How are billionaires getting away with paying so little to Uncle Sam now? A key reason is that our current tax system rewards wealth, not work.
The top tax rate on paycheck income is nearly double the rate at which Wall Street windfalls are taxed. But while you and I rely on our paychecks to make ends meet, the very rich make most of their money from financial investments.
In fact, America’s top 1 percent hold more than half of all U.S. wealth invested in stocks and mutual funds.
In short, their wealth makes their money for them. Yet they’re taxed at far lower rates.
President Joe Biden wants to get rid of this perverse tax preference for the wealthy. He’s proposing that we tax wealth the same as work for people who earn more than $1 million a year.
Another Biden proposal would close a loophole that allows the wealthy to escape capital gains taxes altogether on assets they pass on to their heirs. Under his plan, individuals who inherit family businesses and farms — and continue to operate them — would not be affected.
In 12 recent polls, voters, including independents, support these and other Biden tax proposals by 60 percent or more.
Some Congressional Democrats are calling on the president to go further to tax the top 1 percent. Senators Bernie Sanders and Elizabeth Warren have proposed an annual wealth tax on fortunes over $50 million, as well as levies on Wall Street speculation and excessive CEO pay.
Equitable reforms like these are critical if we want to modernize our public infrastructure and give families the economic security they need to fulfill their potential in the world’s richest country.
If we don’t unrig our tax code, billionaires will keep getting away with stiffing Uncle Sam — and sticking the rest of us with the bill.
Originally published by OtherWords.