President Donald Trump managed to effectively raise taxes on the majority of Americans through his tax policies, while handing the richest five percent a tax cut. Now, many Americans want to see the rich pay their fair share — and that could mean increasing their taxes.
The former chief economist of the White House Office of Management and Budget, Professor Zachary Liscow, argues there’s a “slow, boring” yet “easy” way to do so.
“The United States is seeing an increasing concentration of wealth at the very top and a worsening national debt,” Liscow writes in an op-ed at The New York Times. “For many Americans, taxing the rich more is an obvious move.”
He details some of the “novel proposals to curb the many intricate ways the rich make and hide their money,” including a wealth tax, a tax on unrealized gains, and a tax on “loans that billionaires take against their stock.”
But, Liscow warns, while novel, these methods would not raise the substantial amount of money the U.S. needs.
“The boring truth is that Congress can accomplish a lot simply by raising the rates of the taxes already on the books,” Liscow explains.
He examines U.S. Senator Elizabeth Warren’s (D-MA) proposal to tax “fortunes above $50 million,” and says there are “serious constitutional and policy arguments for this idea, but the Supreme Court’s current members would probably strike it down.”
There is a billionaire’s tax proposal by U.S. Senator Ron Wyden (D-OR) that would tax unrealized capital gains, “the appreciation in the paper value of assets such as stocks.” That would likely find a Supreme Court challenge.
There are other tax vehicles, like fixing the “buy, borrow, die” loophole, which would tax loans taken against stock portfolios, but that would likely not raise sufficient funds: “It’s just not where the money is.”
He finds that “the most powerful lever is also the simplest one,” and concludes that “Congress has a simpler, tried-and-true tax policy to choose from: raising the rates.”
Liscow is advocating to restore the “top marginal ordinary income tax rate to its pre-2017 level of 39.6 percent” — where it was before Trump’s first term in office.
“In addition, raising the corporate tax rate from 21 percent toward the 35 percent it had been set at historically would add hundreds of billions in revenue for the government,” he says.
“Raising the rates,” Liscow concludes, “the simple, boring answer — is where the real money lies.”
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