More and more you read about income and wealth inequality in the United States your learn it is on the rise. This fact has been highlighted by several 2020 presidential candidates, who believe that wealth is too highly concentrated at the top. One proposal to redistribute wealth from the top earners is a wealth tax (there are currently several versions of this tax being suggested). While most taxes hit a flow of money (like when you earn money via an income tax or when you buy a product via a sales tax), a wealth tax hits stagnant money, such as business assets, personal belongings, etc.
To be honest; as income and wealth inequality rise, so too does its prominence in political discussions.
Americans “strongly agree” that the wealthiest individuals should pay higher taxes. According to a Federal Reserve Survey, “families at the top of the income distribution saw larger gains in income between 2013 and 2016 than other families, consistent with widening income inequality.”
This trend has led prominent government officials and various 2020 Presidential Candidates to recommend policies to curb wealth at the top income brackets. Some recommend increasing corporate taxes, others recommend increasing progressivity of existing income taxes, closing loopholes, increasing estate taxes, implementing a wealth tax or some combination of all proposals. The remainder of this article will specifically focus what we call Wealth Tax
Based on research ,
A wealth tax is most similar to a property tax, except instead of taxing property ownership exclusively, a wealth tax would be a tax on all assets. This includes personal belonging (i.e. clothes, jewelry, cars), business assets (i.e. Jeff Bezos’ interest in Amazon), investments (i.e. money that millionaires put into other companies), and may even include foundations (i.e. the Bill and Melinda Gates foundation).
The wealth tax is considered an aggressive plan and has been a topic of hot debate not only between politicians and business leaders, but also amongst economists. Both sides believe that the tax system should be equitable and promote growth.
WHO ARE THE SUPPORTERS?
Supporters of the wealth tax say it will promote a redistribution of wealth to those who need it most. Opponents of the proposal say it will be challenging to implement and will ultimately hurt economic growth and job creation
PROS OF A WEALTH CREDIT
A wealth tax would help reduce wealth inequality, which is at historically high levels. Typical income taxes are not an effective way to tax the ultra-wealthy as they earn most of their money via investments and other means. Another reasons is,Some self-made and inherited billionaires have called for a wealth tax. A group of nineteen billionaires and multi-millionaires signed an open letter supporting the wealth tax as a “moral, ethical, and economic responsibility” to improve the economy, health outcomes, and democratic freedoms.
Lastly on reasons A wealth tax will increase tax revenue to the federal government and allow funds to be redistributed.
WHAT ARE THE CONS ?
A wealth tax punishes success and will hurt the economy by discouraging business investments.
- Roughly 80% of millionaires in the U.S. earned their wealth instead of inheriting it. A wealth tax unfairly punishes success of individuals who, on average, work more hours than lower-wage earners
To add a wealth tax may be deemed unconstitutional and an ineffective means to curb wealthy individual’s influence. However, we look at everything we are concerned with the political influence of wealthy individuals — we should strengthen campaign finance laws, not cap wealth potential.