Soaking the Bezoses and Musks of the world will not be sufficient to finance social democracy, nor to meaningfully reduce elite domination of democratic politics. EricLevitz writes
Photo: Chesnot/Getty Images The American tax code is kind to billionaires. And billionaires can afford to assemble teams of advisers dedicated to innovating bespoke schemes for making our tax laws even more generous. As a result, the very richest among us routinely pay lower tax rates than working-class families.
To elucidate this point, let’s explore a simple question: Why is it bad that the superrich pay low tax rates? Of course, one could theoretically raise the wealth tax to a confiscatory level . But your fiscal policy cannot simultaneously abolish the ultrarich through expropriation and fund new social programs by taxing the ultrarich.
A second prominent answer to our opening question goes like this: We need billionaires to pay higher taxes because concentrated wealth is antithetical to democracy. As the economists Gabriel Zuman and Emmanuel Saez write, “Wealth is power. An extreme concentration of wealth means an extreme concentration of power: the power to influence government policy, the power to stifle competition, the power to shape ideology.
One can imagine a tax policy comprehensive enough to radically diminish that influence. But good luck getting Congress to pass such a plan. As is, Democrats don’t appear to have the votes to restrict “stepped-up basis,” the law that allows Americans who inherit unrealized capital gains to cash them out without paying a cent in taxes.
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