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Taxes work, shaming billionaires doesn't
The tax proposals
A workable plan looks like an alternative minimum tax of 40 percent on anyone making over a million dollars, and 45 percent on any company with more than $50 million in profits. Other proposals include lowering the estate tax exemption from $30 million to $1 million and triggering a tax event when someone borrows against stock, a common practice of the very wealthy.
Why shaming backfires
Public shaming works against all of it. A billionaire with a $6.5 billion project in New York can move it to Texas or Miami, and a quarter of a billion dollars in donations to New York charities can start flowing elsewhere. Most Americans also aspire to be millionaires themselves, so attacks on the wealthy as a class lose voters, including billionaires who would back a more progressive structure.
Power versus virtue
Meanwhile, Democrats have controlled all three branches of government for years at a time. Senators Warren and Sanders have sat in the Senate for decades, and taxes on the wealthy have gone down during that time. Billionaires who behave badly, including an Epstein class that deserves to be called out or imprisoned, are a separate matter from the idea that no billionaire has earned their money, a claim that would cover Beyonce and Oprah.
Why does the US have an alternative minimum tax?
Congress created the first version in 1969 after the Treasury Department reported that 155 high-income households had paid no federal income tax in 1966. The rule requires a second tax calculation with fewer deductions and takes whichever result is higher. It was meant to ensure that large incomes could not be shielded entirely by deductions.
How has the estate tax exemption changed over time?
Congress sets the federal estate tax exemption, and it has moved a great deal. It was $675,000 in 2001. The Tax Relief Act of 2010 raised it to $5 million for 2011, with annual adjustments for inflation after that.
Why have so many countries dropped wealth taxes?
The OECD reported in 2018 that the number of its member countries with a net wealth tax fell from 12 in 1990 to 4 in 2017. Reasons cited included administrative costs, difficulty valuing private assets, and capital moving abroad. France replaced most of its wealth tax with a tax on real estate in 2018.
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