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The many ways to tax the rich


If you've been following the pack of politicians seeking the Democratic Party's presidential nomination, you know that ways to tax the wealthy is a common thread.

But there are as many proposals to do that as there are White House wannabes, although Elizabeth Warren is leading in suggested changes to get more tax money from the rich.

There's the general wealth tax, corporate book profits tax, new Social Security wage tax, new Social Security net investment income tax (NIIT), new estate tax and every Democrats' favorite, repealing the Tax Cuts and Jobs Act (TCJA) lower rates for higher earners.

This weekend's Saturday Shout Out goes to a couple of items that look at the tax the rich ideas that have been floated so far in this 2020 presidential campaign.

First there's Howard Gleckman's post at TaxVox, the Tax Policy Center's blog, where he provides the high points of some of the leading ideas on how we should tax the rich.

Then there's the paper "Taxing the Rich: Issues and Options" by Lily L. Batchelder and David Kamin. The two New York University School of Law professors discuss advantages and challenges associated with four potential structural tax reforms: (1) dramatically increasing top tax rates on labor/ordinary income, (2) taxing accrued gains as arise and at ordinary rates, (3) wealth tax and (4) financial transactions tax.

Tax the rich options_Batchelder and Kamin NYU Law paper graphic

You can read the abstract of Batchelder's and Kami's paper at SSRN and, if you want more details, download the full 51-page document.

The bottom line, as Nobel Prize winning economist and New York Times columnist Paul Krugman notes is that taxing the rich, per the findings of actual tax experts, makes a lot of sense and could raise trillions in revenue.

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Raina Casbon-Kelts

The idea of taxing the rich is an impossible concept IMO. The rich offset their tax burden with write offs through corporations and all of this is completely legal.
As individuals, our taxes are removed from our gross income, the remainder is ours to spend, save and invest. This is why tax increases hurt the middle class more than any other. The lowest income brackets receive much of the taxes they do pay as refunds. High income (the rich) utilize tax shelters through investments and corporations.
For a corporation, paying bills, payroll, purchase of new equipment, settling debts, etc. all comes before taxes! Company vehicles, housing, computers, software, office furniture, travel, loss leader products and services, charity donations, your niece's startup the boss was so kind to invest in...all of these are tax write-offs. Whatever is remaining, or the profit, is taxed.
I've worked in sales since the early 90's. The highest sales volume months of the year for business to business sales, are June and December. Fiscal year end. This is when businesses have analyzed their books, and NEED to spend money. They spend money on equipment, give employee bonuses, make donations & investments, etc. because all of this is eligible for write-off.
"The rich" employ skilled tax professionals who use the law to minimize tax burden. Any new tax is researched and loopholed, before it has the slightest chance to make an impact.

Just to end with a bit of humor...This book "Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes (Rich Dad Advisors)" is the advertisement right beneath this post. If that's not funny, IDK what is!

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