Sunday, October 27, 2019

"Taxing the Rich"

Funding the government by taxing the wealthy has always had political appeal. In 1913 the ancestor of today's federal income tax was introduced to chastise the rich by imposing a tax ranging from 2 percent to 6 percent.

The 2 percent bracket started at an income level, in today's dollars, of over $500,000.

The top rate of 6 percent only hit incomes, again in todays' dollars, of $13 million or more.

Times have changed, haven't they? 

Taxes on wealth may trickle down even before they are enacted. Elizabeth Warren's proposed 2 percent tax on wealth over $50 million, for instance. One of her advisers has already suggested a lower tax bracket starting at $l million. 

1 comment:

Jim Gust said...

The serious problem with the wealth tax will be the exceptions. Do 401(k) balances count toward the $1 million threshold? How about IRAs? Do they count once you can make penalty free withdrawals? What about the actuarial value of pension rights?

What about private foundations? I would argue that so long and Bill Gates has control of his private foundation, all of the foundation's wealth should be counted as his for wealth tax purposes. The fact that the funds must be used for charitable purposes should not matter. But you know that rule won't be adopted, there will be an exception.

One of the largest pots of wealth, university endowments, still goes tax free under the so-called "wealth tax." Why is that? Why are their savings more holy than mine, to be excused from supporting the government?