Why 200 millionaires want higher taxes: Inequality is "eating our world alive"
More than 200 millionaires say they have a message for the corporate executives and billionaires attending the World Economic Forum in Davos this week: "Tax the ultra rich."
The group, which includes actor Mark Ruffalo and Disney heir Abigail Disney, argues that the rich aren't paying their fair share, allowing them to become even richer while inequality widens across the globe.
Meanwhile, a group of lawmakers in seven states plans to introduce bills this week that would raise taxes on the rich, the Washington Post reported. The states include California, Connecticut, Hawaii, Illinois, Maryland, New York and Washington.
The push for higher taxes on the rich comes as the U.S. is hurtling toward an economic crisis over reaching the debt ceiling, currently at $31.4 trillion, on Thursday. That figure represents borrowing the Treasury taps to fund financial obligations, from social safety-net programs like Social Security to the military budget and infrastructure spending. The number has ballooned from $24 trillion since President Donald Trump's 2017 tax cuts, which primarily helped the rich and corporations lower their tax burdens.
"Eating our world alive"
"Extreme wealth is eating our world alive," said Abigail Disney in a statement. "It is undermining our democracies, destabilizing our economies, and destroying our climate."
She added, "But for all their talk about solving the world's problems, the attendees of Davos refuse to discuss the only thing that can make a real impact — taxing the rich."
Creating a federal U.S. wealth tax could raise more than $583 billion annually, revenue that could be used to boost education spending by almost half, according to a new report from Oxfam, Patriotic Millionaires, the Institute for Policy Studies and the Fight Inequality Alliance that was released on Wednesday.
The group is calling for a new progressive wealth tax, which would add a 2% tax for people with net wealth of $5 million or more, 3% for those with $50 million or more and 5% for those with $1 billion or more. "Tax the ultra rich and do it now," said a letter signed by the 200 millionaires.
The rich get richer
The benefits of the growing economy have largely accrued to the richest Americans, according to the new report.
In the past decade, the richest 1% of Americans have seen their wealth grow 19 times faster than the bottom half of the population. On a dollar basis, that means $37 of every $100 has gone to the top 1%, while the bottom 50% received $2, it found.
The U.S. has about 64,500 people with more than $50 million in wealth and 728 billionaires, ranging from Elon Musk to Jeff Bezos.
While the report focuses on the fortunes of wealthy individuals, corporations have also benefited during the past several years due to the tax cuts enacted by former President Trump.
The average effective tax rate for profitable large corporations, or the percentage of income paid after tax breaks, fell from 16% to 9% in 2018, the first year the tax cuts went into effect, according to a new report from the U.S. Government Accountability Office, a government watchdog.
The impact of extreme wealth
About 7 in 10 economists believe inequality is rising across the globe due to tax cuts for the rich, according to the new report, which surveyed 135 economists in 40 nations. About the same proportion believe the rich pay lower taxes in relation to their income compared with the average citizen in their country, the report added.
The latter has been a criticism of the U.S. tax system, with a 2019 analysis from economists Emmanuel Saez and Gabriel Zucman finding that the 400 richest U.S. families enjoy a lower overall tax rate than the middle class. The rich have been helped by the 2017 Tax Cuts and Jobs Act, as well as lower tax rates for capital gains, including profits from investments, compared with earned income.
Such an upside-down tax system is hurting the nation's economic stability and social cohesion, said Chuck Collins, a board member of the Patriotic Millionaires, in a statement. It also makes it more difficult for the U.S. to raise revenue, he added.
"Our failure to tax the rich effectively is making things much, much worse," he said.
