10 Steps to Break Up the Wealth of the Super Rich
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• Institute a wealth tax on the 1 percent. A “net worth tax” should be levied on individual or household assets, including real estate, cash, investment funds, savings in insurance and pension plans, and personal trusts. The law can be structured to tax wealth only above a certain threshold. For example, France’s solidarity tax on wealth is for those who have assets in excess of $1.1 million.
• Establish new tax brackets for the 1 percent. Under our current tax rate structure, households with incomes over $350,000 pay the same top income tax rate as households with incomes over $10 million. In the 1950s, there were sixteen additional tax rates over the highest rate (35 percent) that we have today. A 50 percent rate on incomes over $2 million would generate an additional $60 billion a year.
• Eliminate the cap on social security withholding taxes. Extend the payroll tax to cover all wages, not just wage income up to $110,100. Today, some in the 1 percent are done paying their withholding taxes in January, while people in the 99 percent pay all year.
• Institute a financial speculation tax. A tax on financial transactions could generate significant funds for reinvesting in the transition to a financial system that works for everyone. Speculative trading now accounts for up to 70 percent of the trades in some markets. Commodity speculation unnecessarily bids up the cost of food, gasoline, and other basic necessities for the 99 percent. A modest federal tax on every transaction that involves the buying and selling of stocks and other financial products would both generate substantial revenue and dampen reckless risk taking. For ordinary investors, the cost would be negligible, like a tiny insurance fee to protect against financial instability. Estimated revenue: $150 billion a year.
• Tax income from wealth at higher rates. Giving tax advantages to income from wealth also encourages speculation. As described by Warren Buffett and others, we can end this preferential treatment for capital gains and dividends and at the same time encourage average families to engage in long-term investing. Estimated revenue: $88 billion per year.
• Tax carbon. Instead of taxpayers paying indirectly for the expensive social costs associated with climate change, taxes could build some of these real costs into purchases and products. Perhaps the most critical tax intervention to slow climate change would be to put a price on dumping carbon into the atmosphere from the transportation, energy, and other sectors. For example, the real ecological and societal costs of private jet travel would greatly increase the cost of owning or using private jets. A gradually phased-in tax on carbon would create tremendous incentives to invest in energy conservation and regional green infrastructure. Proposals include a straight carbon tax or a cap-and-dividend proposal that would rebate 50 percent of revenue to consumers to offset the increased costs of some products and still generate $75–100 billion per year. We could also explore similar taxes on other pollutants, such as nitrates that are destroying our water supplies.
• Tax excessive consumption. Consumption of unnecessary stuff, especially by the 1 percent, is filling our landfills and destroying our environment. A tax on certain nonessential goods, such as expensive jewelry and technological gadgets, would reflect the real ecological cost of such items. It could apply only to purchases that exceed a certain amount, such as cars that cost more than $100,000. Some states currently charge a luxury tax on high-end real estate transactions.
Objections by some in the 1 percent to these proposals will be strong, along with howls of “class warfare” and “job killing.” Some will argue that government shouldn’t be in the business of picking winners in the economy. But the reality is that our current tax policy is picking winners every day, and they’re usually in the 1 percent.