Thursday, February 20, 2020

Bernie and Elizabeths 2% Wealth Tax

Democrats controlled tax policy from 1933 to the early 1980's.  They had lots of income tax brackets, as your income increased, each time your income passed a certain point your additional income was taxed at a higher rate.   Really excessive incomes were taxed at over 70% during that period.  In that period GDP growth was far better than it has been since, the National debt ended where it began and it was the golden age for working folks - income inequality was at all time lows and working folks incomes were at all time highs.

In the early 1980's Ronald Reagan began cutting taxes, and in particular eliminating high tax brackets, which has been the norm now for 40 years,  - nobody pays more that 39%.  The result - our National debt has risen in those 40 years from 30% of GDP to somewhere around 108% or GDP.  Income inequality is at all time highs, working wages have stagnated while the rich get fabulously wealthy.  A recent study found that the middle class has paid an ever larger part of income taxes the last 40 years.

So why are Bernie and Elizabeth fixated on a 2% tax on wealth?   Taxing static wealth worked in England 100 years ago because wealth was primarily held in huge country estates.  They couldn't hide their estates or move their wealth out of the country.  

That world is long gone.  Most wealth today is in ownership interests.  Rich folks who don't want to pay a 2% tax on their wealth can simply move their wealth out of the country, or hide it in shell corporations, or move themselves and their wealth out of the country.  

Income taxes are much harder to avoid, which I presume is why Billionaire Bloomberg is savvy enough to propose increasing income taxes.   

Why are Bernie and Elizabeth so adverse to going back to the kind of income tax system we had after World War II that produced the golden age for working people along with a strong economy, focused on income instead of wealth?

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