Yes, tax the rich
Don’t bat an eye at Democrats’ modest plans to raise $170 billion over a decade by hiking the top marginal income tax rate from 37% to 39.6% for Americans earning more than $400,000 ($450,000 for married couples). The rich can afford to pay a bit more on their last dollars earned, and the proceeds would go toward worthy benefits like paid maternity and paternity leave for families; vision, dental and hearing care for the elderly; and free community college for adults.
The top earners who’d be hit with a higher rate — a rate levies are already set to rise to after 2025, when provisions of the Trump tax cuts lapse — have been doing quite well, thank you. Inflation-adjusted average incomes of the top 0.01% and the next 0.09% have risen by 600% and 372%, respectively, since the late 1970s, while those of people in the lowest 20% rose just 86%. Meanwhile, Americans at the top have found creative new ways to shield large amounts of what they earn from the taxman.
Of course, the $170 billion from that marginal rate increase is less than one-twentieth of what’s needed to pay for President Biden’s $3.5 trillion, 10-year domestic agenda. To get most of the rest, Dems propose an additional 3% surcharge on incomes over $5 million a year. (Remember: Donald Trump’s own adviser, Steve Bannon, once pushed for a 44% marginal tax rate on incomes $5 million and up. Also remember: Donald Trump in 1999 wanted to “soak the rich” with $5.7 trillion in new taxes.) And raising taxes on pass-through entities, like many financial and law firms. And lowering to $12 million the value of estates shielded from taxation. Good, good and good.
It’s wise for Dems to simultaneously forego a wealth tax, which is devilishly complex to administer, and understandable that they took a pass on closing other loopholes the billionaire class exploits.
Far-left progressives will shout about the establishment going wobbly, while Republicans howl that even these $2.1 trillion in proposed revenue raisers amount to socialism. The opposition from those quarters is a sign leadership got things about right.