Robert Reich really wants to tax the rich. No more namby pamby taxation for the plutocrats insofar as far as he is concerned.
Before we dig into his seven suggestions for ripping off the most productive of us, consider these facts:
The wealthiest 1 percent of the population in 2020 paid 38.5 percent of all taxes. This is more than the total for the lowest 90 percent of the population, which was 29.9 percent. As for income tax rates, the exploiters weighed in at 26.8 percent; this compares to 4 percent for the 50 percent of the people at the bottom of the income distribution. The former is almost seven times the latter.
And what about the top one tenth of one percent? What proportion of the tax bill do those scalawags account for? You’d better be sitting down for this because you’re going to keel over when you hear this: a full 19.5 percent, of all taxes. That is, out of 1000 people, the richest one person pays roughly one fifth of the tax bill!
But that is still not enough, not by a long shot, for Mr. Reich. Here are his seven suggestions:
First: Repeal the Trump tax cuts
Of course most of the benefits of a tax cut go to the rich, Mr. Reich bitterly complains. They are the ones paying the lions’ share of the taxes. People who are assessed no levies, or very little, cannot possibly gain from a reduction thereof, since they are not on the hook for these payments in the first place. But this tax grabber is gnashing his teeth at this bit of elementary logic.
Second: Raise the tax rate on those at the top.
Mr. Reich yearns to turn back the clock to the 1950s, when the richest Americans paid a marginal tax rate of over 90 percent. Thanks to a lot of pricey lawyers and accountants who could have otherwise been adding to the GDP the actual rate for those at the top was rarely 40 percent. This former Secretary of Labor under Bill Clinton obviously thinks we’re on a weird section of the Laffer Curve. He thinks the tax take can actually rise if we go back 70 years.
Third: A wealth tax on the super-wealthy.
The problem with plucking the very wealthiest guise is double taxation. They have already paid once, through income, sales and other such taxes. And now we are to come back at them once again? This Berkeley economics professor doesn’t seem to realize that people move from New York to Florida, and from California to Texas, to escape these sorts of programs. Nor are the relocation plans of the super-rich limited to any one country. Bjorn Borg the tennis champion left Sweden to escape such confiscation, as did Gerard Depardieu, the actor, from France.
Fourth: A transactions tax on trades of stock.
This would of course reduce stock trading, as even a Berkeley economist should realize. But these commercial interactions promote vast wealth. If investors cannot easily rearrange their portfolios, they will take their business elsewhere. Do we really want to decimate the New York Stock Exchange for the benefit of counterparts in London, Hong Kong, Tokyo and elsewhere?
Fifth: End the “stepped-up cost basis” loophole.
This failure to sock it to the rich enables them to pass on vast amounts of wealth to their progeny. Well what’s wrong with that. People, not just the wealthy, scrimp and save and struggle so as to make their children’s lives better than would otherwise be the case. Do we really want to interfere with this basis human desire?
Six: Close other loopholes for the super-rich.
There ain’t no such thing as a “loophole.” What the grabbers of other people’s property mean by this is that anything that is not taxed is a “loophole.” If a robber comes up to you and grabs your wallet, but doesn’t also steal your car, the latter is a “loophole.” If he commandeers that too, but leaves you with your shoes and clothes, that, too, is a “loophole.”
Seven: Increase the IRS’s funding so it can audit rich taxpayers.
The IRS ought to be disbanded, and salt sowed where once it stood. These people are incompetent. They can’t even agree amongst themselves as to how much a given taxpayer really owes. Do Americans need more torture from this source? Not bloody likely.
Conclusion: Evidently, economist Robert Reich has never heard of “tax shifting.” This has nothing to do with hiring pricey lawyers and accountants (who could be enriching the country but for our tax laws), to safeguard their hard-earned money from the tax collectors. No, this is the phenomenon that just because the government targets someone, does not mean they end up paying the tax. It all depends upon elasticities of supply and demand, as is taught in econ 101 classes: the more elastic you are, the more you can shift taxes to others. And, the rich are typically more flexible than the poor; they are a hard to hit target, thank goodness for continued American prosperity, despite the machinations of the Reichs of the world.
