‘We Are Not Taxing the Very Wealthy Enough’: Runaway Inequality About to Get Worse

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Original article by Jake Johnson republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).

People participate in a “march on billionaires” event on July 17, 2020 in New York City.
(Photo: Spencer Platt/Getty Images)

“Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like healthcare, medical research, and infrastructure,” said Sen. Elizabeth Warren.

The United States’ astronomical levels of economic inequality are poised to become further entrenched in the coming years as what The New York Timesdescribed Sunday as “the greatest wealth transfer in history” gets underway, with the richest members of the Baby Boomer generation set to pass trillions of dollars in assets on to their descendants—often paying little or nothing in taxes.

“Most will leave behind thousands of dollars, a home, or not much at all. Others are leaving their heirs hundreds of thousands, or millions, or billions of dollars in various assets,” the Times reported. “Of the $84 trillion projected to be passed down from older Americans to millennial and Gen X heirs through 2045, $16 trillion will be transferred within the next decade.”

The newspaper added that thanks to the loophole-ridden U.S. tax system, “heirs increasingly don’t need to wait for the passing of elders to directly benefit from family money, a result of the bursting popularity of ‘giving while living‘—including property purchases, repeated tax-free cash transfers of estate money, and more—providing millions a head start.”

“The trillions of dollars going to heirs will largely reinforce inequality,” the Times observed. “The wealthiest 10% of households will be giving and receiving a majority of the riches. Within that range, the top 1%—which holds about as much wealth as the bottom 90%, and is predominantly white—will dictate the broadest share of the money flow. The more diverse bottom 50% of households will account for only 8% of the transfers.”

Don Moynihan, a professor at Georgetown University’s McCourt School of Public Policy, argued that the Times analysis further demonstrates that “we are not taxing the very wealthy enough.”

The Times noted that individuals in the U.S. can pass nearly $13 million in assets to heirs without paying the federal estate tax, which only applies to around two of every 1,000 American estates.

“As a result, although high-net-worth and ultrahigh-net-worth individuals could inherit more than $30 trillion by 2045, their prospective taxes on estates and transfers is $4.2 trillion,” the Times observed.

The explosion of wealth inequality in the U.S. over the past several decades has prompted growing calls for systemic reform but little substantive action from lawmakers. In 2017, congressional Republicans and then-President Donald Trump contributed to the inequality boom by ramming through tax legislation that disproportionately benefited the wealthiest Americans.

Now in control of the U.S. House, Republicans are trying to make the Trump tax cuts for individuals permanent and eliminate the estate tax altogether—a move that would give the nation’s wealthiest households another $2 trillion in tax breaks.

In April, Sen. Bernie Sanders (I-Vt.) led several of his colleagues in offering an alternative proposal: Legislation that would impose progressively higher taxes on estates worth between $3.5 million and $1 billion, as well as a 65% levy on estates worth more than $1 billion.

“At a time of massive wealth and income inequality, we need to make sure that people who inherit over $3.5 million pay their fair share of taxes,” Sanders said last month. “We do not need to provide a huge handout to multi-millionaires and billionaires. It is unacceptable that working families across the country today are struggling to file their taxes on time and put food on the table, while the wealthiest among us profit off of enormous tax loopholes and giant tax breaks.”

Sen. Elizabeth Warren (D-Mass.), a co-sponsor of Sanders’ legislation, tweeted Monday that “Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like healthcare, medical research, and infrastructure.”

“Congressional Republicans need to get on board,” the senator added.

Morris Pearl, a former managing director at the asset management behemoth BlackRock and the chair of the Patriotic Millionaires, stressed in an interview with the Times that structural changes to the U.S. tax code—not just a crackdown on wealthy tax cheats—are necessary to slow the rise of inequality.

“People are following the law just fine. I generally don’t pay much taxes,” said Pearl, whose group has warned that democracy “will not survive” unless the rich are taxed much more aggressively.

Stressing the ease with which rich families in U.S. are able to pass assets on to their heirs tax-free, Pearl told the Times that he currently holds stock that his wife’s father, “who died a long time ago, bought in the 1970s,” an investment that “has gone from a few thousand dollars to many hundreds of thousands of dollars”—unrealized capital gains that are not subject to taxation.

University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman have estimated that $2.7 trillion of the $4.25 trillion in wealth held by U.S. billionaires is unrealized.

“I’ve never paid a penny of taxes on all that,” Pearl said of his inherited equities, “and I may not ever, because I might not sell and then my kids are going to have millions of dollars in income that’s never taxed in any way, shape, or form.”

Original article by Jake Johnson republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).

Continue Reading‘We Are Not Taxing the Very Wealthy Enough’: Runaway Inequality About to Get Worse

Question Time audience member perfectly sums up Britain’s wealth inequality

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An excellent post from Left Foot Forward

Image of loads of money
Image of loads of money

Question Time audience member perfectly sums up Britain’s wealth inequality

An audience member on BBC Question Time last night offered a perfect summary of the wealth inequality in Britain as a result of the government’s politically motivated economic choices.

The comment came after a question on the show which asked, “is it a bit rich, for the rich, to tell us to accept being poorer?”.

This was in response to an insensitive, to say the least, remark earlier this week by the Bank of England’s Chief Economist Huw Pill who said Britons, need to accept being poorer.

“If you put the tax burden on the very rich, it’s like, ‘ok I have a slightly smaller bank balance at the end of the year’, but you’re still rich.

“And when I say rich, I don’t mean people on £100,000 or £200,000, we’re talking about people who have billions, you could never spend it in a lifetime, you could never spend it in ten lifetimes.

“Why is that you’re then putting the burden on people who have no money, it just doesn’t make sense.”

Question Time audience member perfectly sums up Britain’s wealth inequality

Continue ReadingQuestion Time audience member perfectly sums up Britain’s wealth inequality

Coming soon :: Focus on Cuba

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I did promise you a short series of a week [ed:month] [ed: no. a week] or so on wealth and inequality. That was a month or so ago. That’s difficult because you just have to search for it. The Occupy protesters were exactly right – it’s all for the 1%. The 1% own just about everything, governments suck up to the 1%, the 1% avoid paying tax, Giddeon Osborne goes to the 1% shindig at [ed: to] help them avoid tax, the UK government actually employed tax evader Philip Green … There is so much online about rich scum being rich scum. I apologise that I haven’t done anything about rich scum ruling the planet but it’s so obvious. It’s probably 0.01% never mind the 1%. Look just search for wealth inequality or distribution in a search enjin.

Anyway, I’m going to do a bit about Cuba.

Cuba has a fantastic health service despite being subjected to crippling sanctions by the US for decades. Cuba trains so many doctors and other medical professionals who often [ed: that might be always] go to assist in disasters, etc.

Somehow the UK Solidarity Campaign – as well I am sure as other countries – were able to bypass those sanctions. I am proud to [ed: have] played a small part in the UK Cuba Solidarity Campaign – which involved individuals and trade unions – and we were able to send ambulances and medical supplies to Cuba. I’ve heard stories of Cubans saying to tourists “Thank you. You’re from ~wherever~. Your* ambulance saved my mum”. The ambulances are not repainted, they’re ambulances.

President Obama is going to visit Cuba in a month or so as part of his visit of South American nations.

*I edited You’re to Your for grammatical correctness

7pm 21/2/16

One slight mistake there. I called Philip Green a tax evader. Tax evasion is illegal. Tax avoidance is legal tax evasion so Philip Green should properly be called a tax avoider.

One way to consider the 0.01% is that they are the 1% of the 1%.

ed: It should be recognised that rich scum’s wealth is unearned. Rather wealth grows wealth. Very little research reveals that the rich are getting richer over the past two or three decades.

Continue ReadingComing soon :: Focus on Cuba