EDITORIAL: Progressive taxation rightfully favored
Nation wants taxes on excessive wealth, proposals to address inequality
Beneficiaries of the status quo are rarely among those who look to change it. Yet, the theft of the American Dream and the problems that have manifested out of the concentration of wealth demand confrontation. In the nation that invented progressive taxation, change can be won once again.
A year has passed since the tax cut package proclaimed to bring with it an economic boom of capital investment, wage growth and job improvement, which proved to be a sham sold by false prophets. The President Donald J. Trump administration’s $1.5 trillion tax cut package appeared to have negligible impact on businesses’ capital investment and hiring plans, according to recent data. The National Association of Business Economics’ (NABE) quarterly business conditions poll found that 84 percent of responding companies have not changed their practices.
Corporations, big shareholders and top-corporate executives strip away the majority of the gains from the tax cut, as it did not boost economic growth substantially, did not result in a capital spending or U.S. manufacturing renaissance and might have contributed to limited job growth and imperceptible wage increases.
Now, as a new Congress begins its session and 2020 presidential candidates start to differentiate their platforms, a potential shift back to an ideology that drove leading American politicians to proclaim a willingness to tax the wealthy to both increase revenue to address rising deficits and limit an excessive concentration of economic power will occur.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) has garnered continued media coverage after she had proposed a 70-percent marginal tax rate on income earned above a $10 million threshold. While some were quick to brand the proposal as radical, polling tells a different story. "Voters support tax increases on families making more than $10 million annually by a 46-point margin (70 percent favor-24 percent oppose) and support a hike on those making more than $1 million by 36 points (65-29 percent)," according to a poll by Fox News. 45 percent of Republicans support the 70-percent marginal tax rate, according to a recent HarrisX poll.
Sen. Elizabeth Warren (D-Mass.) has also unveiled a proposal cutting directly toward the heart of the concentration of wealth. The proposal would impose a 2-percent annual tax on an individual household’s net worth in excess of $50 million, and an additional 1-percent tax on wealth above $1 billion.
This tax would only affect approximately 75,000 households, and yet it would raise around $2.75 trillion over the next decade, according to analysis by two of the world’s leading experts on economic inequality Emmanuel Saez and Gabriel Zucman. Polling by YouGov commissioned by Data For Progress found that 61 percent of Americans support Warren’s proposal to tax the rich, including 44 percent of Republicans.
Former Republican President Dwight Eisenhower understood that taxes on the rich were a prerequisite for a nation with a deficit. “The fact is there must be balanced budgets before we are again on a safe and sound system in our economy. That means, to my mind, that we cannot afford to reduce taxes, reduce income, until we have in sight a program of expenditures that shows that the factors of income and of outgo will be balanced,” he said.
Deficit hawks have now awoken after lying dormant as the tax cut expanded the deficit. But polls have shown overwhelming public support for increasing, not cutting, spending on Medicare and Social Security.
We have a rich history of economic growth alongside the avoidance of the rigid-class system and inequality — a history that continues to distant itself for contemporary times of economic immobility and concentration of wealth. The public appears to be shifting, ready to welcome the the American democratic ideal that once went hand-in-hand with a form of equal access to property growth.
The Daily Targum's editorials represent the views of the majority of the 150th editorial board. Columns, cartoons and letters do not necessarily reflect the views of the Targum Publishing Company or its staff.