Legislation

The Only Thing Stopping Us From Taxing the Rich Is Political Will

For the past few decades, the Democratic Party has ceded the tax debate to Republicans, failing to put forward a truly progressive vision for taxation. According to economists Emmanuel Saez and Gabriel Zucman’s new book, The Triumph of Injustice, the result is a country whose tax system looks very much like a plutocracy.

In their book, Saez and Zucman find that today the top 1 percent earns nearly twice as much of the share of the national income as the bottom 50 percent. Yet currently the 400 richest Americans have lower tax rates than the bottom 50 percent of income earners. And the ultrawealthy aren’t even paying what they owe: In 2018 most income groups evaded taxes at a steady rate of a bit more than 10 percent, while the top 400 Americans evaded 25 percent of their taxes owed. And in the same year, for the first time in modern US history, capital income was taxed less than labor income.

These realities are why one of the main battles emerging in the progressive wing of the Democratic Party has centered on the best way to tax the wealthiest Americans. For Elizabeth Warren’s presidential campaign, one of her first defining policy proposals was a 2 percent wealth tax on household assets worth more than $50 million and 3 percent over $1 billion. “It’s time to fundamentally transform our tax code so that we tax the wealth of the ultrarich, not just their income,” she declared when she released the plan in January.

By September, Bernie Sanders released his own plan to tax wealth, which went further than Warren’s, starting with a 1 percent wealth tax on those with a net worth above $32 million and reaching 8 percent on households worth more than $10 billion. In November, Warren’s Medicare for All plan doubled the top rate of her wealth tax, to 6 percent for those above $1 billion. As Zach Carter wrote at HuffPost, “Adding wealth to the list of taxable items could prove as socially transformative as the introduction of the income tax in 1913.”

Saez and Zucman, both professors at the University of California, Berkeley, are at the center of this debate, having advised Sanders and Warren on their tax plans. Their new book challenges many of the assumptions about the immutability of the country’s tax system, drawing on historical parallels to outline clear proposals for the future. “There is nothing inherent in globalization that destroys our ability to tax big companies and the wealthy,” Saez and Zucman write. “The choice is ours.”