to the tax rate for the rich before Reagan changed it please.
590
@Patsy One interesting point that I couldn't fit into my column, and perhaps it feels wonky, is that a high marginal rate (like the 91 percent rate in the Eisenhower administration) doesn't just affect post-tax inequality. It also affects pre-tax inequality, because corporations then pay CEO's less. Everybody recognizes that it's ridiculous to pay a CEO an extra dollar when he or she gets only 9 cents of it. So boards reward CEOs in other ways, such as helping them become popular with employees, or letting them take on dream projects. These may or may not be good for the company, but they don't fuel inequality, and high tax rates thus not only redistribute income but also prevent inequality in the first place.
357
@Patsy ...It is a little more complicated. For example, when the top tax rate was 70%, investments in things like apartment complexes, shopping malls, and industrial parks were very popular among the high earners because of the business depreciation tax write offs involved. People in the higher brackets could actually make money by investing in projects for the depreciation allowance, even though the projects themselves had little or no value. In fact when the Regan tax cut went through it resulted in a significant real estate collapse as these kinds of investments lost their attraction when the top rate dropped to 38%. Please understand that I don't disagree with your sentiment, but rather that increasing the upper tax rate by itself won't have as much value as you think unless a lot of other parts of the tax code are also overhauled.
44
@W.A. Spitzer / great point. That Trump was allowed to take tax breaks because of depreciation is similarly wildly unethical.
Its one of the many reasons he doesn't want anyone to see his tax returns.
26
"But as Warren Buffett has observed: “There’s class warfare, all right. But it’s my class, the rich class, that’s making war, and we’re winning.”"
It was also Warren Buffet who years ago urged his fellow billionaires to push for higher taxes on themselves, via a titan industry "pledge." Bill Gates, Warren's big pal, committed but somehow we never hear any more about it.
Buffet also observed that high rates of taxation didn't discourage the wealthly from working hard, but rather encouraged them to expanding their businesses in order to make up the slack.
In so doing, they kept America employed by their expansions. Sure, it was the post-War rebuilding, but it also looked a lot like a version of "trickle down" the middle class has never enjoyed.
Fast forward to Reagan and beyond: the more the wealthy get through tax cuts, the more they hoard, keeping wages low and cutting programs for the poor when deficits loom.
We're long overdue for a change to this dynamic.
490
Reagan - "a rising tide lifts all boats". No, it only lifts all yachts. More progressive tax rates are one of the best examples of good governance I can think of.
35
@ChristineMcM
Yes, but you give the very wealthy too much credit. They didn't keep America employed. Their businesses, financed by their customers, kept America employed. The very wealthy rode that rising economy, created by us, in their 100-foot yachts.
24
@ChristineMcM We Democrats are absolutely right to be worried about the candidates’ sharp turn to the left.
We need to make sure we don’t turn off all those voters who are independents, undecideds and even Democrats who don’t want socialism.
Here’s what some, many or all of the current Democratic presidential candidates are promising in return for votes: Free college tuition. Medicare for all, including illegal immigrants. College loan forgiveness. Reparations for blacks and gays. Guaranteed basic income. Federal job guarantees. Open borders.
All of the fabulously wealthy individuals and corporations put together do not have enough money to pay for all of these goodies year after year, and even Bernie Sanders has admitted that taxes will have to be raised on the middle class just to pay for free college, not to mention all of those other freebies.
As Margaret Thatcher aptly noted, the problem with socialism is that sooner or later you run out of other people’s money.
Remember, folks, our goal is to elect a Democratic president in 2020, not to make Karl Marx smile in his grave.
6
Clicking through to David Leonhardt's column brought a moment of clarity.
How did the oligarchs of Russia acquire their assets? With the Chicago School riding shotgun, they looted their country as it was collapsing.
How are the oligarchs of American acquiring their assets? Is it any different, other than that this collapse is being engineered?
4
Recall the motto of the Medici family: "Money for power, power for money." Given SCOTUS's bias for the rich and the hard right, there is no obvious escape from this looping trap. Inequality will surge. Fiscal crises will intensify.
The global political machine cannot be reversed, given its momentum and its methods. The clock of climate catastrophe has set impossible due dates. End Game looms, a proposition that requires serious consideration.
Fiscal constraints will preclude expanded social safety nets and protective infrastructure. End game by 2050 will bring horrific outcomes.
1
If the rich paid more in taxes, like their fair share, maybe we'd have enough money to have a massive infrastructure program in this country that would bring us up to First World class. This would also open up a lot more jobs - a win win solution.
Many of NYT readers are too young to remember the days of the WPA and CCC - jobs provided for the jobless in building bridges, buildings, trails - you name it. A lot of those structures still survive.
I'm waiting to hear about infrastructure repair from the 2020 candidates.
760
@Pat Boice Thanks for reading my column. Your comment about the WPA and CCC rings true to me. As many readers know, I'm a hiker and I just finished the Pacific Crest Trail last year, after 2650 miles. Much of that trail was constructed by the CCC in the 1930s, and we still benefit today. But sadly, the Forest Service often can't maintain trails today, and bridges have collapsed. So when we were a poor country we were able to build these wonderful trails, but somehow now that we're a rich country, we supposedly can't afford to maintain them. Makes no sense.
846
@Nicholas Kristof Much of the WPA's work can be seen in and around Southern California. Incredible bridges with classical lighting, the sea wall at Mission Beach. The beauty of those things still astounds me. We could do it again!
102
@Susanne Wheat: And the WPA and CCC public buildings such as museums and libraries. As a child, I’m now in my 70’s, I remember being awe struck by the sheer magnificence of these beautiful buildings. And they still exist, almost 100 years later as monuments to what a country can do when its government recognizes and responds to the needs of its citizens. The US did it before and can do it again by citizens casting votes for candidates who want to help all US citizens, not just the richest.
108
OMG, next thing you know Kristoff will declare that workers should own a share of the company for which the slave I mean work. Looking at sharing the means of production rather than ownership, then all involved would be rewarded rather than the few and the sitting on their derrieres shareholders and board members.
Also Yang wants a VAT -- on everyone. but no one goes with bring back the LUXURY tax on non-necessities. I think it's unfair for people to pay 1$ more on their already taxed meal at McDonald's -- It sometimes id cheaper to buy the burger there than to make it at home if your ground beef costs 6.99/pound.. plus costs for electricity, pickles, catsup, the bun. I am sometimes astonished by the extra $$ I am paying for taxon certain items. Meantime was 1 cent in tax paid on the 400 million $$ Leonardo? pruched by the Saudis aat auction? inquiring minds. etc. Certainly the 10% federal tax in its second iteration died with Bill Clinton... Ah the rich.. only the little people pay taxes and in lots of other ways.
PS> think how exciting it would be to have Chinese Nationals (workers) owning shares of Apple stock!!
Define rich. Does age matter? Tell us what your income and net worth are. What do you think the total federal, state, local and payroll tax rate on your poorest rich person should be?
1
Those using their wealth to lobby in order to pay less in taxes, and who hide their wealth, and those that dont pay their fair share of taxes by trickery or deceit are unamerican. Their narcissism is also shortsighted. Their children and grandchildren, at least those who dont reside in their gated compound, will share the fruits of their misbegotten gains.
1
Instead of soaking the rich how about soaking the Dept of War and the $15,000,000,000 they spend every week finding better ways to kill people?
5
Wy not at least cite a few positive role models?
How about writing up the Patriotic Millionaires, who want to pay more taxes? See web site & twitter. Where's some media exposure on this group on TV cable news or NYT op ed page?
Or Nick Hanauer, billionaire? His Ted Talk---"to fellow plutocrats--wake up. Our inequality is growing and we can do something about it. Want to grow the economy? Tax rich people like me."
His quote in the Guardian:“You can compete to be the richest or you can compete to create positive social changes, so I do that....I used to compete to be the richest. I got bored with that. Now I’m competing in a different dimension...."
Others? NYT Feb 2019: "They’re Rich and They’re Mad About Taxes (Too Low!)--- An affluent few are raging against a tax law that puts more money — a lot more — in their pockets. Friends call them ‘traitors to their class.’"
How about Physicians for a National Health Program? Ever heard of it? Too radical?
-- PNHP.org.
"The answer to our health care crisis ... a publicly financed, non-profit single-payer national program to fully cover medical care for all Americans."
These groups are too ignored in our media. Is the center of our politics so cautious, that most journalists fear looking 'left wing' ---lest they get bashed by GOP & FOX? So keep these groups dark?
So maybe we'll accidentally run across those who are called a 'traitor to their class'.
2
Absolutely!
How about the NYT joining with other media to propose a "connect the dots" contest, & offer some incentives? Thomas Friedman had a good article entitled "Connect the Dots" a few years ago, but it needs broader follow up, including a contest. As usual Mr. Kristof thoughtfully addresses many serious topics, but neither he nor other media writers or news programs stress the most basic root cause of all issues- "How kids turn out everywhere determines everything, asking 'How could it not?' " Mr. Kristof correctly notes - "immense wealth (using his 400 #) translates into political power, while exacerbating suffering at the bottom." But the bottom doesn't necessarily mean poor, but ANY situation where power determines outcome. I suspect that power includes preventing media, etc. from alerting the public that the House Sept. 25, 2018 passed WITHOUT DISSENT H.Con.Res.72 re safety 1st of children of divorce if abuse alleged. I suspect "the 400" represent paternalism personified - they want no father denied unsupervised access to their kids, even if he's abusive! The NYT did recently publish that since 2008 over 700 kids have been murdered due to abusive custody or visits & over 48,000 get so ordered yearly. The public MUST be informed to demand their state pass resolutions -family courts & child protective services are under state jurisdiction! Epigenetics- child trauma can cause genetic dysfunction (pedophilia...)! CONNECT DOTS!
Kristof writes that “it would help if the I.R.S. focused its audits less on impoverished Americans claiming the earned-income tax credit and more on wealthy people with murky assets.” Such fantasies clash with reality. Insiders have known for decades that both Democratic and Republican Presidents deliberately suppress IRS audits and U.S. Department of Justice investigations on such “wealthy people with murky assets.”
How? Politically-connected appointees at both IRS and DOJ look forward to post-government payoffs by defending “wealthy people with murky assets.” This is the ultimate bipartisan tacit agreement for decades of illegal corruption - including routine multi-trillion-dollar tax-based money-laundering that is deliberately ignored, despite readily-available whistleblower-guided evidence for asset forfeiture.
Moreover, Democrat and Republican Presidents want their own get-rich-quick-schemes right after leaving government to collect payoffs as well– millions of dollars from “speaking” fees, board memberships, etc.–paid by Fraud Street, fraud collar law firms, lobbying firms and other "murky asset" special political interest groups.
That’s why there is a decades-long “civil war” raging – the political appointees are tacitly appointed to castrate career IRS auditors and DOJ prosecutors because those auditors and prosecutors want to deploy whistleblower guidance to identify & seize the trillions of dollars of laundered “murky assets” belonging to wealthy crooks.
3
"Even if Trump disappeared tomorrow, we would still live in a country where the top 1 percent own more than the bottom 90 percent — and where on any given night more than 100,000 children are homeless."
Appreciate when columnists acknowledge that the Great Pretender is a symptom of a larger problem and not the problem itself. This presidency is a perfect exemplar of the "interesting times" that have we have been slouching toward my entire 53 year old life. Let's change the times, and prepare a path for something better. Keep ringing that bell Mr. Kristof.
2
It's become clear that there's a circle of despots in this country COORDINATING their efforts to destroy America FROM WITHIN.
Circle One: Trump, Giuliani, Pense, Pompeo, Barr, Macalvanny, Kushner
And it's clear there is a another circle of despots COORDINATING their efforts around the world to BREAK other democracies.
Circle Two: Putin, Trump, Erdogan, Bashir, Kim Jong, Xia.
Day by day, we see ALL THESE GUYS in secret meetings, palace visits, secret phone calls, world wide flights, under-the-table diplomacy, hidden WH visits, billions of Treasury dollars unauthorized, hotel and golf visits. All the people mentioned above are working in coordination to replace all democracies with tin-pot governments in America and around the world. Its impossible not to see it. It's happening now, almost daily.
4
It is easier for a camel to pass through the eye of a needle than for a rich man to enter the gates of heaven. Matthew 12:24
3
Hopefully Bill and Melinda Gates will take this Kristof editorial as seriously as the did the one about chlldren's deaths due to diarrhea, in the third world. The Gates and their billionaire buddies could voluntarily do a lot to correct income inequality. It would not require legislation, if everyone made efforts to "do the right thing".
Kristof, you're absolutely wrong. Imagine if I had, say $100 million in assets, and no debts. Now, if I were taxed at 50%, and they took all the rest, I'd only have $50 million! I'd be broke! I'd have to sell the Hawaii house... the boats... all but one or two cars. I'd be a pauper. You ordinary middle class people just can't understand what kind of negative impact those kind of taxes would have on my life. Having to think about whether to fly business class or first. Having to think twice before ordering a second $300 bottle of wine with dinner. Just what kind of socialist -are- you, Kristof?!
Luckily, I am nowhere near $100 million in assets... so at least I don't have the worries of the wealthy what with all this unfair socialist talk about "tax equality" and "tax fairness". What's "tax fairness" but what the wealthy have worked long and hard to set up -- which is the current spectrum of loopholes, special rates, and 'incentives' that shelter the wealthy from paying tax rates as high as ordinary workers? That's fairness! Just the way they've set things up now, 'bought and paid' for. Ask your Congress-person who gives them donations? The wealthy claim they have bought "tax fairness" fair and square, and they deserve to keep it. It's "socialists" like you, Kristof, who keep claiming taxes are not fair already... you won't hear any wealthy people saying that, except those traitor liberals.
2
taxation is theft. and theft is theft whether you steal from the wealthy or the poor. morality is not income-based.
3
Don't let them give up their citizenship to avoid taxes.
Nicholas, when do we call an Emperor an Emperor — instead of a President?
And when do you call an Empire an Empire — instead of just a “Democracy Dying In Darkness”?
2
I blame the middle and working class people for this dilemma. They are brainwashed to believe this is your American dream and you can achieve it and they believe that it’s the right thing. In fact it’s a nightmare. Do they believe that Trump was really going to give them a tax break? He conned them and they are happily accepting it. They very well know he made millions cheating everyone on the way. He created a bigger swamp than ever existed before. He used charity money for his own benefit. But they keep voting for him. People vote Republican against their own interest. So who do you blame?
2
The Fairness Doctrine
Not on your life will three squares suffice
Poor folk require the best things in life –
Fairness is all – though they labor at leisure
Enjoying the sunshine till their next seizure,
Then off for prime care till back on their feet
And they can panhandle on easy street;
Still, cry the Lefties, they’re richly entitled
To clean digs and sheets, they’re needs are unbridled
And, by this doctrine, the poor must have more
Then the haves can imagine, so unlock the door,
Let them into your castle; drink and cavort,
Have at your best things, storming your fort -
Take objects d’art that you called your own –
With fairness for all, your life’s overthrown.
1
Go Bernie,go.When Obama was faced with recession,he bailed the rich.Do you think Biden would be any different.If he does not think that his son´s business ain´t suspicious.
2
It will never happen, though. The popularity of Trump should prove that. About a third to a half of Americans are authoritarian followers, pleased to lick a billionaire’s shoes clean before heading to church to hear how Jesus hates the poor and the meek. They will tolerate any number of kicks to the face, as long as they can be part of the mob stomping a boot on someone else’s neck.
4
When Obama was faced with a recession, he bailed the rich. Do you think Biden would be any different? If he does not think that his son´s business ain´t suspicious.
We know that Saez and Zucman lied in presenting their research. The Times perpetuates this lie. Saez and Zucman intentionally disregarded the Earned Income Tax Credit, which pushes the federal income tax rate of low-income workers down as low as MINUS forty percent. Besides, even if you take Saez and Zucman at their word, if a high-income and low-income worker each pay the same percentage in income taxes, the tax system is still highly progressive. If the first worker makes $50,000 and the second $100,000, the second still pays twice the taxes of the first, and gets less from the government in return. And the high income worker does not make his money by accident. He probably has to work twice as long. For all this columnist's bloviating over all the power the rich have, we still live in a system that takes $3 trillion a year from the makers and gives it to the takers. Who has the real power?
5
Calm down, our theocratic monarchy-inclined Attorney General William Barr will preach us back into soporific rule-bound sheephood so we will be good little boys and girls again and just accept our place in the plutocracy the conservative Church entwines itself with. We should be grateful such patriarchal wisdom is available to us. It's for our own good!
1
We need to call it what it is. Criminal. This form of bribery amounts to theft. Sooner or later there will be a violent revolution. Let's avoid this by electing Democrats to full power in D.C.
2
I work for a CPA who specializes in high net worth individuals. I see tax return after tax return with income in the seven figures, and no or little tax paid. The returns run sometimes into the hundreds of pages ("very complex" as Trump claims his are), and even though I'm just doing admin work and have no background in accounting, the returns are not so complex that I can't understand these people are not paying their fair share. Oh, sure they pay something, especially those that get a paycheck. But, for the ones without paychecks, but still millions in income, it gets a little sickening. Our CPAs claim that they obey every tax law in preparing the returns, and I believe them. It's legal for the rich to not pay tax. That's what it boils down to.
4
I prepared tax returns for thirty-six years, over thirty-thousand of them. Returns with seven figure incomes who pay little or no taxes? Yes Virginia, there is a Santa Claus. No, there are virtually no such tax returns. I don’t know what kind of game you are playing by writing such a post and yes, I do believe the rich should be paying more.
1
After a person's income reaches a certain level, it's value is often more to "keep score" compared to other wealthy people rather than needed for a better lifestyle. If an income tax or wealth tax is applied smartly so that each wealthy person is affected essentially the same, then the score keeping still works, it just happens at a somewhat lower level
2
Please, stop saying things like "Soak the rich!" It sounds baseless and mean-spirited.
When we speak of taxing the wealthy at increasingly higher rates it's recognizing the reality that they utilize the resources of our country disproportionately to their advantage.
It's the fair thing to do, not because the rest of us are being pouty, it's because it's true!
2
How is he supposed to survive on 87 billion dollars? What would his neighbors think? Imagine the lifestyle compared to when he had 160 billion dollars. Must be horrible.
2
Is there something in the American psyche that hasn't wanted to "soak the rich"? There still exists the dream/lie that everyone here can pull themselves up by their bootstraps and get filthy rich too. That could be what is keeping us from fair taxation.
Many Americans finally are waking up to the fact that the dream is a lie. Most people who are wealthy either inherited it or stole it, legally or illegally, or got very very lucky. It also helps to be white.
5
"Mr. Buffet understands who is winning class warfare..."
Really?
Warren Buffet's top tax paying year was 2012 in which he paid $12 million in taxes. Meaning, his lifetime taxpaying was, at most, 0.1% of his lifetime earnings. 2012 did not change that percentage.
Warren Buffet has organized his entire empire around and to be powered by his evasion of taxation. Pay dividends? Never!!! Such dividends would be subject to personal income taxation. If you want a dividend, sell your stock and pay long-term capital gains rates!
Better yet, borrow against your unrealized capital gains and pay less than nothing!!!
His answer to the screams for equality? Advocating increased taxation on his smaller business competitors.
Neither Ocasio's 90% tax and Warren's tax 140% tax on returns to capital would affect Buffett's empire in the slightest.
Buffett's entire persona is a complete falsehood.
Warren's and Ocasio's tax policies would affect us. Sixteen thousand businesses employing over 20 million workers will be wiped out by the extra $72 billion in taxation of the Ocasio proposal. Like Roosevelt's Great Depression's 76% tax rate, it won't raise a dime, it's yield is purely a sophistry by Saez and Diamond.
3
Too late!
The ruling class brainwashed the underclass to remain poor.
The actual subversives of USA are the Radical Red elected Communist Party. They reap all benefits. Their 'Leaders' get free medical for life with pension. Plus insider trading.
True Blue Americans don't need Unions, Medicare, Social Security as that is Red Communist Property stolen from the wealthy. The wealthy create all jobs. They are blessed.
The Media is also Rich, maintaining an illusion of wealth for All with Shiny Objects.
This will not end well, so glad to be old and sick...
1
I think Elisabeth Warren is smart enough to assemble a team to get this done. She can hire really smart people that do not just have their own interest in mind.
2
I just love this article....
but Mr. Kristof how do we fix this??
I have personally been the victim of corporate greed;
my "position" was eliminated after 40 years in a health care profession that is now owned by a corporation.
I know one thing for very very certain. Corporations should not be in the business of health care. They do not care one bit about providing care...they only care about how much money they can make off the sick.
I could say more but I think its slightly off topic.
Yes tax the living doo out of these rich corporate beasts.
2
@Joan So "Corporations should not be in the business of health care"? Say goodbye to all the drugs that save lives and all the instruments, scanners, and procedures invented by corporations.
1
This response is about the email I received that got me to this column. "The Trump administration has announced plans to send an additional 1,800 troops to Saudi Arabia to help defend it against Iran. I just don’t get it."
My take: President Trump is taking orders (commands, not suggestions, not ideas, ORDERs) from someone.
I hope someone who reads this (if it's published in the Coments Section) investigate my concern - I hope I'm wrong.
1
Ahem where were you when Bernie was saying all this in 2015-16. Oh right you we’re under the media gag order, to ignore Bernie. The media is making the same mistake this time around. By focusing exclusively on Trump and completely ignoring voices of William Weld, Joe Walsh etc. How will the public learn about them unless you talk about what things they offer as alternatives to Trump? Bernie got far far along WITHOUT media help in 2016, thanks to the millennials and his fans who used alternate methods to spread his message his rallies and his eye opening mission.
Wake up Nicholas and NYT, you are bit tardy and sloppy by not being fair objective to all other voices in our democracy that are so worth listening to. Sheesh
3
Typical Socialist totalitarian advice from the left. Right now the bottom 60% of earners pay no tax and the rest of us pay it all. This comment of "fair share" is just absurd, how about everybody pays a flat tax with no deduction, that would be fair. The state and local governments collect a huge amount of tax and add this to the fed's portion and many working forms are exceeding a total tax contribution over 50%. This is criminal and the fact that the totalitarians want the money to buy votes shows just how ridiculous this entire editorial really is.
3
@James The bottom 60% pay quite a lot of tax, they just don't pay federal income tax. Neither do the very rich really, they move money around so they don't have to. A flat tax is massively regressive, if you make $40000 a year you will really miss $4000, if you make $4000000 a year you won't even notice $400000 missing. If you make $4000000000 a year you can't even conceive of $400000000 as an amount. Did you mean farms? Most farms are gigantic corporations, they pay very little. Most states, at least in the East, have all sorts of breaks for family farms. I've got a bunch of small farms within a few miles of my house, they don't complain about taxes, they complain about the weather.
2
They call it "trickle" down for a reason.
Think about it.
1
Nicholas, if I were working for your salary, I'd harbor the identical sentiment.
2
It took Western Society thousands of years, to try to disengage its self from the chains of the religiously-imposed “Divine Right Of Kings” — only to now be subjected to a new type of caste system; one imposed on Western cultures by the “Divine Right of Inheritance.”
As it made no sense to assume, that a king’s son would be the same type ruler as his father had been, now it equally makes no sense, to assume that those who have inherited vast amounts of wealth, will be able to manage vast amounts of wealth, without harming large numbers of people in the process.
Bottom line: The continued toleration of Inherited wealth, makes no more sense, than the “Divine Right of Kings.”
And, as a consequence, both should be relegated to the “ash- bins of history.”
2
I mailed my September tax check off to the U.S. Treasury whose boss is Steven Mnuchin, whose boss is President Trump.
I will have to do this again next year in January, April and June.
It's not the taxes I resent, it's who I am sending them too.
3
I would be delighted if your colleagues at the Times would read your column and curb their need to sandbag Sanders and Warren at every turn.
1
Remember it was JFK who lowered the tax rates. Ike kept them high because we needed to fund the Cold War. Kennedy lowered the taxes and then started an unnecessary war on the Asian land mass.
Should we tax the rich more ?
Yes, but the right way - the Swedish way.
Sweden eliminated the inheritance tax in 2005, the wealth tax in 2007 and taxes on residential property in 2008.
Income from wealth is taxed, but not wealth per se.
Sweden taxes INCOME. It then distributes the money collected with transfer payment down to the non-rich
In a global economy, where wealth can move with the click of a mouse, this is the way to go
3
Rich people don't build roads, but they donate to the people who won't build them. Rich people don't provide safe drinking water, but they support candidates who will not. Our country is falling apart because no one will admit there is a need for socialism when it comes to infrastructure and other public programs. Democratic candidates must stress the need for government to provide these essential services because they are both necessary for our economic health and for our security.
We need to educate the american people that rich people do not create jobs when they get tax breaks. We have a large portion of the population scared to death that if we tax the rich, everyone will suffer due to the unemployment.
3
Do we really understand this issue and the subtle ruse of our massive wealth disparity?
Highlighting Mr. Buffet is sentient: while pledging to give up the majority of his fortune, he still manages to take full advantage of current tax law and keep obscene wealth within the family. This includes moving billions of fortune into non profits run by his children. Others like him use equally “magnanimous” ways to gain appearance of being genuinely understanding of the issue elitism while simply perpetuating a circular false image that it’s all somehow earned. A 21st century “Let them eat cake.........”
On top of it all, many so called pundits and visible academic economists who claim to understand the threat continue to focus on incomplete data and agendas to tout misleading solutions. Sure, like the public somehow cannot see.
I think Wealth is necessary and a certain amount of disparity is ok. But when it’s too much, maybe it’s best to remember other, more aged examples in history.
It might be worth noting that Jeff Bezos has what, 150 billion? If you spent $10000 a day, every day, and didn't make a dime on your money, it would take more than 41000 years for you to run out. I doubt the rich are going to suffer, absent an actual revolution.
3
While income inequality certainly is a national shame and I'm pretty sure leads to CO2 emissions inequality, it's sidebar issue. Humanity is going to end in the next 100 years, and the voyage along the way is going to be unpleasant. An undiscovered miracle technology is not going to save us. We need fewer people and a drastically different way of life.
1
Thank you!!
Thank you!
1
"Soak the rich" Nothing like a daily dose of schadenfruede from the NYT. If billionaires are really the problem then let's start with Oprah. Her reign of terror on the american people needs to come to an end. After that, move on to Tom Steyer. Imagine all the children we could feed if we just confiscated the money he spends on those stupid political ads.
5
Even though the NYT is a leftist Democratic newspaper, I am appauled by the title of Mr. Kristof's article. The title is anarcho-communist of the have-not, who would not know how to manage the expropriated riches of the well-to-do, and would quickly waste them on useless things and ephemeral pleasures. In politically incorrect language, on booze and gambling.
4
As your column points out, there are two approaches to increasing taxes on the wealthy: higher marginal income tax rates and/or a wealth tax. Higher marginal rates would be easy to implement since we already have an income tax and an IRS that knows how to collect an income tax. Along with higher rates we should bring back deductions for state and local taxes. It makes no sense to support shifting the burden of government to state and local governments (as Republicans do) and then make it harder to collect funds to pay for it.
On the other hand, a wealth tax would be an administrative nightmare. If it is similar to an estate tax, the difficulties in administration are self evident. The fact is that most rich people have a significant part of their wealth in investments that are not easily valued, such as closely held companies, real estate, private partnerships, art, etc. Why create a separate (and huge) bureaucracy to administer such a tax, when the same goal could be achieved by raising income tax rates?
1
Taxes and tax subsidies are tools for the redistribution of income and wealth. What many people fail to recognize is that policies over the past several decades have used our tax structure to redistribute wealth to the super rich from everyone else. A change in the tax structure to reverse that trend is a redistribution of wealth – but so are the tax policies that led us to our income and wealth inequality crisis.
2
I will pass over Mr. Kristof's obvious bias in cherry picking data to prove the point he had before he started to write the column.
I may be in a unique position to look at the broader picture.
I was a successful businessman who worked 40 to 50 hours a week. I travelled when needed, but probably no more than 10 to 15 times a year. I was able to take my family on multi week vacations.
Still I was able to put 5 children thru some of the most expensive colleges, without any tuition aid. And I live in a coop on fifth avenue.
My children by comparison work 70 to 80 hours a week, travel constantly across the globe from time zone to time zone and take their vacations in long weekends.
Do they make more than I did? You bet.
But I wouldn't want their work schedules.
Do they make too much? maybe.
But you have got to stop comparing apples and oranges.
You have to add to the lower wage earners the additional earnings they receive from social programs, everything from food stamps to college assistance.
You have to let people know who is paying the most taxes.
So, all of this is by way of saying the problem is a great deal more complicated than Mr. Kristof makes it.
3
@RD What exactly is your point!? That getting food stamps and some college assistance is something low wage earners should be grateful for while the kids are sunnning themselves in the Caribbean? I tip my hat to your hard-earned successs ) that of your family and I wish you well... but a real progressive tax will not diminish your ability to make waves in the world. It's not as complicated as you think.
Back in the good old days of 70% tax rates people still worked hard and became seriously wealthy. Paying higher taxes today wouldn't affect people becoming rich.
That said, they would be well served to pay their employees more of the profits the employees actually do the work to create. The concept of a CEO being worth 300 times the average pay of their company's employees is just silly. I won't invest in a company where that wage disparity is greater than 30-1, and my portfolio is doing quite nicely. Dump stocks with those ratios and corporate boards will react. These people's real money is made in the equity they hold. Drive that value down and watch their employees wages go up.
3
A corrupt system:
The Federal Home Loan Bank of San Francisco presents itself as a government answer to affordable housing.
Well they have been around since the Great Depression and the only housing that is more affordable as a result is for the CEO, CFO,
EVPs and SVPs.
Executives at the FHLB SF make several million dollars a year, many multiples of the President of the US and any federal agency heads.
Well you think they must be geniuses to earn so much tax payer subsidized monies, right?
They are a non profit government corporation that funds itself with government debt in money markets, free from paying state and local taxes. Congress gave them extraordinary powers to fund themselves through preferences like a ‘Super Lien’ on collateral, etc.
The Federal Reserve Bank bought over $1.3 trillion in FHLB MBS collateral and debt during the last Crisis in 2008-2009 to keep the Federal Home Loan Bank from going into conservatorship like Fannie Mae and Freddie Mac.
Otherwise the full extent of their bailout would have been revealed, like Freddie Mac and Fannie Mae. At least taxpayers were repaid for the latter.
The FHLBs were also responsible for the Savings and Loan Crisis a few years earlier.
They are a malevolent force exacerbating housing cycle crashes while their executives earn millions from Congressional preferences and do exactly nothing.
They are PR machines that should be replaced by the Fed, who could provide far more liquidity and affordable housing.
Soak the rich is so inaccurate. Their wealth is severely miscalculated. Corporate officers get so many perks that are not counted in the calculation that the assumption of what is wealth is ludicrous. Airplanes for private travel. Retreats. Outings. Trips (vacations). Memberships. I believe the tax laws, if presented to the public, will turn their opinions against the rich pretty quickly.
2
Well put, Nick. Poor people need money to survive. Food costs the same for everybody. After a certain point, having all that money warps your sense of who you are and it also deprives those who could put it to better use of resources they need.
3
Adam Smith spoke of "their little interests" referring to the wealthy. He advocated a society that invests in each and every individual so he/she puts the natural gifts and talents to good use, contributes to society and is happy.
The present brand of capitalism has nothing to do with Smith's principles; it is predatory, destroys the fabric of society and condemns individual to indentured slavery, it is a sick, rigged and derelict system. Our economic system must undergo massive structural changes and just taxation is key!
Warren for President!
1
Flat tax. Same rate. No loopholes. Everyone pays something.
1
Why the beef against someone who comes up with an idea that results in that person becoming "rich"? If Bezos had not come up with Amazon, more than 100,000 people would not be employed there...that is a real and tangible contribution to the wealth of this country. If you really want to level the playing field, increase the inheritance tax to a level that does not make heirs automatically become 1%ers. Nothing more annoying than to see or hear an arrogant heir is there not?
2
At this point, "soaking the rich" would simply amount to getting them to finally pay their fair share.
Elizabeth Warren is completely right about the need for a wealth tax. Income and wealth inequality are higher than they've been in generations and it's a very bad thing for society to remain so unjust and unfair.
Americans are being taught that hard work is for fools and that the way to get rich is to manipulate the system. That will eventually destroy the nation. It must be changed and the sooner the better.
3
The 0.01% have convinced everyone else that they got there by dint of sheer hard work, and if that everyone else Just Works Hard Enough(TM - America's billionaires), they too will be invited into what George Carlin in 2005 called "the big club -- and you'ain't in it."
If you read about the background of this country's billionaires, you'll see a pattern of a belief in superiority by birth. People like the Kochs, the Mercers, the DeVoses and others believe that their inherited wealth is theirs because they are somehow anointed by the Almighty as superior. Even someone like Marc Zuckerberg, who didn't come from great wealth, came from a family affluent enough to afford to send him to Harvard.
The bootstrap myth is just that -- a myth. And it's high time people stopped looking down the economic ladder at darker-skinned people who they then blame for their problems, and start looking at the oligarchs above them, who are lifting the last two bucks from their back pockets in an attempt to fill the dark holes in their psyches where the rest of us have souls.
2
I have always wondered what magic spell do republicans have over the poor voters that they vote against their self interest. Race, religion and all that alone are enough to make those voters so blind that they do not see the glaring inequality in America ? When they cannot see a dentist or even a regular doctor because there isnt one within reach, when health insurance is not available to them or they cannot pay for one, while billionaires manipulate the government policies to make even more money, doesnt their blood boil with anger ? And cant they figure out which party is it that perpetuates their misery ? Please, some one tell me.
2
No human society can endure the levels of inequality discussed in this piece. The US will collapse if this is not rectified -- Trump, a faux Gracchus, is merely a warning sign. Declining life expectancy is the surest sign. Despite what some may think, this is not a second Robber Baron Age -- real wages rose back then, though farm incomes suffered. It is far worse.
3
Nicely done, Mr. Kristoff. It's rather simple, actually, a flaw (feature say most) in Capitalism.
"THEY" had slavery around here once, and "THEY" liked it! (be as philosophical as possible in thinking it thru, I'm not just talking about whites enslaving blacks, for example)
And
"That which gets rewarded gets done" (Thanks, B.F. Skinner)
Rich contribute to elected politicians 'cause the reward is legislation that benefits them specifically. The GOP is their "waterboy". Democrats aren't far behind sometimes...but they should be far behind in such an outlook.
Vote Blue no matter who in 2020 & beyond.
1
This has been a long, slow squeeze, and I am so tired of taking shallow breaths through life, waiting for someone to do something. I am surprised that things haven't actually gotten violent, but it's hard to march with pitchforks when you're working three jobs.
Warren 2020.
2
We 'soak the rich' and they will leave. They have no loyalty to our country. Our government would help them hide their wealth and abscond.
Our government officials, in both parties, enrich themselves and their families off of our society. They scratch the backs of the wealthy and the wealthy pay them off in bribes.
Their kids (Hunter Biden, Ivanka Trump) benefit. Society loses. Our political and business elites care nothing about the people of the United States. If we 'soak' them it defeats the entire purpose of them being here: stealing from society.
If you do not raise taxes as Mr Kristof says correctly, welcome to the many third world countries I have lived in where the rich live behind 10 foot walls topped with broken glass, drive armored cars and hide their money abroad (Cayman’s & the USA) while the poor ride their donkeys and beg just outside those very walls.
3
If I gang up with my friends and rob a neighbor because he has more than us, I am called a thief. If I gang up with my friends at the polling place to tax more wealth from my wealthier neighbors, than I care to pay in taxes myself, this suddenly becomes “justice” and not theft. Please someone explain to me why this is.
3
Thank you for such a compelling, straightforward column. You prove the conventional wisdom with numbers. I think most people can feel the tax inequities in this country. We read about it in the headlines. And we see it in the growing number of homeless on our streets. Hopefully Democrats can make this a major issue in 2020. Why any lower income, working family would want to support a president who is so obviously out of touch with their daily financial struggles. They need to accept the reality that their “savior” has an oft repeated word to describe them. Losers.
2
The most obvious response to this flimsy argument is first run an efficient government.
Stinging the wealthy largely out of spite cures nothing unless the government and its
employees learn how to run programs without fraud and abuse then we could truly find out what if any money
is needed by a lean instead of a bloated bureaucracy.
2
We can see the results of government's loss of revenue at every level. Our roads are disgraceful. Our public places are neglected. We have people with jobs unable to find affordable housing that's decent and close to where they work. We have people making decisions about medical care based upon what they can afford rather than what they need and those needs are not for cosmetic surgery or sprained ankle. It's for vital medications such has insulin, heart medications, cancer treatments, etc. States have cut funds to public colleges and public schools. Mid to large size corporations threaten to leave an area or move to an area and they get tax breaks that they don't need.
We have become a country that is falling apart, that is falling short, and that is failing all but the richest companies and citizens. 99% of us are forced to make impossible choices when it comes living. It's unsustainable. We can't be good neighbors or good to ourselves or our families. Many who were born after 1954 will not be able to retire but we'll lose jobs anyway and take jobs that pay barely enough.
This is the result of greed. Greed that has been allowed and encouraged by a few economists who felt that efficiency, oversize CEO pay, and shareholder value was more important than the human side of things. When the flimsy prosperity based upon credit cards falls who is going to pick up the pieces? We know who gets the breaks and it ain't us.
10/12/2019 6:32pm first submit
3
Soak, marinate, then slow roast.
3
Despite many good and reasonable points made in objection to inequality the exploration of this issue (by the nyt, the nation, etc.) is pretty shoddy and one sided (judging by the reader comments, the subscribers like it anyway). The Saez zucman data is not presented in a transparent way and many economists would view their presentation as misleading. Even compared to Picketty’s methodology the saez zucman data seems out of the norm. For example, median per capital income in the us is closer to 32k by almost all sources. But if you include all individuals over 20, not just ones who file taxes (i.e. are in the workforce) you add millions of people with close to 0 income. Furthermore, saez and zucman don’t include government transfers to these people as income.
If you live in a state like New York or California and pay a marginal federal income tax rate in the 30s (as the type 5 percent do), a marginal state tax rate around 10 percent, Medicare / Aca taxes of 4 percent, social security tax (not to mention real estate taxes or consumption taxes) it seems hard to imagine a tax rate near 30 percent. Capital gains for most people is a small percentage of their income (unless we are imagining unrealized real estate appreciation is a capital gain).
These articles don’t even hint at being objective - which is too bad because they make many important point.
4
Extreme inequality of wealth can result in revolutions. Sadly, ours so far has been the election of Trump. The folks at the bottom have bought into a charlatan. Those at the top fear Elizabeth Warren, and with good reason. Their greed may ultimately accelerate the very changes they don’t want.
1
I think there are Americans who put up with gross inequities because they believe that they are going to win the lottery some day and they don't want that money stolen by the taxman. And they don't want that money to go for "entitlements." Their clinging to a statistical impossibility leaves me amazed.
Given the current political situation, to wit, a wanna-be despot ignoring all norms of a functioning democracy, and economic disparity which surpasses the inequality of the robber baron era, I would suggest that the United States, which see itself as a light unto nations, is, in fact, a blight unto the world.
1
“ Those billionaires paid an average total rate of 23 percent in 2018, down from the 70 percent their 1950 counterparts paid.”
I assume you really checked your facts. The 23% you referenced was an effective rate. Are you sure the 70% was also an effective rate?
1
A column packed like a fruitcake with so many juicy data points. Media scientists say we liberals read the NYT not for information but for validation. Well, this article shows the benefit!
If it feels like you're doing about a million times worse than your parents or possibly even immigrant grandparents; if you're $400 away from insolvency and have been for years; if you wonder who ever thought 80/20 payouts from Medicare were affordable -- this column just explained, in a deluge of facts, what in the world happened.
Thank you for explaining specifically why we need to embrace radical tax reform. The fatcats won't even feel it while the rest of us work two jobs just to pay for the daycare and the killer rent and phone bills.
Even Goldwater looks like a hero these days.
Great column, yet oddly the poor vote for Trump and like-minded people and against their interests. It's just baffling to me how a Manhattan charlatan, who inherited $418 million at age 8 is beloved by poor people. I still don't get it.
1
George McGovern said it, perhaps on “60 Minutes.” I paraphrase: You can’t soak the rich, but you can dampen them a bit.
I am young but through hard work, smarts, and luck I am in the 1 percent. And I am grateful. Here is my problem with soaking the rich. Where is my money going?
If we lived in Norway that is one thing. But every day I drive by a multi million dollar housing project where barely anyone works, there are frequent shootings, and people casually toss their trash on the ground until paid workers clean it up. This is disgraceful.
I’m sorry, I don’t want anyone who is not going to work to get a cent from me.
5
“We don't pay taxes. Only the little people pay taxes.”
- Leona Helmsley
Welcome to the Republican Party national platform since 1980.
Taxes are the price of a decent civilization, and the Republican Party has no interest in a decent civilization.
We all should pay a little more in taxes....and the tax-dodging-tax-evading rich should pay a lot more.
One of the hidden secrets of Donald Trump's tax returns is that this supposedly successful businessman does not in fact in pay much in taxes...either because he's a lousy businessman or a great tax-dodger.
Paying taxes and paying your fair is incredibly patriotic...an idea that sickens Republican souls.
Time to vote out the tax-dodging, tax-shirking Grand Old Phonies and rebuild America without their trickle-down fraud destroying the country.
3
What you call 'soak the rich' is nothing but a fairer tax system where the 'rich and powerful' stop stealing from the poor. How could we, with a straight face, claim to be living in a democracy, when we have an unethical corporate world where greed remains king? This, with the rising of an odious inequality, incompatible with true integration, and solidarity, of the least among us? Is true dialogue dead?
It’s not so much about soaking the “rich” as it’s about “recovering stolen patrimony” Vulture capitalists launched a systematic campaign to loot and plunder the economy that destroyed the American middle class and sank the economy into the 2008 Great Recession.
1
Soaking the rich is a ridiculous notion. Period.
I wonder whether your thinking is shaped by the inordinate control exercised by the top 1% on legislators and the legislative processes that allows them to vacuum everything into their pockets and further increase their power.
As if unsoaked rich is our primary problem.
The plutocracy masquerading as a democracy is a problem. The reason this is happening is rather simple, and unrelated to soaking the rich.
The primary problem is that 40 plus million American citizens don't vote. The problem is that center and left is filled with terribly unreliable voting blocks who default to 'not voting."
If people don't vote, how and why should those powerful not take full advantage? They, and not voters, are writing the legislation that matters.
The 62 million who voted for Trump couldn't care less about who has money or how much. They are willing to make inordinate sacrifices; agree to live in poverty and dependence, inhale PCP and dioxin, drink lead filled water, deprive their children of healthcare if they have pre-existing conditions and keep them uneducated - just so that a Trump can hurt people they don't like.
Soak the rich to do what? Further increase the dependence of people on the state, and feed the large beast of dependence that exists in America that is uneducated, rural, and white?
The center left wants to make no sacrifices as do the right wing nuts. They want plain 'free.'
Soak the rich? Get real man.
It’s indeed very sad to see how Americans seem to be about to repeat the mistakes made from the 1930s till the Reagan revolution.
The focus on inequality, either of income or wealth, is flawed. You don’t lose because someone else has something more. Penalising folks for being successful is wrong - both morally and economically. This is the politics of jealousy - and journalists are especially prone to it because they think they are super smart but are relatively poorly paid (because they compete in highly contestable markets where very few of them have differentiated skills).
I agree that the lower rate of taxes on capital gains vs high salaries could be debated - but that is not an argument for looting people’s accumulated wealth through a wealth tax or for confiscatory income taxes. Trying to compare a continental country like the United States with “countries” like Sweden or Norway that have populations smaller than that of the New York metro area is stupid. The fact is that the United States has benefited enormously by attracting the most talented people from around the world through a business friendly environment- and would give that up with the stupid policies that Warren and Kristof champion.
Folks hark back to the 50s - but ignore the benefits to the US from Jewish immigration, the opening of worldwide markets as colonialism ended and the absence of competition from the Eastern nations- following 50s style tax policies today would bankrupt the US.
3
Don’t place any bets on this happening. To many lickspittles and quislings in Congress and in the media. Zombie ideas like supply side economics continue to infect the populous. Evangelical religious organizations now promote inequality as gods message. So as much as I wish the big reset happens I am pretty sure it won’t.
1
Some of the rich say, “tax us more,” but that is lip service meant to fool the middle class. Warren Buffett, for example, should give his money to the US government instead of the Gates foundation. Then everyone would have health insurance.These billionaires have become rich cheating all of us by cheating the tax system.
The underlying argument to this piece is pure garbage. Simply because the use and consumption taxes that form the bulk of the burden of the lower income payers becomes a minuscule component of that of the wealthy, the effective “rate” paid by the wealthy will become lower. The fact is that the top earners pay no rate on any income component that is lower that that paid by any lower income group. Further, most of the taxes paid by the lower income groups are state and local taxes and most of that paid by the higher income groups are federal income taxes. Call this argument for what it is: an implication that wealth is somehow bad and that it is desirable to confiscate more from the wealthy in order to satisfy an insatiable appetite of politicians to fund an ever-increasing government.
3
Buffet and the billionaires only pay lip service to this idea.
He could use Citizens United and flood red states with enough ads to flip the senate and the White House too.
And what about Gates and Epstein?
No rush for justice.
It is really a tragedy that people in America can't do basic math. If they could, no Republican would ever be elected.
2
A whole piece on income inequality and you only mention Bernie Sanders once, in passing, after Warren. Your corporate masters are proud.
“Tax” the rich all you want, or can politically get away with, but unless the political class in Washington and each state house learns and relearns (civics, anyone?) what true priorities face us it’s all competing wastes of time and misplaced effort. Sorry kids, theres no time or room for self interests anymore...now eat your peas.
I'm all for taxing the rich, but a 70% tax rate is counterproductive: it just leads to the proliferation of tax shelters. The higher the tax rate, the more profitable tax shelters become. The problem is not low rates for the wealthy; it's all that income that never gets counted. An inescapable tax of even 20% on the true income of the wealthy would produce far more revenue than a 70% tax that hardly anyone pays.
It's also important to consider that there are two dimensions of being rich: wealth and income. It's more important to tax wealth than income. A 2% or 3% tax on wealth, as Elizabeth Warren has suggested, would hardly impoverish the wealthy, but it would produce enormous revenue.
Absolutely. Warren and AOC are on target. Raising marginal income tax rates and imposing a wealth tax should be a no-brainer.
1
Soak the rich? Not happening! Even if it's a rich billionaire arguing for it. All the logic will not change the status quo. Greed, wealth and power are aphrodisiacs the rich will never let go.
Most, though by no means all, of the very wealthiest among us earned their money the hard way -- they inherited it. I absolutely agree that rates need adjusting. But equally serious to my mind is looking at inheritance tax laws on estates worth more than, say, a billion dollars along with removing tax dodges available only to the exceedingly rich.
I would start by saying that I'm not among the 100 richest Americans and I would welcome a surcharge on the very wealthy that would accomplish great things while the wealthy did not even miss the money.
My concern is that I'll be heading into my 15th presidential elections and the issue of soaking the rich never fails to come up. Yet it has never gotten through Congress. Why?
I have not researched this matter but one argument that I have heard used is that the U.S. population and budget (330 million and $3.9 trillion) are so large that even if 50 percent wealth from the top 100 wealthiest Americans were thrown into the pool it would hardly create a ripple. Under a soak the rich policy the electorate should know about how much that this would benefit them, lest they be very disappointed.
Many of the wealthy are very responsible men and women who recognize a duty to give some of the money back. Bill Gates, of Microsoft, established a charitable organization to which he has committed the rest of his life. In one recent year I believe that Gates and master investor Warren Buffett threw about seven billion dollars into the fund and gave it away.
Younger wealthy men like Jeff Bezos of Facebook can't part with millions yet, but I believe that Bezos has committed giving way the proceeds of the sale of some 95 percent of his Facebook shares to charity.
So a question here would be would the excess soak revenue be better spent by the government or by the wealthy philanthropists.
2
But... if Bezos would have half as much money, who would pay taxes the second year? That's a joke.
In fact, when we did have high marginal tax rates, we could afford to build interstate highways, to fully fund a space program that put people on the moon, to build fine public schools, colleges and universities and... Grand Central Station -- excellent public transit facilities.
Today, we can't keep bridges from crumbling, but Bezos gets to keep his billions.
The problem is money in politics and a Supreme Court that equates money with free speech.
1
I am waiting, waiting for some to suggest abolishing the largest tax-avoidance loophole used by the very wealthy - the charitable deduction. But then all these liberal organizations would lose their funding.
Liberals are not serious about inequality until they dramatically pull back trial and class-action lawyers and remove the charitable deduction.
We should enact the 70% tax rate and the wealth tax on the rich and have truly affordable higher education and healthcare for all.
5
I object to the term "soak" when referring to getting the wealthy to pay their fair share of the benefits that they have reaped from democracy. It plays into the mythology of self made wealth and the entitlement that the wealthy have come to embrace.
Every day in millions of small ways we all contribute to a system that allows the accumulation of wealth. Accumulation is a good thing that in a free market system rewards success. We built this democracy. It's ours. If you want to use our social and economic platform to make money, then you have to pay for it in proportion to the benefit derived from OUR democracy.
1
The wealth tax is highly inefficient, which the Euro's have figured out. Paying for property taxes is one thing, but when you have to sell property in order to pay a tax, that is another. The wealth of the wealthy is on paper, they would have to sell some of that to pay; that impacts all of us.
Instead, 1. get rid of the Corporate tax, it is inefficient, wastes corporate efficiency, and takes up most of the tax code. 2. Instead, raise taxes on stock dividends and capital gains. 3. withhold the tax owed on dividends, this will hit foreign investors. 4. increase the time criteria for long-term capital gains from one to four years; that would also mop up extra money. #4 will also cut into hedge-fund managers piggy backing off their customers long-term gains. 5. sit with this plan for a while and then if necessary, increase taxes on those $500,000 and up.
1
We ran a great experiment on taxation of the wealthy and it worked. It would work again.
3
Who gave all the loopholes and deductions to the rich?
Hedge funds, I guess still pay 15% in taxes. The whole tax code should be reformed, but never will be the rich write the laws?
With the help of their lawyers and lobbyists!
1
So presumably Mr. Kristof has the numbers and knows roughly just how much this should generate in actual dollars, at least pro-rated at a particular rate. So presuming Warrens tax on wealth gets enacted, I’d be curious to hear.....
I like to invent things. Most never make it past the paper stage, some never make it past the shower-thought stage.
But never once have I thought "I'm not going to try to take this into production because I'd pay too much in taxes." Would I give up the chance to make $1 million next year because it's not $2 million? No.
Does anyone who might be inclined to buy a lottery ticket the jackpot grows to $300 million stay home because after taxes it will only be $150 million? I doubt it. I don't.
Tax the rich. There is such a thing as "rich enough" to support any kind of life, any more is just accumulation for its own sake.
7
In my adopted hometown, I live among trust funders who do not work, have never worked and whose children will never work. And my contention has always been that their elder's companies could have and should have paid their workers more. Part of our income inequality stems from our disrespect, bordering on hatred, of workers. Destroy unions and worship the stock market reaps these exact results. One change needed is to force companies to pay workers fairly, and reduce both upper management compensation and obsession with stock prices.
3
The discrepancy in tax rates reflects, in part, the lack of a sense of community among many Americans. The individualist ethos that dominates the thinking of Americans encourages us to think of tax rates only in terms of their cost to us personally. If we identified more closely with our fellow citizens and grasped the elusive truth that we all benefit from a more just, humane society, then we might understand that taxes represent an investment in the creation of that society.
As it is, Americans tend to complain about the inadequacy of public goods and services, while simultaneously demanding lower taxes, all without seeing the connection between the two. Clearly, low-income workers do pay too high a tax rate, and the affluent pay far too little. Even much of the middle class, however, will probably have to pay a little more in order to meet the pressing needs of our society. Soaking the rich will not suffice to solve our problems.
As the old auto maintenance commercial used to warn, "You can pay me now, or you can pay me [far more] later." The longer we defer investment in our future, the more expensive it will become.
2
This inequity seemed to take off once the GOP and its wealthy supporters found a way to demonize labor unions (which in some cases were quite corrupt). Once the ability of organized labor to collectively demand a reasonable share of the value it created in various industries was lost, all other labor (salaried workers) also lost leverage.
We've since seen increasingly large slices of value created by labor used to enrich the managerial class as well as owners, through use of retained earnings to buy back shares (which used to be illegal), to artificially drive up share value to enrich such owners of the companies. Workers haven't seen much real increase in compensation since this change in law from the 80's.
The other downside to this appropriation of retained earnings for the owners is a lack of investment in new product development, R&D, and other investments for competitiveness. Managing that sort of growth is hard work; financial engineering is easier for senior management.
This, in conjunction with increasingly un-progressive taxation since the 80s means that we have a small, very wealth upper class, built on an increasingly weak (and leveraged) corporate foundation.
Bring back higher tax rates for the very wealthy, as well as return to the policy that large scale stock buybacks are nothing more than share price manipulation and are illegal. The economy will be stronger and far more equitable.
2
One area never discussed in these ”tax the rich more” op-eds is what to do about the tax-free benefits of dividends from municipal and state revenue bonds. Many of the “rich” buy these bonds that produce income that is treated as tax free at federal, and sometimes state and local levels.
Yes, considerable assets must be dedicated to provide income, but the benefit to public government, schools, and other worthy projects is immense.
Tax laws were created to provide incentives for investment; ranging from some perfectly reasonable, all the way to those that many might find questionable.
Similarly, many pension funds, public and private, depend on investments. Those with money may be on the other side of those investments.
When I see “tax the rich more”, or “the rich need to pay their fair share”, I see envy. There will always be people with more. Someone will always be at the top, but too many at the bottom.
Why penalize those who may have started with nothing, and with their efforts, have figured out how to work hard, invest and/or save, and eventually accumulated wealth?
2
Mr. Kristof, you should be reminded that one of the architects of the redistribution of the wealth from the poor to the wealthy was Laurence Summers and the Clinton administration. See: repeal of the Glass-Steagall Act in 1999.
4
I'm reminded of Zuckerberg and his brownish tee shirt. Worn for years after he was no longer a teenager, but perhaps wanted to look like one, it endeared him to millions as just being a young, bright guy who wanted to help them connect to friends. In our culture, there are those like him, paraded before us promoting familiarity, insanely rich, yet our familiarity with them helping to weaken our resentment about the privilege they enjoy from equally insane tax rates.
6
If and when we get the tax rates right, we will still have another massive problem with the wealthy: how do we prevent them from eventually owning everything.
I don't care much is someone has a super fancy house, a million dollar car, a yacht, and a bunch of Picasso paintings on their walls. I'm much more concerned that they might own something that my grandchildren need to survive or even to have a decent life. If they own five or ten houses, that's OK as long as there are houses that they don't own for people of ordinary means to buy.
All those fancy houses, cars, yachts, and artwork are luxuries. Let them have all they can earn, as long as they do it honestly. But we must prevent them from obtaining control of the things that people need, such as housing, water, food, medical care, education and legal protection.
If we let them buy the world and continue to militarize the police to protect their holdings, our grandchildren will be either be their servants, or will starve.
5
There are only a handful of mega-issues which threaten the very existence of our democratic republic, three of which are climate change, inequality, and erosion of democratic institutions.
Our elected "leaders" spend almost no time on these. We as voters need to hold them accountable for ignoring the long-term problems at the expense of short-term issues, which they don't solve either. Think immigration, gun violence, trade.
We have a lot of work to do to save the United States.
4
Mixing average and marginal tax rates is a nice touch but I wonder if you even know the difference. The fact is that the tax system in the US is the most progressive in the world and in history. Also the Trump tax cut was not responsible for your little factoid on the richest 400 that has been in place for a long time and is a result of lower tax rates on capital than on labor. This is an area on which we could agree but it seems to be lost on you or perhaps too complex for a sound bite. Instead you prefer to reminisce about a golden age of higher marginal rates which were paid by no one and in fact the tax burden for the middle class was substantially higher in a relative sense than today.
6
These low tax rates for the rich were institutionalized, and put on into the Republican standard policy lore by Ronald Reagan. For that he is forever lionized and worshipped, and the false canard of low taxes actually increasing government revenues put into economics theory as legitimate. You are not going to convince these legions of people who believe all this of their errors. Buffett notwithstanding, most believe what they want to believe.
4
Taxing the wealthy puts more money in the Government’s hands which is central to the argument conservatives have against ‘soaking the rich’
I’m my opinion, while taxes on the rich should be raised to some degree, focusing on a higher minimum wage, ensuring people can afford healthcare and perhaps have the Government use taxes from the wealthy to match retirement savings (as companies do) are better ideas than just giving the Government more to spend.
1
There is an easy solution. Tax capital gains at ordinary income rates.
6
"High marginal income tax rates, applied only to very high incomes, are a perfectly sensible way to limit the explosion of top wealth inequality."
As a theoretical statement this is rational, but I think it is not a realistic comment on the extent to which the government will increase taxes to fund an ever-expanding set of services under Democratic governance. From my observations what the state provides to many is far from stingy. And anyone who believes the Democratic plans to expand services can be funded by increasing taxes on just the very wealthy is engaging in magical thinking. Further, once you empower a group that thinks more programs solve all social problems, good luck getting that power back when things don't go so swimmingly. Just as we need to critically examine the current state of affairs, there needs to be some very healthy skepticism of Democratic plans to level out the playing field.
3
When there is a 50 or 100 million dollar lottery, I always think they should be drawing for 50 or 100 one million dollar prizes instead of one large amount. You can be sure that most of those new million dollar winners are going to go out and buy at least one new car. If only one person wins, they will probably go out and buy a new car only for themselves and maybe a few close family or friends. The economy is stimulated when more folks have money.
1
The political showdown continues. In 2016 it was between Hillary and Bernie. Now it's Biden and Bernie, as well as Warren.
There's no indicator that this momentum will dissipate magically if Biden is elected. The people have risen up, have organized, and are powered by a larger mission.
Many of them are young, late teens and early twenties, so this will be the trend for decades to come. You can only stick your head in the sand for so long.
This is not just a matter of fair distribution within a given-size economy, it is critical to economic growth. Economic growth in the US is being limited by the bad distribution of wealth. There is excessive private capital, as demonstrated by the way that corporations use the money from tax cuts and ultra-low interest rates to buy back their own stock rather than investing in new production. The reason that investment in production is not considered profitable is that demand is not growing, and demand is not growing because real wages are not increasing - they have scarcely grown since the 70's. Modern economies are based on mass consumption, not yachts and other goods for rich people. Directing money to wealthy individuals starves the government of funds for public investment such as infrastructure, which is needed to form a basis for private investment.
4
I agree that we should increase taxes on the Rich, but Kristof's reasons are all wrong. We don't have to soak the Rich to get quality preschool for all, etc. The federal gov can create as much money as it needs out of thin air. It will run out of money the day after the NFL runs out of points.
The reason we have taxes is because if we cannot produce enough goods and service to soak up the new money, we will get excessive inflation. The things Kristof wants to do will increase production for two reasons.
The first reason is that the federal spending will get the money to the people who need it. Then they will spend the money on stuff--food, house paint, etc.etc. This promotes production of food, etc. This will prevent too much inflation
The second reason is that the things Kristof want to spend on will increase production directly. For example, quality preschool for all will allow more parents to work and produce a better educated and more productive workforce.
The reason we should have higher taxes on the Rich is that they will reduce inequality which is bad for the economy. The Rich spend a lower percentage of their money. Their money is less useful for domestic commerce. They use their money for financial speculation which is not good for the economy. It adds risk, cf 1929 & 2008.
After WWI we had high inequality. In 10 years the economy fell off a cliff. After WWII we had low inequality. We had 27 years of Great Prosperity.
What is that definition of insanity?
3
At some point, y'all are gonna just have to admit the farmer will never feed the goats any more hay or grain than absolutely necessary to get the milk and meat they want on their dinner table. You might be offended by such a reality, and that would be the correct response, however dismissing it will only perpetuate the problem: you need to admit that you are a farm animal to them and that your wealth derived from your work accrues to them far more than it does to you.
It is the aggregate effect of laws written by oligarchs on behalf of plutocrats, and the latter ingratiating the former, well, because, they are one and the same, that causes the feedback loop of increasing political power and immense wealth. Horribly ironic are the twin facts that we mill about voting them into power to structure how they sluice the wealth off of our backs and direct the flows of excess capital into their casino-style investment accounts.
We have no other option but to follow the education -- job -- shopping -- retirement trajectory in life, it is the dominant hegemony, and like a protection racket, if you don't adhere to it so your productivity can trickle up wealth to the ruling class, then the laws they write will punish you worse than the go along to get along paradigm we have in society today.
1
Tax audits are expensive for everybody including the IRS. One wonders what the net gain to the taxpayer from auditing some of the people at the bottom of the income ladder is? Conceivably it is negative.
It is necessary to enforce the law and prevent fraud, but when resources are limited, as the IRS's resources are, they should be focused on the most bang for our bucks.
2
Don't understand why Mr. Kristoff used Elizabeth Warren's tax policy as an example, when Bernie Sanders has been sounding the alarm since long ago. He also is less generous than Warren with the billionaires ...he wants to go full bore to 74 percent! He also questions the existence of billionaires themselves....how about that? Strange that you would overlook his much more strenuous approach to the robber barons.
I get it, you're a Bernie supporter. But his point was not that Warren's proposal was better than some other one, it was to point out that even with her plan Jeff Bezos would be quite well-off.
2
The author and most of those commenting appear to know how much wealth is too much, how other people’s money ought to be allocated and to what causes, and assume success is unfairly gained. One can agree solutions are needed, but there seems no room for discussion or the assumption that “other rich people” need to pay. So how does this differ from tyranny? That said, if these policies are put in place, one can expect corporationS and the wealthy with the means to do so, to move to friendlier venues, much as we have seen already in state to state movement in the US. And you wonder why there are such partisan divides.
6
@LTJ I bet you don't call it tyranny when the wealthy lubricate the political system with money and lobbying to get their preferred policies. So you shouldn't call it tyranny when the people rise up and vote to redistribute the wealth of their (the people's) nation.
Even Henry Ford knew that, in order to sell cars, he had to pay his workers enough to buy his cars. Republicans have been pushing “trickle down” economics for over a century, and it has never. once. worked. It’s past time to return to progressive tax policy and force the “trickle down”.
8
The collective amnesia of this country is astounding. Why have the democratic candidates given up on the estate tax, and carried interest for hedge funders?
Both are less punitive for the wealthy than a wealth tax. Taxing those who worked hard and earned a lot after they die is fairer than taxing their wealth while they are alive. And the elimination of the estate tax has given us an entitled generation the likes of which we will never recover.
And carried interest for hedge funders (which Trump promised while running) just taxes those very wealthy the same as the rest of us.
2
This is the basis of the anger that has given rise to Trump and the far right. Sure, there will always be religious and gun loving fanatics over there, but not even close to enough to sway national elections.
By all means, let's go after the obscene wealth that our home-grown oligarchs have accumulated. But there is another source of money that rarely gets attention: the now one trillion dollars/year that goes to the military. In my fantasy world, Democratic politicians would be asking the hard questions about what actual value Americans get out of this expenditure and whether we would not all be far better off if the money were re-directed to adapting to climate change, education, relieving poverty, on and on, instead of supporting a military-industrial complex whose chief purposes are propping up an empire and pouring money into weapons.
2
This middle-aged widow on Social Security thanks you. Add disabled mid-life, needs requiring specialized housing, and living on the East Coast, where my specialized doctors are... if I didn't have some savings, I'd be on the street. When that runs out as a supplement, well, who knows.
4
My career has been in small business, buying, selling, startups, franchising and consulting. I have known hundreds of business owners. They rarely make a decision based on tax rates. The vast majority couldn't even tell you at what rate their business is being taxed. Would they like lower operating costs? Sure, and that includes their tax bills. But tax bills are small when compared with other operating costs and the idea that businesses are constantly calibrating operating or investment decisions based on their tax rates is ridiculous, a bogus politically-motivated idea. Successful small business owners have a drive and ambition that far transcends any concerns that they may have over tax rates. If they have concerns about taxes they are more likely to be critical of how the money is being spent. Businesses want modern infrastructure and honest, forward thinking government at all levels. Give us that and we can thrive, creating jobs, innovating products and services and creating wealth for ourselves despite having to pay taxes on profits.
4
Here is another consequence of the irresponsible tax system: As climate change intensifies, the need for massive infrastructure investment to safeguard cities from fires, hurricanes and catastrophic flooding will only become more urgent. Running up the deficit to unprecedented levels today to benefit the ultra-wealthy is almost criminally negligent.
In the next 20 years people will need to be relocated from coastal areas, dams and levees shored up and response plans put in place to deal with displaced people and damaged infrastructure. The government will need the funds to respond to the crisis. The billionaires will have plenty of money to maintain a comfortable life but the rest of us will pay a heavy price for the bad government tax policies of today.
3
The cries to soak the rich, the demonizing of the successful and fortunate, the idealization of the poor, the whining about inequality, the solemn endorsment of confiscatory taxes, the demagoguery about effective tax rates: none of this help the levelers cause. As skeptical as I am of Government at all levels to ever get anything right or to approach matters with fairness and balance, I actually would not mind paying somewhat more in taxes. The style of argument on the left, however, does not inspire confidence that fairness will be forthcoming.
11
I thought that around 40% of Americans, possibly more, do not pay income tax on a net basis. If this is true, may we assume the that higher tax rate you attribute to the lowest 10% refers to someone actually in the middle roughly of the income scale, and not to poor people who should not be paying at all? If this is correct, you probably should point this out since it is a material fact even if it doesn't change your overall point.
3
@DP You have to consider ALL taxes, not just income tax.
Though the general tenor of the article is right, Mr Kristof (and Liz Warren) are wrong about the wealth tax. There is a reason 8 EU countries abolished it; it was apparently a nightmare to administer and didn't raise as much revenue as anticipated. Better by far to raise marginal rates to, say 50%, but then eliminate most of the deductions/loopholes that only the rich benefit from, and make all income equal, so that income is taxed at the same rate however it is earned. (Unlike, eg, carried interest, which is taxed at, if I recall, 15%.)
As well, the cap on Social Security contributions could be eliminated, which would go a long way to reducing old-age poverty.
One of the many things Warren gets right is that she doesn't talk about "soaking the rich"; she describes it as the rich paying their fair share; messaging matters.
9
Manufacturers who haven’t sent their factories overseas are steadfastly investing in robots to replace our American workforce. Such tactics eliminate employer expense for healthcare, social security, pensions, while eliminating a 40-hour workweek and those pesky labor unions. It’s win-win for all corporate entities with lower corporate taxes. And win-win for their rich guys with lower personal wealth taxes. Wake up ye of the blue collar. Workers unite to Vote Blue! Then become tax lawyers or a CFO’s, the two jobs robots can’t yet do.
2
It would appear that closing all loop holes and having a flat tax rate for all over a certain income level would be the fairest kind of taxation. Why hasn’t this idea gained any traction?
3
It's not "soaking the rich." It's insisting that those who have the most of everything pay the highest percentage of tax, including income tax, capital gains tax, and a wealth tax. They will still be filthy rich. I just don't see the problem. They don't spend it, they don't need it, and hoarding is wrong, particularly when there are so many needs in the country where they got rich. And, how about we redefine the term "poverty?" The so-called "poverty line," in 2019 is $12,490 single, and $16,910 couple. Are you kidding me? I'd like to see some of the rich folks try to live on $25,000 a year, for one person. Nobody making only that amount should be paying income taxes, but they should qualify for subsidized health insurance. They already pay sales taxes and payroll taxes. That should be enough. It's no wonder people can't get ahead in this selfish, greedy country. Let's get a grip, rich people.
4
@ChesBay
Do you think that rich people have money rooms like Scrooge McDuck, where they roll around on piles of gold coins? Where do you think investment in other business ventures comes from?
His flip argument about the wealth tax, i.e., that widows can cope, is just that—flip.
A wealth tax will lead to rich folks buying assets thst cannot be valued in any consistent way, will lead to less productive investments and will require a tax authority with ms y more people to argue about things are worth.
The 70% tax rate was instituted to pay for the two wars , WW2 and the Korean war. The direct beneficiaries of peace after those wars were the soldiers returning to establish their place in the economy. Many became very wealthy in a short time due to the peace they created and the baby boom. Did they understand their duty to pay for those wars by paying a greater share than their less fortunate vets? Yes, but then we had two unnecessary wars in the 2000s and the wealthy just have gotten more grabby and less patriotic, maybe because they had no skin in the game like the WW2 vets. Then Trump iced the cake with more tax breaks to get us where we are today. The reckoning will be much worse than if these short sighted greed driven "masters of the universe" had been just a little smarter along the way.
7
How did this income disparity come to fruition?--GOP political and financial power, that's how. The GOP has adroitly used wedge issues, i.e. abortion, gay marriage and racism to sway people to vote against their economic interest--and thus the GOP gained power despite being a minority.
The Republican strategy is to keep a segment of Americans focused on emotional issues embedded in their local culture, while they utilize gerrymander and voter suppression, to block Democrats out of the power loop.
The GOP has been implementing a bloodless coup for decades--it culminated in McConnell's refusal to bring Obama's SC nominee Garland to a vote. The everlasting shame is-- that he got away with it.
4
Of course the term rich is relative.Few would oppose taxes on the super rich.But somehow it turns out when the laws are passed people who earn in the $250-300,000 ballpark,often middle managers and professionals in blue states get defined as "rich" and hit with the burden of the tax.This time it won't be different.
Elected officials in NY,NJ Ct,CA please keep in mind the implications for your states when the time comes.
Remember the AMT?
2
I am all for far higher taxes on the rich. Missing, however, is the functional mythology for many that the rich deserve their wealth, based on the American dream. Working one's way to the top. Pulling on the bootstraps and all. Hardy individualism. If I work hard I too can become a millionaire. While that dream has crashed under a mountain of greedy capitalist realities, nonetheless the myth still resonates at the core of many Americans, though we have become more cynical about it.
So perhaps Democrats and progressives need to talk more about how the dream has been destroyed and needs to be brought to life anew by those who have the 90% in mind. It doesn't seem to me that the several Dem candidates are doing that effectively. Appealing to reason with stats and plans is fine, but getting to the gut is critical.
2
of course you realize that we are not talking about millionaires but billionaires. Go ahead aspire to become a multi-millionaire you can keep your money, but don't cry crocodile tears over the billionaires having a few less billions.
Other than serving in the armed forces, paying taxes is the ultimate patriotic act. I honestly feel a sense of pride mixed in with the dread that comes with writing my quarterly estimates. I cannot comprehend the kind of greed that would not be satisfied with an income of $87 billion when the country needs funding in so many ways. You have to pay to play, and we all owe it to our fellow citizens to pay our fair share. Using simple math, that means the very rich must pay a lot more than the rest of us.
2
@kglen the logical implication of your first sentence is that the 50% of Americans that pay no net taxes (ie they get more back in benefits, than they ever pay in any variety of tax), are not patriots (ie traitors)?
Preschool, decent high schools and access to college for all, you bet.
BUT, let's not overlook the roles states (and state taxes) play in quality of life for citizens. These goals are within reach for individual states regardless of national politics and the Fed Government. And higher tax states tend to care about these matters.
The national political pendulum swings back and forth, it is wise to focus on state programs (and politics) for more lasting efforts.
"Those billionaires paid an average total rate of 23 percent in 2018, down from the 70 percent their 1950 counterparts paid."
Make America Great Again... tax the rich.
Thanks, Nick. Keep up the good fight.
2
When I retired and started living off my invested savings I was appalled at the inequity of capital gains rates. It was insulting to realize that my hard work helping to build that company and contributing to the economy was valued less (taxed higher) than the "work" of my money in the stock market.
The usual response is that capital investment in America's businesses builds the economy. That is true but those businesses only get that capital at the IPO or a secondary stock offering. The vast majority of stock transactions are between investors and not a penny of profit goes back to the underlying company to build it or the economy.
So in honor of America's workers who actually do build our economy with every dollar earned, their tax rates should be lower than capital gains rates. Rates for gains made when IPO stock is sold for the first time deserve the same lower rate as earned income, they are building the economy. But profits on the speculative "work" of a dollar invested in a share of stock bouncing from one investor to another is almost effortless and the tax should be higher.
7
“Even if Trump disappeared tomorrow, we would still live in a country where the top 1 percent own more than the bottom 90 percent”. We would also still live in a country where the top 1% received 16% of total income and paid 43% of total income taxes in 2018, according to a Tax Policy Center study. The United States has a more progressive tax regime than the Nordic countries, and this is only partly due to their higher top rate. The other factor is that that higher top rate applies to incomes starting at 1.2 to 1.4 times the national average. That translates to about an $80,000 income in the U.S. And under the current U.S. tax law, according to the same study, in 2018 those making up to $86,000 as a group had no net income tax liability at all, I can only assume a significant number would object to having their tax liability raised to Swedish or Danish levels. Calling for higher rates on “the rich” may sound good on the stump, but that’s not how other countries address the issue, they make everybody pay something.
@Scott
In Scandinavia people are paid enough so that they qualify to pay taxes. I like this better than the "squeeze blood from a stone" policies Conservatives prefer.
I also like the 4 weeks paid vacation for all workers by law.
And the balanced budget at the end of each year.
But I live and worked there. No "Real American" wants a balanced budget. They keep voting against it.
3
@Scott How about a link to the study that determined that "And under the current U.S. tax law, according to the same study, in 2018 those making up to $86,000 as a group had no net income tax liability at all . . ." I'd like to see how I too can get in on the magic of no tax liability.
I'm a member of that group and obviously doing something very wrong. My total income tax liability (federal, state & local income taxes is about 22%. Add in property & school taxes and my total tax liability is close to 40%. If memory serves, that's about the same total tax liability (not including VAT/sales) as our Nordic brethren.
@gratis and presumably you are comfortable with a 20-25% VAT, which is strictly regressive and impacts those with less income more than those with more, reinforced by the significantly less progressive structure of your income taxes. VAT accounts for, if I recall correctly, around 30% plus of taxes collected in the Nordics, so that’s how your budgets get balanced (by the way, I’d love to see a balanced budget again in the U.S. myself, and would be willing to pay more income tax if the spending side was effectively addressed, but that doesn’t happen here). And please don’t think that those with little or no federal income tax liability in the U.S. are too poor to pay taxes anyway, that group includes anywhere from 45% to just over 50% of U.S. taxpayers, depending on the year you choose. Whatever you may have heard, half of Americans are not living in poverty.
The tax code is certainly messed up, but it has less to do with income tax rates than capital gains and complicated estate tax rules that most benefit the rich. It's a blind alley to blame business interests. We need companies that want to do business in our country -- we gain investment in productive technology and in developing people. Focusing on changes to individual and estate tax law can get the job done in terms of raising revenue.
There is no question that income/wealth inequality has increased. While some of it has been due to economic success of new business creation, much is the product of globalization. Workers in developed countries have much less power and are becoming relatively poorer on a relative basis. This is de-stabilizing.
It is particularly negative if people are only measured in material ways.
So there are two jobs:
(1) Think more effectively about how incremental tax revenue can improve the long term well being and wealth of most citizens and their families. Namely, not just short term wealth re-distribution.
(2) Identify more non-material markers for societal respect and recognition. I despair of the elite's disdain for religion and patriotism. Material success is fine, but it is not a person's measure.
I had lunch with one of the wealthiest men in California yesterday and he said, "They need to tax us. How else are we going to pay for the things society needs? The middle and working classes are overburdened. We can afford it."
3
I don't hear the sound of fairness on any side of this argument. First, the rich should pay their fair share(whatever that is) but the folks that risk their money for returns also need to be compensated fairly. The rub is what is fair and who says what is fair. If I invest my money and create jobs and make money, is it fair to take 90% of it? Or 70% ? No, it isn't and expecting that take is akin to stealing. First, simplify the tax code in order to stop abuse. If that means ending some deductions, so be it. Second, enforce the code equally to all citizens. People with money are not an enemy, and, in fact, many have been good for the nation. Treat them fairly because the freedom to become wealthy is good for the nation. Millions of folks in this great nation have good lives and incomes because people took risks to make money. Few people know nor understand what it is like to put up your own money. Try it. It's easy to take and much more difficult to build.
4
@dudley thompson
Fairness is not the goal of taxes. Or society. The goal of taxes is a successful society.
Ideally, the measure should be the success of the society as a whole. Adam Smith thought one measure of a successful society is to pass on to the next generation a society as good or better than the one received. Another measure would be the welfare of a society as a whole. Smith recognized the flaws of inequality and argued for regulated capitalism, against monopolies, and for a progressive tax system. Those who benefitted disproportionally from the structure of the system should pay disproportionately to maintain and improve that system for the next generation.
Looking at the real world, it is much easier to argue that high taxes lead to a successful society than the other way around.
Our history also points to that. Our large middle class is due to FDR's socialist policies more than anything else. Take away FDR and we have extreme inequality both before and after his policies. Real World.
A lot of the political inertia that is brought to the issue comes from people who never see the wealth in this country. If you live in a rural or suburban area chances are you see very little of the great wealth this country has created. Because of that it is easy to say that we are living beyond our means, or those who have worked hard should reap the rewards of their work. A lot of people have no concept of how much money is really out there.
People today need to realize that wealth was created on the backs of their parents and grandparents, they are owed a fair share of what their work created. It is immoral that people should need the basics of human existence when generations have worked so hard, just to wind up with their livelihoods swept away from them by mistakes the wealthy have made in their race to make a cheap buck.
(That IS the argument).
3
@erhoades
While factual, it is a lousy argument. Requires too much introspection from people reluctant to do that.
Better to focus on the positive. And short messages.
"We all do better when we all do better."
Real world data shows high tax counties do better by their citizens without giving up economic healthy. Scandinavians vote at 85% participation rate. They like paying 50% taxes because they are buying life security. Yeah, mommy government if I never have to worry about medical expense, education expense, and have enough to enjoy my 4 week paid vacation by law, and the country ends up with a balanced budget. Or surplus.
Focus on what taxes will buy people now, and benefit their future and the future of their kids.
"The problem with socialism is that sooner or later you run out of other people's money". Real world, Norway runs a budget surplus and has a huge Sovereign Wealth Fund. USA has huge deficit every year and huge National Debt.
1
@gratis Have you read this piece?
https://www.nytimes.com/2019/10/12/opinion/letters/trump-rural-america.html?searchResultPosition=2
I don't think many of these voters are interested in being like Scandinavia. I think you are better off recognizing the individual effort to achieve.
I've always found it interesting that the richer many of the richest get, the greedier many of them seem to get even though they (and their offspring) could never come close to spending all of the money that they have. I'm not sure what drives this-is there the equivalent of greed out there in the animal kingdom?
3
Certainly things have to change. But, over the years, I can't stand the "spin" used to bias the discussion BOTH WAYS.
For instance, "The rich pay less than the middle class" headline. Not so....a rich person pays more in hard countable dollars than a middle class or poor person...but the effective tax rate may be less.
The rich don't pay "their fair share!" They definitely should pay more but their "fair share" is exactly what the law requires them to pay. They take every legal deduction they can, and so do you and I. That's their fair share. If we have a gripe, blame Congress. They should change the law, getting rid of dubious "legal" tax deductions and perhaps raising the graduated tax rate to make the "fair share", well, more fair!
Not all the "rich" are greedy, conniving cheats, as they so often are portrayed. Just like all poor people are not upstanding hardworking victims of society. There are good and bad in all stations of the economic scale. Many (not all) of the rich contribute millions to arts, charities, and other good works. Sure they get tax deductions but the arts get most of the money. If filtered through the government, we all know the 50-70% of the money would vanish via government paperwork and diversion.
Yes! Let make changes. The rich should pay more. But lets do it without all the negativity.
5
Astonishing but not surprising to learn where the greatest number of tax audits is happening. If this were also true in poor white communities that support Trump, maybe the Democrats could get through to them that Trump is not working for them- but I doubt it.
1
When billionaires and corporations can spend hundreds of millions to buy politicians who will promise to lower their taxes we have incontrovertible proof that their taxes are too low.
2
I agree that higher INCOME taxes (sorry, I don't buy the wealth tax) are necessary. I do take issue with the headline. "Soak the Rich" isn't going to help sell this idea - it reeks of unfairness. Having progressively higher tax rates isn't unfair.
So an additional question might be --- would you like The Gates Foundation working on curing society's woes or would you rather have the government fix things of which it isn't capable? More money and more power the government -- say good night to us all
3
How about a simpler question? Why not use the additional revenue to get rid of the deficit and, eventually, debt? I am sure the Gates Foundation will keep on doing it’s excellent work even if Bill himself is taxed at a much higher rate.
3
The great wealth in this country is created by labor, on the backs of the working class. That most of this wealth makes its way up the ladder and into the pockets of a such a tiny percentage of Americans is one of the biggest failures of capitalism, and it must be corrected.
For the vitality of the our nation and democracy I believe we need to make the uber-rich a rare and endangered species.
4
I do not like the title because it infers that the rich do not benefit more than the poor by a social economic structure that not only keeps them and their possessions secure it also gives them an inside track against the odds of their ever losing their money or of having some poor person become richer than them.
A few billion in tax dollars is nothing to what it would cost them to put that menagerie together all by themselves. Our country may have not been found on the principle that those with unbelievable means must never be allowed to lose them.
But that is where we are at today. Run your bank like a casino? The taxpayer's got your back. Can't run your business to save your life? The taxpayer has got your back. Kill a bunch of your employees by not following the law and fear for your life? The taxpayer has got your back. Pollute the air and the land to the point that the one cannot be breathed and the other never lived on? The taxpayer has your back.
A few extra billions in taxes in exchange for being the masters of the universe is a bargain...
2
Technology is the cause of the present trend to upward wealth redistribution. Computers, automated systems, robots of one kind and another have made manufacturing and distribution, information transfer and handling, greatly more efficient squeezing costs out of the economy. This means fewer points of distribution, less paperwork, fewer workers; whole layers of costs have been eliminated. Owners of means of production, producers of automated systems that facilitate it, have seen their costs fall, their profits rise. Part of these savings are passed on to consumers, part to shareholders, part paid in taxes. People who made the goods, manned the typewriters and billing machines, answered the phones, drove the trucks, staffed the stores are out, they are the human part of the costs cut out by technology. You've heard the advertising slogan, "eliminate the middleman, buy direct"? They are the middlemen no longer needed. We don't want less technology, we shouldn't penalize cost-cutting by taxing away its benefits, that's backwards. Downward redistributionists and tax-raisers are modern-day luddites. The real answer to the problem is the passage of time; unneeded people eventually find new places to fit into the new economy. Time eliminates other excesses as well: some choose lower levels of family formation and reproduction, some would-be immigrants decide not to come here, some even emigrate. Aggressive government policies only delay the inevitable readjustment.
1
Yes, but I think we should make a distinction between the "innovators" who created new wealth with new ideas and the "inheritors," who did nothing to earn that wealth and are the prime source of the corruption in Congress.
3
What difference should it make? As far as punitive tax rates for inherited fortunes, Sam Walton’s surviving heirs have a greater claim on the fruits of his genius than the guy stocking the shelves at my local Walmart. On the other hand, the whiz kid who developed that killer app or who builds a better mousetrap did so on a foundation of education and finance that exists in this country.
3
What most articles miss about rising Inequality is thet Keynsian economics has also become Trickle down economics or what should be called in America, Tinkle down economics. The huge debt unleashed during the Great Recession of 2008 by first President W Bush and then continued by President Obama created todays economy. The big winners of all this debt, QE2 and low interest rates were the Banks, Wall Street, and the Financial class that is wealthier than ever.
Keynsian economics says the debt bill should be paid back when the good times come back. Instead those who were the big financial winners had their taxes cut by President Trump. The National debt continues to rise. The homes foreclosed from the average folks during the Great recession are now owned by large financial conglomerates. These financial bemoths can raise large amounts of money at low interest rates. They then rent the homes back to former foreclosed home owners who can no longer afford to buy a home as they try to survive on 16% credit card debt. Tinkle down economics.
1
I agree. Soak the rich, if it possible to pass the legislation. Trump’s tax giveaway to the ultra-wealthy is the logical consequence of Big Money’s total control over the GOP. It may not be so easy to reverse the trend. The Supreme Court’s ill-fated Citizens United decision will not be easily overturned. The donor class rules now, and while we hope voters will send a resounding message to Washington in 2020, furious spending by the One Percent could maintain control of enough elected “representatives” in Congress to prevent the passage of a new Democratic tax bill. Even if a candidate like Senator Warren wins, she’ll have her work cut out for her, and then some.
3
The greed evident in the 1%, even in the top 10% is obscene.
That they are not banding together, coming to Congress and saying, the tax laws have to change, is a reflection on their character and morals (the lack of them).
Corporations that moved headquarters out of the country to tax shelters cannot be allowed to do this - Their top employees enjoy the benefits of living in this country, but then don't pay their share of keeping it somewhere that they all want to live.
This is all horribly unethical, a moral outrage. It's obscene....
4
One other aspect of this to think about is not just taxation, but labor's sacrifice here. For decades all the wealthy have done is convince the worker in America that expected higher wages, health care, adequate time off, and a reasonable retirement after years of dedication were just too much to ask of the wealthy. They could not afford to give that much to workers. Choices needed to be made. But the wealthy figured out that by bad mouthing unions and playing the violin they could get workers to give up all of it. And they did. Unions, pay, benefits, the whole ball of wax. And after all that the wealthy said "We don't get to keep enough so taxes have to be cut". To top it all off they convinced workers it wasn't the rich that were the problem. You don't need higher pay and benefits. You need to kick single poor mothers off welfare. And then give US the money you save by doing so. And Americans are more than willing to do just that. Then they elected a president who is helping them be more like the poor in America than the rich. What is amazing is how all the evidence is staring them right in the face and they still do the wealthy's bidding.
1
What’s wrong with simplifying the whole system so that there are two federal taxes, progressive income and VAT, with no deductions and no loopholes? All capital gains should get taxed as income. This would hit the rich more than than the poor as it would target both income and spending. The upper bracket could be raised up to 50%. This would be a simple system that wouldn’t create huge bureaucracies to manage them and would eliminate the temptation for politicians to pepper the tax structure with deductions to gain favor with certain political constituencies. It would greatly simplify the process of filing taxes.
@Chris You should ask the politicians what's wrong with simplifying the whole system. They will tell you every reason but the true reason - the wealthy contribute the vast majority of campaign donations and provide a heck of a lot of fringe benefits. They are also their golden parachute when they leave politics.
There's nothing I like better than rich people calling for taxation of the rich. If Nick Kristof wants to pay more, there's a line on the return that lets you do exactly that. The war of the one percent against the .01 percent is of little interest to the rest of the country.
3
The fault doesn’t lie on the wealthy, but a broken tax system mired with favoritism from all parts of the political spectrum. Erskin and Boles had the correct approach, a simplified system with no breaks and a flat tax. President Obama could not find the political wherewithal to fight for the best tax proposal in a century. This nonsense argument of a lower rate (the top 1% pay the vast majority of federal tax dollars) can easily be fixed with a flat tax. It’s not that complicated except that trying to explain simplicity to a politician is a lost cause
Tax cuts don't build roads, pay for education and don't incetivise work. You work hard for money and harder for more. The rich have sold America a bill of goods that benefits them. What did they do with the money? Buy bigger homes, bigger boats, sent it overseas to China, sent it secretly offshore to pay no tax and bought treasury notes for the excess. Ever wonder why we can have 12 trillion in debt and it gets bought up at 3 percent for thirty years and Japan bad European debt is negative. Who is buying all these bonds?
1
It should not be the job of the federal government to "redistribute wealth" - rather it should level the playing field.
Instead of these calls to go after the very few ultra-wealthy (you can only go to that well so many times), we should ask everyone to pay their fair share. Set up three tax rates and eliminate just about all deductions to prevent people from gaming the system. Auditing taxpayers to ensure compliance will become much simpler, and the focus can be better shifted to targeting cheats, such as cash-based professions where it's easy to hide money.
I think this would be much easier to sell to the public than the "wealth-shaming" tactics currently being proffered, and hopefully the effect will be more durable.
3
The playing field isn’t supposed to be level. I grew up in Queens, NY in the worst days of the 1970’s. The city was flirting with bankruptcy. I have a NYC public high school diploma. It is both absurd and obscene to think that I was entitled to the same education, same quality schools or similar opportunities as someone else of that era who attended Long Island schools with substantially higher taxes.
1
If inequality were framed as a moral issue perhaps those fighting against abortion on moral or religious grounds would expand their moral indignation to wider societal concerns. If religious groups in the forefront of ending abortions would use their considerable influence to fight for struggling Americans, for a more equitable tax system, more progress could be made in spreading the wealth of our great nation. Politicians have the power to create a fairer tax system, but first they have to be woken up an aroused public and their moral leadership.
I wonder how Mr. Kristof would propose to remedy the ills of our social security? Use some of the hyper taxed money from the rich? Or, given that it was our very own government which caused the problem in the first place, propose that the government be forced to shrink itself and pay back what they, in a sense, took out over all these years from that "locked box?"
2
The Fair Tax (Not the flat tax) would solve this problem. It would result in massive redistribution of income and wealth and would eliminate almost all poverty. Impotently it is supported by V.P. Pence and former Governor Huckabee. Also it would simplify the tax system.
I’m an American that moved to Canada for work 15 yrs ag (I had had done my Ph.D in Canada 20 yrs earlier). We became Canadian citizens and are duel citizens. Several weeks ago Bloomberg News published an article detailing that the ‘average Canadian was now wealthier than the average American’. The article also notes that: ‘Canada has the feel of a wealthier nation’. The difference? It is taxes on the wealthy vs those on average Canadians. Our taxes in Canada are high, but they are relatively speaking ‘progressive’ I.e., the wealthy have a much higher tax rate. Moreover, the social support system (national health care, parental leave etc.. exist in Canada whereas they do not in the USA). We live in Newfoundland, one of the poorest provinces in Canada, yet you see few signs of poverty, even in remote rural communities. When we left the USA (at the time we lived in South Carolina) a colleague told students at the university where I then taught that I was moving to Canada and, one student replied to her: “Canada!? Isn’t that like a third world country?” Ignorance is bliss.
19
In order for the transition to the Third Industrial Age to take place in the US, which is lagging behind Europe and China, it will be necessary to create a whole new infrastructure. The only way to attain the funds to do it will be to transfer private dead wealth to the creation of living public wealth, from which all Americans will benefit. Tax emphasis needs to shift from income to capital. An annual wealth tax and FICA on income derived from capital would be a start. A specific tax levied on corporations on incomes paid to executives in excess of, say, 30X the lowest paid worker, might encourage the to pay better wages and also limit executives excessive pay.
This is not socialism but a national policy to fulfill a moral imperative to hand on to our children and grandchildren a future, and to preserve the greatness of America which is being destroyed by gridlock, ineptitude, crony capitalism and backward looking ideas.
2
I agree completely with Warren Buffett and Nicholas Kristof. Our tax schedules combined including local, state and federal are completely out of whack. If this continues we could look like a banana republic; the only thing that is different is the wealthy don't seem to have a bucket load of colonels on their side at this point in time.
4
If I had $20 million in net worth, I would certainly be well-off. But I would be no less well-off with a net worth of a mere $10 million. And I would not be half as happy.
From my elderly precipice overlooking the abyss of the end of my life, I might wish to endow a foundation to manage my theoretically ginormous wealth but at the same time would wish a big chunk of it to be used to help others live better lives into the future.
In my current reality I will not face the dilemma of wealth or its distribution but I can dream as I drive the Taconic State Parkway in New York or walk along the Appalachian Trail or see so many things born from the ashes of the 1930's Depression Era.
2
"Great wealth has translated into immense political power, which is then leveraged to multiply that wealth and power all over again" The simplest most succinct expression of the prime mechanism driving inequality in the US today. High time citizens united behind the repeal of Citizens United.
5
Taxes on wealth and high incomes are not a disincentive to the truly ambitious. Money stops influencing most behavior at about $120,000 in household income. The extremely rich aren't doing it for the money. Wealth accumulation is the game. That's how they derive satisfaction in life. It's a form of self-worth. They're competing to prove how smart they are. Money is simply the scoreboard. Lowering taxes is one mechanism by which points are scored.
Warren Buffet understands this principle. He's beyond it He's already won the game in his own mind. "Mic drop; I'm done." For all the other would-be financial aspirants though, there's still a whole lot of ladder left to climb. Taxing them at 70 or even 90 percent isn't going to change their desire to climb the ladder. They'll simply figure out a different way to play the game.
If you place a 90 percent tax on wealth and income, you'd better believe the extremely rich are going to find ways to earn less income and hold less wealth. Where does that money go? Depends on the policy. You want smart people who aren't driven by wealth accumulation to write the policy. In other words, economic wonks. People who derive self-satisfaction in understanding human behavior more than getting rich.
That characterization is the exact opposite of the people who are influencing the policy debate since around the time of Reagan. Self-obsessed megalomaniacs. Politicians hired the wrong talent for the job to do the right job: Form tax policy.
4
To reinforce Nick's point, the widow who refinances her home and is left with only 10% equity is paying the "wealth" on 10X her actual assets while the rich pay nothing on the 95% of their wealth tied up in investments.
And they pay ZERO % on unrealized capital gains, allowing them to compound their earnings year after year.
But merely taxing the rich more, while an excellent idea, isn't enough. We need laws to stop them from profiteering over "labor input reductions." We need jobs even more than we need infrastructure and free tuition.
6
Of course, tax the ridiculously wealthy. And also, end wars, over seas tax loopholes, and do the Green New Deal instead to soak up that excess work force. Defense contractors could easily switch to making rails and new energy infrastructure. End student debt..wipe it out and watch the economy surge. Do Medicare for All, and add income to everyone's bottom line..including the big corporations. Insurance has no business being in the health business, betting against people's welfare for their profit. I love the comment about the WPA and CCC too. Let's get busy! and rebuild our country.
8
We forget that even renters pay (the higher commercial) property taxes that landlords pass on, of course. And that employers' portions of both Payroll Taxes and insurance premiums come out of workers paychecks. Thus the poor pay an even greater percentage of taxes by far, and their incomes don't grow. Payroll taxes and heath care costs were much lower in the fifties.
7
When someone like Jeff Bezos is allowed to accrue so much money, *he* is the one who decides what to do with it (e.g., philanthropy ... or whatever else), rather than the voting public through elected government. That is an inherently biased and inefficient way to run the country. (Too bad for those lead-poisoned kids if Bezos decides they're just not a priority ... but getting his name on a Mars spaceship is.) Extreme wealth inequality is simply undemocratic. Even Warren Buffett and Bill Gates admirably giving up half their wealth means they are the ones deciding where it goes, not the rest of us. We can do better than that. Just because someone is rich doesn't mean they are the wisest among us. There is wisdom in the crowd.
17
Several years ago I saw a person on a discussion panel say, My advice to the poor is not be poor.
The poor don't have a fighting chance, nor does the middle class, to be what the wealthy call self-reliant when so few have so very much and the tax laws are set so they get more and donors demand that programs that help the poor get less funding or cut.
8
@David Bible
The poor do have a fighting chance, they just need to fight to get ahead just like every other person that has fought their way out of poverty. Get an education, get a job (any job to start), and don't get married and have children before you do the first two is a time and statistical proven way to begin the process. Soaking someone else is not going to make the poor less poor but it will make them more reliant on someone else to put bread on their table. Self reliance is the only way that an individual can better themselves and blaming others for their blight is nothing but a cop out. Since 1964 the US has spent $22 trillion, that's trillion, on anti-poverty programs which is 3x what the US has spent on our military since the Revolutionary War, so obviously it is not a lack of money to support the poor that is the problem. Maybe it's because of the $22 trillion that the poor remain poor while at the same time the responsibility to be self reliant has been pushed to the back burner.
1
It's not clear whether Mr Kristof cares more about inequality or raising revenue, which suggests an underlying confusion. The example of baseball players has nothing to do with raising revenue and everything to do with addressing inequality. If he's correct that higher taxes do not result in less income generated, which is unlikely, then his proposals won't address income inequality.
There is of course another way to address the wealth of billionaires and superstars. Stop paying for their goods and services rather than trying to take some of the money back after agreeing to their terms of trade. Don't use Amazon if you think Bezos is too rich; stop seeing Hollywood movies if their stars are too wealthy - there's an abundance of foreign and arthouse movies available; stop buying fancy tech toys that depreciate faster than ice cream on a sunny day; stop insta-whatevering; stop buying cars; stop watching major league sports - go to your local league instead.
Ah, but that'd be no fun. Much better to buy their products and services and then send the state in to seize the wealth you've given them voluntarily. After all, that way you get the toys and whatever benefits the government provides with the seized money. And since you've already given the money away, you're not too fussed about how efficient the government is or what they give back to you.
Most billionaires aren't self-made. They're made by us. Rather than crying to the sheriff to change the deal, stop dealing.
5
The truth is the 1% is scared of democracy.
The ONLY power available to the American working class
is if it joins together at the ballot box.
Why it continues to not use its power is crazy.
8
We did. We voted for Hillary, but our votes don't count, because we didn't get rid of "states' rights" which should have been eliminated right after the Civil War. That's also why "emancipated" African-Americans were re-enslaved by debt peonage, and couldn't get the right to vote until the 1960s. I'd fight another Civil War to get rid of states' rights.
These sorts of articles invariably invoke extreme outliers, like billionaires, major league baseball players and CEOs. Usually by the end of the article there's an admission, explicit or implied, that the proposed 'soak the rich' taxes will start the soaking at much, much smaller pools of wealth and income. Taxing Jeff Bezos' income at 70% isn't going to accomplish much; but taxing the millions of households earning high incomes, especially those with limited room to move, will. We can sure that's where the soaking will start; necessarily so if Mr. Kristof is sincere in wanting to raise substantial tax revenue.
As for those people, it's not at all clear that the examples Mr Kristof cites are terribly relevant. Most are neither superstars nor CEOs. The 'drive' characteristic of a baseball player may be more difficult to find among families sandwiched between providing for parents and children, or trying to pay off loans or buy their first home. Sure, they're likely ambitious people, but take away more of the fruit of their labor and it's entirely reasonable to imagine they'll make different decisions. If George Clooney must pay 70% income tax, he'll simply negotiate a higher fee for his services, which will translate into higher ticket prices. Those more 'ho-hum' high earners? They have less negotiating power and may simply decide it's not worth the extra labor.
Hey, if you think that's wrong, go for 95% and see what happens.
4
@Terrence - the proposed wealth tax kicks in at $50M - ho-hum?
Warren Buffet has empathy and...wisdom. He brings to mind Andrew Carnegie. After the brutal repression at Homestead where 39 workers were killed, Carnegie had a change of heart. He - similarly to Buffet and Gates - pledged his wealth to The Gospel Of Wealth, building thousands of libraries, schools and colleges to benefit all citizens.
And he asked to be buried next to Samuel Gompers the labor leader.
1
There is no question that tax rates for the wealthiest need to be adjusted upward. And it can be done without doing violence to meritocracy and initiative. However, tax rates do not in any way correlate to justice. Justice is less about government revenue, but mostly about expenditures. Sadly, fraud and abuse occur at excessive levels no to mention the misallocation of those resources formally. Two classic examples -- the Pentagon and Medicare.
1
@HPower - Worst case estimates of total annual Medicare fraud are under $50B, much less than Madoff alone. Subprime mortgage fraud was in the trillions.
Decades ago when the highest tax bracket was over 70% (1940s -50s) our economy thrived like never before or afterward and the Middle Class was created out of a population that previously been paid as low as dollar a day. Yes, there was some inflation, but when working class people make money...they spend it on commodities that create more jobs and profits for all of us. When the rich make more money they use this surplus income to mostly invest in stocks, bonds, and real estate, because they already have most of the commodities they will ever need. In other words, tax cuts for the wealthy drive up the value of stocks and real estate. Both of these results are over-rated in their supposive poductivity. When stock is purchased for the first time (initial public offering) it really does give an entrepeneur somewhere some capital to grow his or her business, but each time it is resold at a higher or lower price, the transaction provides no additional value to anyone other than the broker. It is no more productive than bidding up artwork or tulips in the 17th Century. Investment in the real estate market is actually counterproductive because the end result in this process is driving up the cost of housing and creating a world in which the working class can no longer afford to buy a home. On the other hand, putting more money in the hands of the working poor benefits all of us, including the businessman, because it increases his sales volume.
1
Quite logical,fair and appropriate: they have money, we think they don't need or deserve it, so we can take it.
2
The inequality trend is unsustainable, at least if we want to remain a democratic country. Would the rich rather have laws micromanaging the economy with government ownership of many industries? Higher taxes on income and wealth will interfere less with economic performance than a command economy.
I think a lot of the rich are motivated by money and wealth as a way of keeping score. Taking a larger percentage from all of them still lets them keep score among themselves.
1
The term "fair share" is meaningful only if there's agreement on what "fair" means.
Republicans currently act as if representative democracy is legalized highway robbery, immorally forcing them to "redistribute" (aka "share") what they've earned to people who didn't earn it.
1
@Eben In addition, the Republican, ostensible proponents of capitalism, should know that a market economy partially allocates its rewards according to the relative bargaining power of the participants. There's no cosmic reason for CEOs to get 200X their lowest paid employee. So the real issue isn't redistribution of what's been fairly earned, but the distribution of the "value" in the first place.
A few years ago I bought a small ranch house for $58k. The following year the assessor said it was worth $86k . I protested such a huge increase in 1 year. The assessor replied- I have a town budget to meet therefore I need to raise everyone s appraisal to raise taxes. I informed her that she had it backwards. Her job was to present fair appraisals. The town budget should work within those parameters. The appraiser couldnt comprehend that process.
We have a spending issue. Not just within the goverment but also within many households.
Also going back to when the tax rate was higher . I remember in the 70s helping my aunt add her sales taxes up . She also deducted private school tution, charitable donations 100 % , credit card interest, student loan interest. Not saying we need these deductions back but pointing out it wasnt a clean 70% tax rate.
13
To actually make the idea work, you first have to add enough tax brackets to return the tax code to the late 1950's. Right now, "Soaking the Rich" also means clobbering the upper middle income since our current code lumps annual incomes of $250K in the same bracket as $250Million!
Be prepared for a backlash that making a tax code that has more than one bracket (The Flat Tax) is unfair and too complicated. Since few Americans still alive remember the old 15+ brackets and really how both simple and fair it was, there will be a fight across the board.
To be sure the 15 bracket (3 per quintile) system is really fair as everyone pays the same rate on the same number of dollars and you only pay the top rate if you make maximum dollars and only on the dollars above the lower brackets.
Our American Royalty has economic and social privilege but unlike our British cousins, they do not have a sense of obligation to the system and nation that allows them to amass their wealth and exercise their power. They are simply spoiled rotten and our media tells us that we love and emulate them.
Changing that perception is going to be very hard indeed. After all most people have aspirations of becoming one of them despite the probabilities, the dream persists. We no longer seek a fair society, we seek one where we are on top lauding it over others because we can.
Right now, anyone making under $100,000 is getting clobbered, and it's basically feudalism, the rest of us supporting the upper middle and upper class.
I think the wealthy should pay higher ss taxes to help those who helped build their trusts.
3
The rich are hazards to the environment, as they consume more resources than others. They also buy up prime locations and price others out. And often not use them. Money and affluence can wreck havoc on some communities. See Aspen and Ketchum Idaho. They also accumulate wealth - and that money, just sitting in place, adds to their power. It also does not flow and produce economic activities.
Solution: Since wealth is detrimental to society, Make it a crime. Well you cant do that. But tax it the same way IRA income is taxed - funds that are not distributed according to the rules are taxed at 50%. Do that for high wealth levels too.
So for anything over $50M - 50% per year. $100M would be taxed at $25M per year.
3
San Francisco and Montclair NJ, are two prime examples of how the wealthy and upper middle class destroy communities, especially minority communities.
Good column. But instead, I'd like to propose that we eliminate income taxes completely in favor of a national sales tax based on consumption... since we no longer have a progressive income tax anyway. If you want to "soak the rich" (which I do in principle), do it via generational wealth taxes vs. penalizing work and global competitiveness.
At the same time, remove big $$$ from politics by doling out via voter capita (and NOT corps/unions, PACS, et. al.) campaign script equally to all qualifying candidates, usable only for valid campaign purposes. Such campaign finance reform would not only reduce corruptions but backstop out-sized influence of the (more reasonably taxed) rich.
1
We have an inequitable tax code but unlike the populist warriors that simply lash out against money and success like Kristoff - "soaking the rich" as he expresses is neither thoughtful or the best way to raise the opportunity for the average American. The tax code didn't create disparity, the shift in the economy toward knowledge based (educational attainment) businesses and away from unskilled typically manual labor is the root cause. 1/3 of Americans have a college degree+, yet a the earnings power of a HS grad vs a college+ grad exploded from 25% to 80% in a generation. Did we somehow forget to tax work as the Warrens and other broadcast by changing the top rate from the 50-70% levels. Wrong. During the period of "high" tax rates, we also had massive loopholes. It's the reason that during the Reagan tax cuts while dropped top rates to 28% YES 28%, we taxes paid by the top income bracket increased. If you want to grow the forest the ultra progressive think that "equality" is better than opportunity by chopping off the top of opportunity. The most unfair part of the tax code is the massive real estate industry (tax free exchanges, depreciation and step up basis on death) - this shareshifts money into the hands of asset owners who contribute little. The other is elimination of the estate tax for the wealthy - this is the right place to tax wealth not during it's creation. But as Buffet, he is avoiding this tax too
2
Every day Trump makes the case that the rich are no better than the average citizen, and some notable examples are far worse.
We are not a poor country, but, since the days of Reagan, wealth has been increasingly diverted to those at the top, particularly the tippy top. Many of those in the bottom half couldn't make a $400 emergency payment for a car repair or a minor ER visit.
And Republicans insist the federal government is broke, despite massive tax giveaways that supposedly paid for themselves. This scam was pulled first by Reagan ( of 'voodoo economics' fame), then by Bush Junior, and now Trump. Bush had a budget busting twofer with an unfunded Middle East war on top of major tax cuts. Trump's congress didn't even hold hearings on their tax cuts.
The end result is crumbling infrastructure, underfunded public education, and inadequate efforts to mitigate the coming climate disaster.
Nicholas Kristof, and the recent opinion piece by Emmanuel Saez and Gabriel Zucman*, makes a strong case for a major adjustment in tax policy. Strangely, Trump's manifest criminality and misbehavior in office have probably opened the door for a blue wave in Washington and the states. The trick will then be to write a tax code impervious to massive lobbying by monied interests.
*https://www.nytimes.com/2019/10/11/opinion/sunday/wealth-income-tax-rate.html?action=click&module=Opinion&pgtype=Homepage
3
I think you have to tax the things you don't want, and if you don't want a billionaire predator class that does all sorts of wrong things, you tax them.
2
The data shows that, except for the top 400 income earners in the country, the wealthy DO pay a higher tax rate than everyone else. Just take the data points from the artile that this article quotes at the beginning, plot them, and draw a stat line. It goes up as income goes up.
So if this is about the top 400 income earners in the US, then fine, let's "soak the rich".
Other than that? Who are the rich? I have no idea. What is the number? Where is the line? Shouldn't it be an average of three years or something? And a wealth tax? Who is gonna keep score? A legion of new federal employees? All that happens here is a bunch of lawyers hold things up in court on challenging some federal employees valuation of a used airplane or a baseball card collection.
Finally, where is the money gonna go? To the federal government in order to help....no one? We have a huge national debt. All I hear is the sound of an Uncle Sam Money vacuum cleaner with no money going directly to the lower middle class...where it should be going. The ones not quite poor enough for entitlements. Lets try UBI for awhile instead, and in the meantime, cut the defense budget and stop making us overpay for drugs. And sure....go soak 400 people...and leave it at that.
8
Mark, I totally agree with your concerns, but I have a suggestion for spending some of the extra money. What about fixing the road network? I visited the US in 2017 for the first time in twenty years and was appalled by the deterioration. No wonder everybody wants an SUV or a truck, a more delicate suspension would not last long, I suspect.
2
@Line Roicy
Agreed. We have crumbling infrastructure, and to make matters " Worse", as we move to hybrid/electric vehicles, less gas tax money will result in less money for the road ways. Finally, in Gerany you have far superior highway/road construction techniques: more expensive but made to last.
So you make a good point.
The wealthy DO NOT pay the highest portion of their income in taxes, like I do. So the wealthy DO NOT pay the highest portion of taxes.
1
We Democrats are absolutely right to be worried about the candidates’ sharp turn to the left.
We need to make sure we don’t turn off all those voters who are independents, undecideds and even Democrats who don’t want socialism.
Here’s what some, many or all of the current Democratic presidential candidates are promising in return for votes: Free college tuition. Medicare for all, including illegal immigrants. College loan forgiveness. Reparations for blacks and gays. Guaranteed basic income. Federal job guarantees. Open borders.
All of the fabulously wealthy individuals and corporations put together do not have enough money to pay for all of these goodies year after year, and even Bernie Sanders has admitted that taxes will have to be raised on the middle class just to pay for free college, not to mention all of those other freebies.
As Margaret Thatcher aptly noted, the problem with socialism is that sooner or later you run out of other people’s money.
Remember, folks, our goal is to elect a Democratic president in 2020, not to make Karl Marx smile in his grave.
8
@Mon Ray - "sharp turn to the left" - like under Eisenhower?
Margaret Thatcher was an arrogant, deluded twit who destroyed the British economy. Socialist countries like Canada - one of very few countries that didn't crash in 2008 - and Norway, the Netherlands, Denmark, Sweden, Germany, Switzerland, are all very prosperous. This country NEEDS to go to the left in order to simply survive. We have gone so far right that we have gone back to the days of feudalism, and our infrastructure and tax code are more primitive
than the 19th century.
I share Kristof's outrage at the increasing inequality in today's USA. I think a wealth tax is an impractical and ill-advised way to remedy it, even if a wealth tax is a good theoretical approach that is easily encapsulated in a sound bite. I favor changing 4 taxes to combat inequality. First, the income tax for high earners must be raised with more graduations for higher incomes. Second, the estate tax should be significantly increased to levels from 1980's. Third, the payroll tax cap should be raised or eliminated. Fourth, the capital gains tax rate should be raised and possibly graduated, and the stepped-up basis should be eliminated.
While my tax program is seemingly much more complicated than "a wealth tax," it's much more practical. Each of the taxes I propose already exists. It's merely a matter of changing their rates. This approach does not require any effort that's not already made to comply with tax laws; only the consequences of the calculations will be different. This approach is not subject to court challenge, unlike a wealth tax. Further, using the (questionable) tactics of the GOP, this approach is not subject to Senate filibuster.
4
Picking up that book based on your article. The black outs in California and the ongoing situation regarding transportation and broadband and wildfires here in Arizona highlight the need for infrastructure spending. Yet, if you were to watch or listen to certain folks on certain networks, you'd think the tax cuts were going to fix all this. They point out to the growth in the market. But the question begs who has this really benefited the most? 401Ks, unless you have enough (and most Americans don't) will never supplant the pension. So how do we get all this? Primarily through taxation from sources that have it. You don't tap oil or water from dry wells, you tap them from very deep ones. America's thirsty and the 1% our hoarding some very deep well.s
3
I am glad more & more pundit are talking about the desirability of raising taxes on the rich.
In 2011 when Robert Reich suggested to raise the marginal tax-rate to 70% on over $15 million, there were only attacks on him. I was disappointed by the silence of liberal economists like Paul Krugman & Joseph Stiglitz.
More than the specific rates like 50%, 70% or even 90%, as it was between 1943 & 1964, the amount over which such rates are set is critical. In 1980 the 70% rate was on over $215,400 (about $650K in 2018 dollars) That means, the affluent had to pay at70% rate on much of what made, whereas, if it were over $15 million, they pay on most of their incomes at much lower rates than 70%.
The rich will use all their power to fight if the taxes are as high as in 1950s.
I would suggest to keep the current rates, which will help middle class households. But have three more higher marginal rates (for joint filers) of 40% on over $1 million, 45% on over $5M & 50% on over $10M. Incomes from all sources over $1 million ought to be taxed as wage income, which will bring tens or even hundreds of $billions annually.
Payroll tax should be cut on the first $10K to 1% & on second $10K to 2%, to help the working poor. Lift the cap but cut again to 1% on over say, $250K so that the rich won't revolt.
Elizabeth Warren's wealth tax is a little too high. Perhaps 1% on over $100M & 2% on over $2 billion is more practical.
3
Income inequality worse? Beg to differ...see below:
As per Census Bureau recently:
The number of people in poverty in 2018 was 38.1 million, 1.4 million fewer people than 2017.
As per WSJ 10 Sept 2019 quoting WH
"As incomes rose, inequality fell. The share of income held by the top 20 percent fell by the largest amount in over a decade, as did the Gini index (an overall measure of inequality in the population). In fact, households between the 20th and 40th percentile of the distribution experienced the largest increase in average household income among all quintiles in 2018, with a gain of 2.5 percent."
Higher taxes on the wealthy? Of course. 70%? Maybe not quite that high.
One problem with higher taxes, however, is that the money goes to and through the government rather than directly to people. Government rakes off a good portion for its own purposes and a lot of the rest would invariably get wasted on projects no one needs, other than the contractors and workers who get paid for them.
Government is not the enemy (Mr. Regan, long ago) but it is an inefficient and often clumsy way of redistribution. Plus, who wants unlimited government power and government intervention in matters like deciding what is the appropriate level for college tuition if, for example, state colleges were free?
There is no magic solution but we should be looking at the root causes of why a few get most of the rewards of our rich, successful society and a lot of the rest get minimum wage jobs or just above.
Why is our system so unfair and how could it be changed for the better? Right now, greed rules.
ONE IDEA worth considering is a national wealth fund that would be available to pay out to citizens at an age of modest maturity like 34. This fund could represent stockholdings of 10% in all public companies and, perhaps, direct payments for the leasing of America's natural resources (which, after all, belong to all of us, not just those who drill or dig).
We need to think radically about problems and act moderately to bring change over time without massive disruption.
2
While I agree whole-heartedly with higher tax rates for the super-rich, I'm skeptical of the effectiveness today.
Until the super-rich have some sense of shared responsibility for the well-being of our country - and everyone in it - they will hire smarter lawyers and financial planners to squirrel money away. How are uniquely large homes, yachts, fine art, historic relics and family businesses accurately valued when there are so few comparable assets?
One of the reasons that those sky-high post-WW2 era tax rates filled the US Treasury was that the very wealthy still had a sense of noblesse oblige. Other than a few, such as Warren Buffet, that sense of responsibility and generosity seems absent among the upper class, and I would point to the current occupant of the White House and his family as prime examples of that lacking spirit.
4
Most important that the "rich" requiring a good soaking be defined to be above Nicholas's own level of income and wealth, so the author will not be "soaked" himself. Notwithstanding, raising tax rates are well known to reduce real wages generally. Taxes do need to be raised to contain the huge budget deficit. Many people oppose raising tax rates because they feel it will negatively effect the real after tax incomes of most people. It still needs to be done to contain the fiscal deficits.
It is dubious that this country will ever return to greatness if we keep electing republicans to power. Their ideal society is not one where the rich pay no annoying taxes, but eventually they will argue that enacting a "poor tax" to enrich wealthy citizens, paid by everyone making less than some threshold (let's say $100K), will encourage people to work harder. Amazingly, this would be something that I am sure makes perfect sense to most Trump supporters.
The argument should start with a decision about who SHOULD pay taxes.
Taxes fund the government. What does the government do? I suggest the primary goal of government is to create and protect property. This is shown in the primary difference among the three major forms of govenment--capitalistic democracy, socialism, and communism. Communism creates a government in whih individuals own no property--the government owns everything. Socialism creates a government in which individuals control some property and government controls other property--primarily industries like mining, power generation, critical materials creation (e.g.,steel) and transportation. Capitalistic democracy creates a government in which individuals own almost all property.
This being the case, why shouldn't people pay taxes in proportion to how much property they own? People wiith more property have more to lose if the government fails and their property becomes subject to confiscation by marauding armies or unlawful hordes.
If people pay taxes in proportion to the property they own, rich people pay a much larger fraction of taxes than they do now.
I claim there is not really a problem setting value on property. Financial property is reported by banks and brokers. Real estate is evaluated for taxes routinely. And most other property is covered by insurance. The data is not hard to obtain.
4
@Blandis - most people already do pay heavy taxes on the property they own - it's actually called "property tax". In fact, they even pay it even though they don't own it. Instead, perhaps we should tax all wealth that isn't real property, such as Bezos's $107 billion and Apple's trillion.
I want to live in a healthy society. Inequality has increased dramatically in our country.
I voted for the California wealth tax that definitely affected me. The greed of those who are the wealthiest (whether they are self made or inherited their money) who relish their tax cuts is galling. How can families like the Waltons sleep at night when their underpaid, overworked employees (at least they won that working-off-the-clock class-action lawsuit years ago) with little or no healthcare make them richer. Why not set an example and pay them a living wage with good benefits; they can more than afford it. Instead of having too much money ten generations from now. The shame of even less-wealthy folks flaunting their second or third home in the Mansion section of the Wall Street Journal says it all.
4
The major problem is lack of campaign finance laws and the FEC vs United decision. We have the super wealthy through their drop-in-the-bucket discretionary spending (for them) controlling elections using advanced motivational advertising techniques. Their candidates don't run on make-the rich-richer, but on racism and guns and intentional malicious slander smears of their opponents.
While you're taxing wealth, raise the maximum income social security taxes are paid on to $250,000, and have matching public funding for Federal candidates up to $200, while doing away with corporate funding and PACs with unlimited spending and secret donors, which can be foreign such as the Russian money spent thru the NRA in the 2016 election.
If the last Presidential election was fraudulent, remove the new judges appointed. It seems the intent of McConnell and the Republicans is to intentionally break the law to appoint these judges.
Make it easy to vote, and especially encourage young people, first time voters, to vote. Just on climate change, a known crisis for humanity for at least 30 years now, they need to vote as they will be most affected by it.
1
As long as you are being visionary, my suggestion is that if the US would increase taxes on the very wealthy, some of the revenue should be used to establish national service for young people 18-19 years old. Some of them could work in the national parks to repair your Pacific Coast Trail, as well as on a myriad of low-tech infrastructure projects. Others could be employed as teacher aids in preschool programs or with the elderly.
Urban youth mix would with rural youth, red state with blue state, privileged with poor.
12
Of course wealth should be redistributed from the rich to the poor, but how is taxing the rich, which will indeed cost them a lot of money, going to transfer one penny more to those in need? The IRS is where money goes to die. The tax payments of the wealthy will be treated like everyone else's--the money will be immediately destroyed. Anyone working for the IRS will tell you this is what happens to your tax dollars--if you would only take the time and trouble to ask. It's amazing that politicians either don't know this elemental fact or else deliberately shield their constituents from the truth. The poor will still have to rely on Congress to pass a budget that will help them. Good luck with that.
Why not keep the money of the rich from being destroyed by creating a legally mandated "charitable contribution in lieu of taxes?" Congress can designate, say, 1,000 worthy charities nationwide that the wealthy can send a check to. Instead of tax dollars being destroyed, the money of the rich can be kept "alive" and put to good use.
1
Mr. Kristof assumes that any decrease in the income or wealth of the very wealthy will automatically mean a corresponding increase of income/wealth for the "lower" earners. I suggest instead that the result will be a decrease both in national income/wealth and in the income/wealth of all us, except those getting increased government benefits.
Take Mr. Bezos as an example. He has grown fabulously wealthy while creating jobs and wealth for tens of thousands of Amazon employees and stockholders, at the same time making life for the rest of us a lot easier. I think that's a great deal for all of us, and I hope the likes of Mr. Kristof don't ruin it.
4
Bezos is a parasite who doesn't pay his employees a living wage, exploits them and breaks OSHA laws.
1
Some will think it unfair for those who have more to pay a higher tax rate; that it seems like a wealth penalty. And certainly some of that wealth has been hard earned.
No. It's just recognizing that the more wealth one has the more interested one must be in keeping the nation societally healthy, with better education, better health, less crime, more efficient infrastructure, etc.
And willing, thereby, to pay for it.
It seems reasonable, in fact, that the thoughtful wealthy would be quite happy to pay dearly for a safer, healthier, very broadly more prosperous society.
1
@gmh Yes, there needs to be a change in attitude and values among the wealthiest. Raising marginal tax rates and closing loopholes will be necessary but not sufficient to restore a more broadly prosperous society.
People who were not there at the time seem to think that the Regan tax cuts were a give away to people in the higher income brackets. That isn't exactly what happened, at least not for everyone. Prior to the tax cut the Federal Government had revenue sharing programs with the various states and cities. To help balance the post tax cut Federal budget a lot of the revenue sharing programs went away. As a result, while my Federal income tax declined, my state income tax went up, and the city where I worked initiated a city income tax where there had been none before. The result was even though the percent of Federal tax declined the total percent of income tax I paid out remained about the same. It was just paid into different pockets.
2
Don't the rich already pay half the fed taxes? Most of these folk have committed to giving away their fortunes when they die. It won't go to the government but it will be better spent, IMHO. We don't have an income problem, we have a spending problem. The Democrats won't cut off the illegal's from coming into the country, they won't close bases in their districts, and want to finance all sorts of departments and programs that are beyond the scope of the Federal Government. The Federal workforce should be drastically downsized and let the private sector take over. End pensions for government workers and lawmakers, let's have an open discussion and reorganize like corporations do all the time.
2
I pay the highest school taxes in the nation, and the school stairs are crumbling, there are potholes in the road and homeless people living in the streets, so obviously having merely the working class paying taxes isn't going to cut it.
Getting rich is OK. It's not a crime.
But the kind of obscene wealth that now exists in the US at the very top should not be allowed. Certainly we should not have hugely-profitable corporations and the super rich paying ZERO in federal income tax while the government is running ever-larger budget deficits and such a huge national debt.
Besides, how much wealth does one person need? You can only sleep in one bed at a time. You can only eat so much food. You can only drive one car at a time -- so how many do you need? There comes a point at which continued wealth accumulation is obscene, especially when there are hard-working Americans who can barely make ends meet because greedy capitalists want more profits even if it means treating workers like slaves.
Before the Trump administration changed the tax laws, the US had reasonable and relatively modest estate taxes. Now, thanks to Republicans Paul Ryan and Mitch McConnell the already obscenely wealthy are creating dynastic wealth. Wealth passed on from generation to generation. This is counter productive for society.
15
With great wealth comes great rot - and corruption and entitlement for even more, no less.
No one's entitled to hoard more wealth than God especially at everyone else's expense, the planet, future generations and life as we KNEW it.They've squeezed the wealth out of everyone below them into debt, now they're after the wealth of our descendants and by empoverishing life on Earth now, to hoard future wealth now.
After they die, their hoarded wealth continues to be used against us. Look at the recently departed Koch - his fortune still funds policies, super PACs and politicos against the common good - from their grave!
Speaking of graves, how much has the Sackler family's donations to art museums around the world benefited the jobless, homeless OxyContin addicts they made their wealth from?
Trump has successfully implemented the many sub-living wage jobs that opened up from his mass deportations of immigrants. How does that help anyone? Is working two or three jobs to barely pay off bills, to support the richest to live ever richer and obscene life styles they feel entitled to, progress? Besides, undocumented immigrants that work at trump properties pay taxes that they will never benefit from - like Social Security - they in effect subsidize for the rest of us while making the trumps richer. Now the rich are after our Social Security too.
The tax dodger in chief gets to ride around in a 747 to all his golf properties at tax payer expense he did not contribute to himself.
3
I do not want to give the Federal Government more money. Last 50 years it has mostly spent it on foreign wars. If our G had stayed away from every war starting with Vietnam, we would've defeated poverty a long time ago.
1
@DL The masters of war got rich. That's why there have been so many wars. Because there was money to be made.
What exactly do (most) of the super-rich contribute to society?
I understand what nurses and teachers and firefighters and librarians contribute. I understand what farmers and construction workers and barbers contribute. But hedge fund managers?
The charity that the super-wealthy may give to the food bank or their alma mater to have a building named after them wouldn't be necessary if we lived in a fairer and more just society . Tax the wealthy. Give a raise to the teacher or the nurse who actually contributes something of value to their community.
28
I want to make a ploint about this line, which is accurate, but which I believe hides something that most Americans don't understand:
"The wealthy would still have more money than they could ever spend: Jeff Bezos would have had $87 billion in 2018 if Warren’s wealth tax had been in place all along, rather than $160 billion, according to calculations of Saez and Zucman. But we would be, I think, a fairer and better nation."
$87 billion is 87-thousand-million dollars -- a million dollars 87,000 times.
It is a question for voters and citizens whether Mr. Bezos and others with stupendously sensational amounbts of wealth - the Waltons of Walmart come to mind - should be sharing more of it with the workers who helped generate it, many of whom need government assistance to make ends meet, and with the government in the form of taxes.
I believe journalists have been derelict in recognizing that this wealth distribution - which as a point of fact is wildly out of line with what most American THINK the wealth distribution is and should be - is not understood by most Americans.
The comedian Chris Rock may be on to something when he says: ""If poor people knew how rich rich people are, there would be riots in the streets."
60
When I started working my meager raises put me in a higher tax bracket. Hence I received a raise on paper but it never found it's way my pocket. We were winning back then, remember win buttons, inflation was an evil that had to be slain. I couldn't get ahead. I paid my taxes and was getting little out of it. How's that you're unemployed and want retraining? You're not qualified.
How do you convince those who think tax is a dirty word, when you say you're going raise taxes on the rich, you're not going to get all wonky and say even though the rich are paying their fair share, it doesn't cover what the government needs. The middle and working class have to cover it and they don't qualify.
1
Great column, and here’s the funny thing. If the wealthy paid higher taxes, they would be actually be happier. They would be more connected to society, and they would worry less about their children being isolated by their wealth. The only people who lose, if the US restores tax sanity? A few corrupt politicians who have jobs that depend on conning the American public about how the temporary tax for citizens is actually stealing from our childrens’ future.
2
Below is why giving more money to Washington is a hugh mistake. We are $20T in debt and the first thought is to spend any new tax revenue from the rich. Horrible idea!
"By raising taxes on the wealthy, we could end the lead poisoning that afflicts half a million American kids, we could provide high-quality preschool for all, we could offer treatment for all people with addictions and we could ensure that virtually all kids graduate from a decent high school and at least get a crack at college"
Nick Kristof, the rational humanitarian. Yet amazingly, he leaves out the campaign finance factor? Why? That's the cause & effect!
'Soak' the rich--a slogan the rich use to pretend that fair and adequate taxes are unfair---they're victims of big govt expropriating their private property. Any reduction in rising profits is called 'redistribution'---they own the proceeds of our national productivity.
They equate low taxes with American Freedom & Private Profit, distinguishing the US from dictatorships.
By the rich legally dominating election financing, these slogans become every day norms in politics, repeated by the 'objective' news media.
The vast majority of citizens favor much higher taxes on the rich, and also reversing Citizens United. This important public preference is ignored in our media. It gets big profits from the campaign ads paid by mega donors, that swamp our voters.
As Kristof must know, many other countries ban paid campaign ads on the media, to prevent 'special interests' from taking over their political discussion.
We don't prevent that, so the rich set up our definitions of left, right and center in politics, to keep policy that ensures private profit as 1st priority. We the People come in last.
So, we still lack medical care for all in the 21st C, and have to fight even for ACA which preserves insurance profits before the public good.
The S. Court said limits on mega donor $ in elections are anti 1st Amendment. How about a column on that?
5
Something is trickling down, but it ain’t prosperity.
Note MY address, the real life laboratory for GOP fiscal policy.
13
It is a self-serving myth, perpetuated by the wealthy, that increasing taxes will reduce productivity and hurt the economy. The riches obtained by Edison, Gates and Jobs derived from their willingness to work hard in the absence of extrinsic rewards. Also, those in the helping professions contribute far more to our society than those in the financial industry.
2
It's sort of ridiculous that the debate is even centered around if billionaires are "useful." Does it matter? The fact is that they have completely unjustified power over our lives. Parsing the "good" and "bad" billionaires is a little like parsing the "good" and "bad" slave masters. Just as there were "enlightened" slave masters who made sure their slaves remained well-fed and taken care of, there are "enlightened" billionaires like Buffet who donate their money to good causes and even say the truth sometimes (e.g. class warfare).
The real point is that these individuals should not be able to decide what gets funded(aka investments), what we are allowed to wear when we work, whether we have access to health care, whether we have a reliable public transit system or have to be stuck in traffic, risking accidents, and participate in the destruction of the planet so that we can buy their products and rent our bodies and time to ensure our survival. If we don't want to do these things we are always "free" to drop out of society and join the homeless among us who have been deemed "useless" by the billionaire class and thus unworthy of resources.
I actually believe in democracy which I suppose makes me a radical. I believe people know what is best for themselves and believe in people's own self-determination. We don't need billionaires making all the important decisions for us. Democracy and billionaires are fundamentally incompatible. Soak the rich? No. End the rich.
12
Soak away.
As long as the very rich are rich enough to hire expensive tax lawyers and accountants, it makes no difference what the tax bracket is. They will still pay less. Always.
It is necessary, should anybody wish to change the system, to change the laws which enable tax deductions for the rich. Alas this might also hurt the middle class, but that would just be collateral damage and noise in the background.
3
@Joshua Schwartz As a retired, career tax preparer, i can say with assurance that there are easy fixes to the system that would not allow the rich to play their games. I know because I was paid to play them. Stop giving preferential rates to capital gains and dividends. Stop capping FICA contributions. Bring back a fair inheritance tax and educate the public that Frank Luntz’s genius in creating the Death Tax is a 100% lie. Stop the real estate tax dodges, the cornerstone of the Orange Slime’s phony wealth. And yes, raise the top marginal rate. And people - just because the top marginal rate would be 70% does not mean that the ultra-wealthy would then be paying 70%. It does not work that way.
1
Money is power, and resources on this earth are in fact limited. I am a big fan of progressive taxation and\or a specific alternative minimum tax for high incomes. Senator Warren is on the right track.
3
I saw Bridesmaids, unfortunately. The one memorable scene was the rich girl who had a back patio fountain which ran milk chocolate. Possibly my biggest complaint with the very rich is that they have absolutely no clue what to do with their money or how to spend it. Nobody needs seven cars or seven bathrooms.
11
And the usually have bad taste, too. It’s more fun being salt of the earth anyway.
5
The rich have a larger stake in keeping the country prosperous because they own so much of it. In the distant past, the biggest problem for those with wealth was keeping it from those who would steal it: thieves, kings, foreigners, con artists. Our laws and our enforcement officials, from military to police to the justice and treasury departments establish a safe zone for the wealthy to keep their wealth. If they own half the wealth, they should be paying at least more than half the tax burden. After all, 99% of us don't need that special kind of protection real wealth requires.
Further, since long ago, the wealthy, who protest gov't debt so much, have learned to financially embrace gov't debt for two basic reasons: first, they can make more money on that debt than they pay in taxes by loaning the gov't the funds that gov't wants to borrow, and second, the wealthy get all the benefits of the spending that that debt creates while getting the rest of us to pay for it so that their cost is negative.
Price's rule implies that the rich will always get richer, because of the advantage wealth gives them: bought gov't policies, college admissions, peace of mind, etc. It is incumbent on the people's gov't to give rest of us a chance and to blunt the power of the rentiers, despite the policies of the last 3 decades.
As more is hoarded at the top, the less vibrant will be the whole, compounded by all the lost opportunities.
1
"We can either have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." -- Justice Louis Brandeis
64
I see that Mr. Kristof is answering some of the comments so I am putting these comments out there. Maybe he or someone else will answer me.
The two arguments I have always heard against higher tax rates on the rich are, first, that the rich create the most jobs so taxing the rich will depress job creation. Second, that if we soak the rich they will either move their money overseas or move out of the country completely and take their money with them.
I haven't studied either of these arguments closely enough to know the answer. Can someone give me lucid answers to these objections?
The problem is that this column makes very sound policy arguments but the title "Should we soak the rich" almost immediately, biases the reader.
The fact is that the rich have soaked the rest of us for more than 30 years.
To return to us what was, rightfully, ours is not soaking anyone, least of all those who have gamed the system to make it possible.
There is absolutely no doubt that what drives the economy is consumption and in terms of pure numbers, the greatest concentration of consumers lies in the lower and middle classes.
The richest people in the world, today, were made rich by the consumption of the lower and middle class.
That is beyond argument or debate!
4
We should redistribute the income so that there is no American who has less than $25,000 dollars in income a year. The wealthy would still be wealthy, just no unnecessarily and obscenely wealthy.
All Americans, at all economic levels should be explicitly educated in how to maintain a detailed monthly budget of their incomes and expenses, including those expenses which come due less frequently than once a month. [The same for businesses].
Due to the elimination of sub-standard incomes, and due to effective income management, the American economy will be regularly and effectively stimulated.
In the 1980s, the Republican Party got hijacked by very greedy, very wealthy men. Some of them were the corporate raiders who convinced CEOs (and MBA professors) that businesses owed their sole allegiance to shareholders, and were obligated to maximize short-term shareholder gain by plundering workers, their communities, the country, and the environment.
Ronald Reagan earned sainthood by declaring war on unions, which had served as a check and balance on capital owners' greed. Republicans invented the myth of "supply-side economics," to justify tax cuts for their constituents, who believed they were entitled to keep all their wealth and not have it confiscated as taxes for redistribution to undeserving "takers." "Deregulation" became dogma, breaking down impediments to greed. And they instilled a widespread aversion to taxes not confined to hard-core conservatives.
The result has been ever-widening inequality of income and wealth. Republican constituents see that not as a problem, but as the desired outcome of the agenda they've purchased from the party they own (and with their controlling stake in the other party). Believing themselves entitled to all the nation's wealth, their agenda has been all about redistributing wealth into their pockets.
Thus, if progressive Democrats manage to get control of the federal government, soaking the rich to reduce the inequality and restore balance would be entirely appropriate. The rich have been soaking us for decades.
32
I remember when Mr. Grumman, the guy that owned Grumman aerospace had a very nice house, not a mansion by any means on Long Island not far from the Grumman plant in Bethpage.
Today’s mcmansions make those days in the early sixties seem so quaint.
11
One of the things you pointed out, Mr. Kristof, about auditing of tax returns being the highest in Humphreys County, Mississippi is almost as obscene as Mr. Bezos’ 160 billion dollar wealth while at least 100,000 children are homeless every night. If something isn’t done at some point quite soon, it might not be climate change that destroys us first.
27
A high marginal income tax rate, a high tax rate on large estates and gifts, and a modest wealth tax on high net-worth individuals would reduce inequality and give us funds for public projects while not having the national debt reach unsustainable levels.
But it is necessary to realize that the "average" American believes that he or she is only one lucky break (or winning lotto ticket) away from becoming a member of the uber-rich. So they are not likely to back anything which they feel, in the future, might adversely affect themselves. (Remember "Joe the Plumber" of 2008?)
So this has to be sold by the Democrats ... and they are bad at selling their ideas, even if the people support them in the abstract.
6
Bernie's been right all along about income inequality, but in distilling his message down to a couple of phrases repeated ad nauseum, he robbed it of much significance, turning it into something easily parodied. It didn't take too long to make your case Mr. Kristof, only a few hundred words, yet that's ten times more than each democratic candidate gets during the Twitterized debates to discuss a matter of such importance. Ross Perot was ridiculed for his hokey charts but a few charts on income inequality wouldn't hurt, not at all.
Studies have shown that most Americans have no concept at all on the magnitude of the wealth divide, and ironically, when asked to outline a society that embodied a fair distribution, they unwittingly describe Scandinavia.
3
@stan continople sadly the so called media “pundits” (which literally means learned scholars) never really got Bernie, neither in 2016 when they blatantly bashed him pounded him on TV in the press, and not now in 2019 either. https://www.realclearpolitics.com/2019/10/11/pundit_class_continues_to_misunderstand_bernie_sanders_488811.html
1
I'm sure the "Rich" would willing pay the rate of 70% of the 50's IF they had the deductions available at that time. In reality very few, if any, paid anything close to the 70% You love to quote.
3
@Ex Californian - Don't they still have most of the same deductions? Or at least plenty of deductions.
It is grossly misleading to lump FICA and federal income taxes together. Although every worker pays an identical proportion of their wages (up to an annual ceiling) in FICA taxes, Social Security and Medicare have very progressive benefit formulas. Because low income workers get such a high return on their FICA taxes, middle and high income workers get back less than they otherwise would. In other words, Social Security and Medicare redistribute income downward in a cleverly concealed fashion. The poor can hardly claim to be leveling the field through their FICA contributions when they benefit disproportionately from them.
11
@Earl W. It's not that easy. Benefits from Social Security are distributed in a progressive fashion, but only within a very narrow band since FICA taxes for disability and retirement funds are only collected up to about $120K in annual income. Furthermore, the much lower life expectancy for those at the lower end of the income bands means they have much less time to collect benefits. A high income worker -- one who earns 3X the max for FICA ends up paying about 2.3% of their income for Social Security instead of the close to 7% for those under $120K.
12
@Egg
You are correct that the Social Security tax is regressive because it starts at dollar one of labor income earned and cuts off at $133K or so. What you forgot to mention is how progressive the retirement benefits formula is. Someone who earned an average annual income of $10K will receive around $9K per year in Social Security retirement benefits. Someone else who earned an average annual income of $100K (and therefore paid ten times as much tax), will receive just $30K per year in Social Security retirement benefits. Low wage earners obviously receive a much better return on the Social Security taxes they paid into the system. Furthermore, low wage earners get back every penny they paid in FICA taxes in the first three years of retirement. Everything they receive from Social Security past those first three years is a completely free ride, so what you said about longevity is true, but not to that extreme.
5
Of course soak the rich. That's where all the money is.
10
People who view the lottery as an investment vehicle vote for lower taxes with the optimism of hitting it rich any day now.
1
This reader has long believed that the justice of a society can be measured by how the most vulnerable are faring and being treated. I also believe that the late Pope Paul VI spoke the truth when he echoed the message of the Hebrew prophets: "If you want peace, work for justice."
Am confident that my perspective regarding justice puts me in the minority, especially among those that equate justice with nothing more than locking up those that violate laws for many years or executing them. But based on my perspective, America is failing the justice test. If we continue to fail the justice test we should prepare for violent conflict on the home front, just as what we got when workers initially fought for their right to organize and collectively bargain for economic justice.
12
I've got no argument at all against what Nicholas and many of the commenters are suggesting here. It's the reasonable thing to do as well as the right thing to do.
I'd only add that, in addition to higher marginal tax rates, abolishing the cap on Social Security and Medicaid contributions and making all income eligible for those, a tax on securities transactions, and the like, we still work hard towards complete public funding of elections, with no organizational contributions allowed (free speech is something exercised by an individual, not a collective entity) and a fairly low three digit cap on individual contributions per electoral race.
What's being talked about here would help towards lessening our inequality, but if allow big money to stay in elections we still won't touch the problem of our representatives being incapable of representing anyone other than their big donors, and if that's the case even 91% marginal tax rates won't put much of a dent in the power oligarchs have to dictate our laws and regulations.
30
Should we “soak” the rich? We have more billionaires than any nation on the planet. Why not? What have “the rich” done for us - besides robbing and exploiting us? Tax cuts for the wealthy only added more money to the wealthy. Let’s stop buying the lies that tax cuts improve the economy. They do not. We need to return to the tax codes in effect before the Reagan era. No more gold parachute; no more billion dollar CEOs. We need to upgrade our infrastructure; to add about a million units of affordable housing and to overhaul our healthcare system. It the billionaires don’t like this, let them move to China.
75
I'm all for trickle-up economics. Put more income in the hands of people who will spend it, not those who can afford to stockpile 99% of what they earn.
What I don't get is why Trump's base, blue-collar America, doesn't see that the Republican party has and will continue to pick their pockets in the name of lower taxes.
A Democratic candidate who can put that message across in 2020 will be a winner, hands down.
45
@David Baldwin
Not all working class Americans support either trump or the republican party. Many voted for trump in the last election because they were put off by Hilary and the fact that many Democrats look down their noses at “the working class”. Perhaps they should realize that belittling people - especially those who are economically vulnerable - usually turns them into Reagan/Bush/Trump/republican voters. Many of those same people voted for Obama twice.
15
@Maureen
I keep hearing this common refrain that Democrats "look down their noses" at the working class. How exactly is this the case?
The Republicans certainly do more to hurt the working class than the Democrats - the GOP cuts programs and agency funding that helps the middle and working classes like a two year old flushes keys down the toilet. I'd certainly not characterize Mitt Romney as a "Man of the People", and definitely not a "Man of the Working Class" - nor would I call Trump, our Illustrious Gilded Idol of a president, a representative of the Common Man.
11
@David Baldwin I certainly share your disbelief that blue collar workers voted against their own self interests. The GOP pander to people’s base interests. I would like to think that most Americans are abhored by such tactics. The GOP have been underfunding education for the past few decades. Educated people are less apt to have the wool pulled over their eyes. My question is what kind of person wants to live in a society of uneducated people.
7
You are correct! Buffet has been on the money for decades on today's class warfare. There is also a simple change which would go a long way to putting Medicare and Social Security on sounder financial footings. Make them much less regressive. Lift the annual cap on income subject to the taxes to $1 million or $5 million or even $10 million. That change will raise huge amounts of money and cannot possibly lose many votes. There are far more US citizens who would see no tax increase from this change than who would.
Another change should be to require that SS and Medicare taxes be paid not only on earnings from work, but on dividends and interest, as well.
These changes can be accomplished virtually seamlessly. They require no new bureaucracy, as a wealth tax would.
54
@James Ricciardi creative idea, but I’m pretty sure that people with money in 401k and like accounts would howl if you tried to tax their dividends. As would those who use those dividends to supplement paltry social security checks in retirement. Not every stock holder is uber rich. Average workers have been pushed into the stock market with the demise of pensions, much to their detriment.
3
@Jean Sims How would removing the cap affect average workers and retirees who make less that the current cap at all? This would seem to be both painless for average Americans and tolerable for the wealthy, and it would raise much needed revenue for SS. Brilliant.
5
maybe
but a Warren suggested 2% tax on wealth becomes a 50% tax over time
Take out your compound interest computation app.....2% earned for 20 years increases wealth by almost 50%
Thus an annual 2% tax removes the opportunity to increase ones wealth by 50% over 20 years.
Is this what we want? Is it fair?
Is the Warren proposed wealth tax a 2% tax or a 50% tax?
2
@Jon Brightman
Not really. Money put in S&P gets 5-7% a year.
The safest investments get about 2%, and few big money investors put 100% in US Treasuries. Conservatively, figure the wealth to grow 4% of the total, with taxes 2%.
@gratis
Ok
But continue your analysis:
The Fed's stated goal is to maintain inflation at a 2%
Inflation erodes wealth's purchasing power
so,
a 2% "wealth tax" on top of a 2% "inflation" tax means
that after 20 years one's wealth would only be worth half as much measured in "real" dollars as it would with out these taxes even when one earns a 4% investment return
Is that what we want?
1
The 400 largest tax bills are in no way the 400 richest americans, and over history 70% of these people are only a among the 400 once. Whether all or even a msjority are billionaires is arguable.
The rest of the 1% not in this 400 cohort paid a lot more, as the graphic published yesterday shows.
And again, percentages vs. amounts are used to make statistically weak arguments about tax rates.
2
Raising taxes on wages/salaries will not close the gap. The richest 400 Americans paid an average tax rate of 23% because the majority of their earnings come from capital gains that are taxed at a much lower rate, about equal to the 23% cited.
Higher tax on wages/salaries will hurt two-income families especially hard and penalize those who work for a living. It won't touch Bill Gates, Warren Buffett, or hedge fund managers.
Tax capital gains the same as ordinary income and the gap will begin to close and much more tax revenue will be raised. It would also be much more efficient than any wealth tax that will be easy to dodge. Also close loopholes that benefit the real estate industry.
43
@lucy
It is not mutually exclusive. I totally agree on taxing capital gains, but we can tax excessive salary, too. There is room in the legislation for both.
And lift the SS cap to infinity, too.
20
@lucy
If you want to tax capital gains at wage rates, be sure that losses are an equal offset to wages as well.
3
@lucy -- along with taxing 'capital gains' at the same rates as wage labor income; remove the cap on Social Security taxes. Wealthy people still collect Social Security - they should pay the taxes on -all- of their income, just like most working class people do. Someone in the top 400 Billionaires group probably makes the Social Security tax limit sometime after midnight January 1 each year... and they'll collect the top payment possible. Meanwhile, Joe Worker is paying that Social Security tax paycheck after paycheck, all year long...
10
The fundamental conservative law of work incentives goes like this: If you give rich people more money, they will work harder. If you give poor people money, they will work less. Therefore, the rich need tax cuts, and the poor need work requirements.
142
@Pea,
This is so spot on, great post. I have family members, none of whom are wealthy - I'd call them lower middle class - who watch FOX News and listen to Rush Limbaugh. This is the talking point they get all the time, which gives it so much staying power. They seethe with a sense of injustice over how, as they see it, the poor are taking this country for a ride. Then they are told that electing Dems will only make it worse. It's a truly powerful distortion they hammer home. Shameful.
18
Wealth inequality translates to political inequality, especially when money in political campaigns is defined as speech by the Supreme Court. Our entire socio-economic system has been perverted by the takeover of our government by moneyed interests. Only a strong surge of political engagement by the majority of the people can tilt the balance back toward justice for all. There shouldn't be any doubts now about which party must be voted out.
109
@Eric Caine ...yes the highest court put out a Trump-type lie that any limits on mega donor money in elections is anti free speech per 1st Amendment.
Jimmy Carter said we veer toward oligarchy since it takes so much money now to run for any office.
Our highest court used our own constitution against we the people. The voice of the citizens is muffled, they can't compete. The voice of the rich is amplified. So we stand in line to vote within the limts the mega donors have set, by how they've picked and promoted their candidates.
Hope that may change a bit for 2020. Most voters and many politicians want to reverse Citizens United. Our political emergecy now is more obvious to all.
12
You want a fair tax system? One tax rate, no deductions, no exceptions. You make x dollars, you pay y per cent of it. No one is paying a higher or lower tax rate, no one is exploiting loopholes.
6
@michaelscody
Only works when the lowest get a living wage. Then tax everyone at a 50% rate. To even things out, government needs to keep the lowest from economic ruin from medical bills, and give them a better chance at socio-economic mobility with better education chances. Help working families more with child care and care for the aged.
Hey, throw in 4 weeks paid vacation by law, and we have Denmark!
4
@michaelscody
I agree. Introduction of innumerable ways to secure 'tax deductions' has made the entire system of tax collection corrupt.
4
@michaelscody, Your comment is contradictory. "One tax rate" implies a flat tax (which is incredibly regressive) whereas "[y]ou make x dollars, you pay y per cent [sic]" implies a progressive tax (which could easily still be regressive if the brackets are too large, as they currently are in the U.S.].
So which is it?
2
The sense of fairness provided by The Greatest Generation has eluded us for too long. Try to send a kid to college without doing terminal damage to your retirement account—you’ll see what I mean. The freeways in California are really worn and cleaning up the environment will be costly. The country’s credit
Is tapped out. Exploitation of the average family cannot go on forever.
70
@Warren Shingle, sure it can. We're bottomless money pits. And if we're not it's our fault for not being born rich or slaving away until we drop. That's the attitude I've encountered. The other attitude, far more infuriating, is that all of us could have jobs if we tried harder. There's one big problem with that: discrimination of all types: age, gender, skin color, and companies lack of interest in paying for what they want. No one working a full time job should be homeless, unable to buy food for him/her self and family, and unable to save for the inevitable rainy day. But that's what we have now. BTW, the greatest generation was the one that came back home from WWII and benefitted from the GI Bill and then took it away from the Vietnam vets. The same generation that didn't want "socialized medicine", took away pensions from their own children.
In truth the generation war doesn't help anyone. Most people's lives depend on luck. We can plan only so far in advance. But we can't plan for everything or how it happens. That's the part that our politicians and the rich don't want to acknowledge.
37
@Warren Shingle
Yes. The problem with capitalism is that sooner or later the rich end up with everybody elses' money.
20
@hen3ry
Vietnam era vets received the GI bill.
When I was got home in June, 1970, I started college during a Summer session, and received GI bill checks for years afterwards to include Grad School. Vets were given 10 years from their discharge date to receive funds for school. At that time, colleges had many vets.
6
I completely agree with Mr. Kristoff’s view that economic inequality needs to be addressed in the next administration not headed by Trump and a GOP Senate majority.
It can be done by adjusting the tax rate. But I have to disagree with the strategy of several democratic candidates. Their approaches will only increase the odds that Trump will be re-elected.
Americans generally oppose “free stuff”; a giveaway as a significant near majority of Americans see it. Also, even if Trump is defeated, there is still a good chance that the Senate won’t change enough for any of the proposals put forward by Democrats.
This does not mean that we ignore the needs of poor people and the gross distortion of income in our society. Taxation changes can provide more justice for the vast majority of people.
What won’t work is for candidates to argue for free tuition even if parents are wealthy or pretend that health care can be ‘free’ for everyone. It’s not free even for current recipients of Medicare and insurance companies still exist for supplemental policies.
Dems have the potential to shoot ourselves in the foot. With Trump in office, we can’t afford to lose this time.
13
Unfortunately, this article lacks facts. Tax rate can be reduced by increasing charitable contributions, which are surely not "loopholes". This article would be credible only if it disclosed the change in charitable contribution rate over time.
@Donald Champagne Try this fact: my accountant told me that for my charitable deductions to actually be deductible they would have to exceed $8500. I got about half way there. So even charity now belongs to the super wealthy.
85
Because you received a substantially higher standard deduction. If your taxes went up last year over the year prior without changes to your earnings, feel free to complain. I suspect they did not
3
@Donald Champagne
I would rather not have my tax reduce, as that impacts the quality of many government services.
I would much rather have my salary increased. Which is not hard to do with certain kinds of legislation, changes in tax law, incentives, etc.
Increasing my salary would automatically increase Fed Revenues and FICA taxes.
Yes, much rather have a raise than a tax cut.
2
People who never have to worry about money do not comprehend what life is like for the majority of Americans. Compassion and action on that emotion usually comes from experience in the circumstances for which one has the compassion. Just as a person who has been a parent might have understanding of what another parent is going through when their child is misbehaving, a person who has struggled financially will likely have a heart for others in their difficulties. Most of the super wealthy have never been poor which leads me to think without mandatory tax increases for them, they will not voluntarily offer to pay more. And they will probably fight mightily to protect their money. I’m not optimistic that things will change in this administration. But one can hope.
12
@Cookie please : No, things will not change in THIS administration. These gop-people don't care about America or the American people; they care about themselves, and enriching those who benefit them. All these greedy oligarchs need to go.
1
Let’s not confuse the 1% with the .01% or the wealthiest 400. The low end of the 1% tends to increase their wealth the old fashion way, via taxable earnings, already paying their fair share of taxes at combined tax rates over 40% in high tax states. Think dual-professional families, not the ultra-rich.
The wealthiest 400 typically increase their wealth disproportionately without generating taxable income. The only way the wealthiest 400 will pay their fair share of taxes is via a wealth tax.
The argument is the wealthy will devalue their assets. A natural check and balance would be to require the use of asset values provided, for example, to banks for a loan, by Forbes for their "richest" list, by CEOs pitching their next round of VC financing, or by hedge fund GPs touting their portfolio performance.
Make the wealth tax an alternative minimum tax, so those paying their fair share via income tax would not be doubly taxed -- a taxpayer would pay the higher of the wealth tax or income tax. With a 2% wealth tax on net assets in excess of $50mm, a taxpayer paying $500k in income tax would pay no wealth tax unless their net assets exceeded $75mm.
As additional incentive for legislative support, repeal the estate tax (a wealth tax at death).
No, don’t soak the ultra-rich, just have them pay their fair share. Write your legislators in support of a wealth tax.
16
Thought problem: what is the origin of 'soak the rich' ?
The 'rich' used to understand that capitalism is not a perfect economic paradigm - that sending in taxes to be distributed by government (we the people) to priorities needing the most attention/delivering the best results was the best way to sustain capitalism, as profits from their re-invested tax revenues would flow upward, and the economic base would grow.
Our current day chicken-capitalists are no longer interested in investment, then growth, then regeneration by sending tax revenues back into the income pyramid - these chicken capitalists are interested in extraction, having dressed up their ethos as 'let animal spirits run free' deregulation.
63
Soaking the rich has such a horrible sound. But the country did just fine under Eisenhower and Kennedy and Nixon. It's not a revolutionary thought to suggest a return to those tax rates. It's not socialism. But it is a good way to be sure that America's middle and lower classes can resume their role as the engine of the country's economic growth.
20
I once was medical director of a hospital and made decent money, although not as much as I made as a medical practitioner. I was happy with the job until the day I discovered that a full-time cardiologist (in practice) was hired by the hospital for his second job, paid him 50% more than I for 3 partial days a week, including his writing unedited letters that created messes that I had to fix.
It was then I sadly realized that the only marker I had for my value in the organization was how much I was paid. Salary sadly equals value for many of us. One can't eat dedication and friendliness.
A wealth tax would require valuations and would be difficult to administer. But a high marginal tax on very high income is another matter. Taxing stock and bond trades at 0.125% or more (0.00125) is another approach.
There must be strong accountability as to where the money is going. Having it doesn't mean things are going to be fixed. Education? How many graduate and what is happening to student debt? Health care? Track bankruptcies due to medical bills. Addictions? Are fewer people dying? Clean water? How many children have elevated lead levels? Tracking isn't sexy, but facts still matter.
I think.
46
There are many reasons economic inequality has gotten much worse, and a wealth tax could help. I think one overlooked factor is the need for older Americans (I am one, affluent and undertaxed) to amass large sums of money to insure solvency for long retirements. This is an unintended consequence of the move from traditional defined benefit pensions to defined contribution retirement plans, which place much more of the burden on workers who are unequipped to plan, invest, and manage wealth. Better social and economic policy would be to expand Social Security while reducing incentives for hoarding cash in IRAs and 401(k)s.
78
There is no logic in our current tax rates. Trump, McConnell and Ryan simply gave a gift to their wealthy backers. Even with that, Ryan clearly saw that he could not win another election, so he left the House.
Post-WWII, when marginal tax rates were quite high for the wealthy, we accomplished some amazing things. We built devent post-war housing for returning troops and their families. We build the interstate highway system. We put a man on the moon. The list goes on.
Does a wealthy person really need yet another house, while the poor wish for just one safe shelter and food on the table? Of course not. It's time to go back to a similar tax structure.
171
@Barbara
That decent WWII housing was like 2 bedroom 1 bath, 800 sq ft. house. Times have changed.
I think people in this country have been convinced that the rich should pay less because there is always the chance that they will become rich. It is a great scheme. While a trillon dollar tax cut for the wealthy was passed, minimum wage has not been raised for over 10 years. And, surprise, income inequality has increased. I wonder why?
123
@Council
Was it John Steinbeck who wrote that Americans think of themselves as "temporarily embarrassed millionaires"? State lotteries are probably partially responsible for this attitude since people suddenly saw themselves as possibly being rich some day and didn't want to pay taxes on this phantom income.
3
Yep, Lottery ticket logic backed by lots and lots of indoctrination about the American Dream being yours for the taking.
5
Income inequality ratio in the US between CEO’s and worker bees is at levels not seen since the time of the Robber Barons of the late 19th Century.
The top 1% control nearly 50% of the country’s wealth.
The rich elite have got a choice:
Level the financial playing field through significant wage increases for workers and agree to pay their fair share of the tax burden to allow this country to meet its full potential on all levels.
Or
Same old, same old, leading to further radicalisation of politics, and a death spiral of our democracy on all levels.
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@winthropo muchacho Sadly, the ultra-wealthy elite yearns for democracy's death spiral. They see themselves as oligarchs, perhaps future presidents-for-life.
They are not really Americans; they view themselves as citizens of the world, with mansions here, there, and everywhere, served by the peons they help to create.
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The wealthy see themselves as competing with each other for status. An across the board redistribution of the wealth of billionaires would allow them to play in their game, just with smaller numbers. Unless we can redistribute wealth and cut the power of corporations we will lose our democracy.
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@LynnG
It is sadly easy to argue that we have already lost what democracy we had==one need only read the paper or watch the news. I suppose we find out over the next 13 months
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A lot of readers here are the 10%,, or higher. There are reasons why all the "tax the poor" schemes are popular, I'm not sure changing things will be easy, might be some reactions in Cambridge, and Westchester County, to say nothing of Marin, but it's reform or pitchforks. I don't blame the entitled left for hating the AR 15.
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If our nation collectively decides to experience the furthest extent to which wealth disparity can exist, before a society breaks down entirely, then I say we let democracy run its course.
We’re already in some pretty murky historical waters, and there are plenty who seem perfectly content to worship at the altar of billionaire ego cults. Give the people what they want.
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We've reached the ultimate conclusion of tax and economic policy when one party is completely owned by the billionaire class: an oligarchy headed towards authoritarian rule.
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Absolutely get them to help the poor more and increase their donations and wages to help.
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@nursejacki we've been the donations and wages route, that's why we are where we are, the only way to get it is to take it, by law, pay taxes or mandatory jail terms just like the 3 strikes the poor have dealt with.
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Rewarding the already uber-rich with more tax cuts was and still is the Republican ideal. And the unfortunate consequence of this latest money give away by the Trump White House is a ballooning deficit. Not only are they saddling our future generation of leaders with crippling debt, but they’re also — by deregulating environmental protections and questioning the science of climate change — leaving a planet that is barely habitable. The GOP mantra is “Shoot now, ask questions later.”
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@J. Grant There's also a real hypocrisy here (Senator Collins of Maine, you listening?). During the Obama administration, Congressional Republicans fought against any social spending because they argued that we couldn't afford deficits even to pay for infrastructure, even to counter the Great Recession, even when every economist argued that we needed that fiscal stimulus. In Jan 2009, during the height of the recession, every single House Republican voted against the bill to lift the economy out of the recession and keep people in their homes. Every single one! But as soon as Trump was in office, those deficit concerns vanished, and the same people voted for a huge tax cut for the wealthy, resulting in our $1 trillion deficit. That's bad economics, but it's also rank hypocrisy. Grrr. Right, Senator Collins?
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@J. Grant Oh, don't worry about that debt. As soon as a Democratic president is in, you can be sure the Republicans will suddenly become very worried about the dead and will insist the deficit be reduced - through cuts to medicare, food stamps, any part of the safety net.
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@Nicholas Kristof - When the federal government spends, it adds money to the private sector. When it taxes, it takes money out. The deficit measures how much it puts in net. When we have a surplus, we take money out net. THE FEDERAL DEFICIT IS INCOME FOR PEOPLE, BUSINESSES, AND STATE AND LOCAL GOVERNMENTS.
Look at history. After WWI, we eliminated deficit and paid the national debt down by almost 40% by 1929. Then what happened?
(In fact EVERY TIME we paid the debt down by more than 10%, we fell into a terrible depression. That has happened 6 times and accounts for all of our depressions.)
After WWII, we had deficits for most of the next 27 years. We increased the debt by 75%. And we had Great Prosperity.
Trump's tax cuts were not good for the economy because most of the money went to the Rich where it is was not used in domestic commerce, but in financial speculation which is not good for the economy, cf 1929 & 2008.
You should always keep in mind that the federal government can create as much money as it needs out of thin air. It will run out of money the day after the NFL runs out of points.
If we use the money to increase production, that will prevent excessive inflation.
You should learn that the finances of the federal government are far, far, different than the finances you discuss around the kitchen table.
Unless you have a printing press in your basement.
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