“Should five percent appear too small
Be thankful I don't take it all
'Cause I'm the taxman
Yeah, I'm the taxman”
Taxman”, George Harrison
Enjoy The Beatles playing the full song here:
Actually 5% is quite a bit more than Senator Elizabeth Warren originally proposed for a wealth tax on America’s richest: she thinks a 2% tax on all wealth over $50 million dollars per family is enough to fund a good hunk of the planned expenditures of the Build Back Better Bill. Right now, however, a couple of Senators put the kibosh not only on the proposed wealth tax, but the entire BBB bill.
I am hardly a student of economics, but I have long believed that the wealthiest among us should pay more in taxes, and of course they do under our graduated tax structure. But those in the wealth stratosphere can pay for an array of savvy accountants and lawyers who can easily “minimize the impact of the tax” for their clients by exploiting numerous loopholes built into the tax laws. The ultra wealthy also seem to have much of their wealth in investments like stocks that aren’t taxable until they are sold, so as long as it is only income that is taxed and not overall wealth, billionaires are free to accumulate their massive asset stockpiles, pass it to their heirs through tax protected trust funds and thus maintain generational wealth.
This appears fine on its face—they earned their money, they should do what they want with it— but with our treasury running a deficit and social and infrastructure programs needing a boost of federal money just to be brought on par with other industrialized countries, is it still OK to allow tax avoidance by the biggest players in our economy?
A friend and reader of Crime and Punishment sent me a fascinating article from The Washington Post that focused on one billionaire as he spent his day watching his wealth grow in the stock market and presumably other investments, and at the same time managing the distribution of millions of dollars in donations—he figured the more he earned, the more he could give away, and has pledged to donate 90% of his wealth.
This particular billionaire, Leon Cooperman, who made his money as an investor and hedge fund manager on Wall Street, also spends quite a bit of his time lobbying Senator Warren and other elected officials who are proponents of a wealth tax. He is attempting to convince them it’s a bad idea for everyone, and he’s passionate about his cause:
"What made America great is our system of capitalism, incentivizing work and effort and ingenuity," he'd written. "Capitalism has flaws, but socialism has no benefits. Why not spread my work ethic instead of just my wealth?"
I think he has a point, but I’d much rather hear your thoughts on this issue. Should we pay down our country’s debt and distribute the wealthy’s money to those most in need, or should we depend on their good will and philanthropy to help as they choose? Does it really have to be one or the other? Even Mr. Cooperman, who says he pays an effective tax rate of 34%, is willing to up his share to a maximum 50% tax rate.
Let me know what you think in the Comments section below.
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Wealth Tax Versus Philanthropy