The wealthy, corporations should pay their fair share

Larry Roche, in a recent letter to the editor, makes the argument that Biden’s proposed tax increases will not increase revenue and will cripple economic growth.

When President John Kennedy reduced taxes in 1964, the top marginal rate was 91%, which stifled growth. Today’s top marginal tax rate is 37%. Biden’s proposal will raise that rate to 39.6% on those making greater than $400,000, which is less than 2% of taxpayers, hardly enough to cripple economic growth.

Amazon filings show that Jeff Bezos received an average annual salary of $81,840 as of 2020. That is possible because wealthy households accumulate a large proportion of income from capital gains (increased value of stocks, real estate, and other assets). Taxes on those gains aren’t paid until they are sold. They are taxed at a preferred rate of 20%, which is much less than the maximum rate of 37% for regular income. When an individual dies the tax may never be paid because of the stepped up basis for the heirs. Considering all of this, the OMB and CEA figure that the federal income tax rate for the wealthiest families is in the range of 8.2%.

Biden’s plan would raise the capital gains tax rate from 20% to 39.6% only on those making more than $1 million. Investors whose income comes from millions of dollars of investments will continue investing because there is nothing else that they can productively do with their money.

Corporations should also pay their fair share. Amazon in 2021 paid a tax rate of 6.1%. In 2017, the Trump administration and Congress reduced the maximum rate from 35% to 21%. Biden proposes increasing the corporate tax rate to 28%. The burden of that increase would fall on the shareholders and not consumers, ensuring that the wealthiest people pay a fairer amount of taxes.

— Jerry Chase, Loveland