Senator Elizabeth Warren recently proposed a new wealth tax on the richest Americans. Though the United States does not have a wealth tax, a number of countries around the world have or had progressive wealth taxes. In this paper, we discuss the merits and demerits of progressive wealth taxation in light of the international experience and economic theory. In short, a progressive wealth tax focused on the ultra-wealthy (households with more than $50 million in net wealth) could raise substantial revenues and the economic incidence of the tax would lie overwhelmingly on the richest families. After defining what a progressive wealth tax is, in section 2 we discuss issues of tax avoidance and evasion; in section 3 we discuss the real effects of wealth taxation on the economy; and in section 4 we make concrete proposals to administer a progressive wealth tax effectively in the United States..How would a progressive wealth tax work? Evidence from the economics literature
Emmanuel Saez and Gabriel Zucman
Instead of progressive wealth taxes, why don’t we start by eliminating totally regressive taxes like the FICA tax, which costs each worker and each employer thousands of dollars a year?
ReplyDeleteFICA tax revenue is destroyed upon receipt. It does not pay for Medicare or Social Security.
Some people respond with, “Yes, but the pretense is necessary to prevent politicians from ending Medicare and Social Security. After all, workers paid into the trust fund.”
Nonsense. The “Social Security Trust Fund” is an accounting fiction. It does not exist. There is no pool of Social Security money anywhere. The US government creates Social Security benefits out of thin air. A sports scoreboard needs no “trust fund” of points.
And despite workers “paying into” a (non-existent) “trust fund,” politicians claim that the “trust fund” is “insolvent,” or that the government spent the “trust fund” money elsewhere. Therefore Medicare and Social Security must be eliminated or privatized.
As I have said before, the problem with “tax the rich” schemes is that (at the federal level) they sustain the LIE that dollars are limited, and that the US government runs on tax revenue.
This lie allows politicians to create infinite amounts of money for war, weapons makers, and corporate subsidies, while claiming that there is “no money” for social programs.
In any case, the rich do not pay taxes. They never have. They never will. We all know it. Therefore talking about it is useless. I say that instead of taxing the rich, let's stop screwing the rest.