No super-wealthy individual or household is going to pay billions in additional taxes when $10 to $20 million will purchase political adjustments.
The 2020 election cycle has begun, and a popular campaign promise is “free everything” paid for by new taxes on the super-wealthy. Who doesn’t like free stuff? Who will vote for whomever offers them free stuff? No wonder it’s a popular campaign promise.As even the most self-absorbed American voter has a latent street-savvy awareness that nothing is truly free, the other popular campaign promise is to “tax the rich” to pay for the proposed “free” programs. Proposals to “Tax the rich” feed off the growing awareness that the financial wealth created since 2000 has largely flowed to the very top of the wealth-power pyramid, and so it’s payback time: tax those who have pocketed the lion’s share of income and wealth gains.Fair enough, right? Even the super-rich publicly affirm that the super-wealthy should pay at least the same percentage of federal tax as their employees.
Public pronouncements are of course good PR, but the real issue is what will the super-wealthy do behind closed doors to protect their wealth from additional taxation. There are two issues here: one is that the wealthy already pay most of the federal income taxes, and the second is the compelling cost-benefit of funding political adjustments to the new taxes.
If one has a taste for facts, it turns out the U.S. federal tax system is highly progressive:
The new idea in current “tax the rich” proposals is to increase taxes on the super-wealthy: mega-millionaires and billionaires. Given the outsized gains secured by these mega-wealthy folks, it makes sense to nail them for the tax revenues needed to pay for more free stuff.
At this point let’s reacquaint ourselves with the enormous size of federal expenditures: roughly $4.75 trillion annually
This brings us to the second reality: it’s much cheaper to buy political adjustments to the new taxes via lobbying and campaign contributions than paying the extra $180 billion. A mere $10 million will buy
The list of special dispensations and obscure tax code loopholes is endless: the wealth can be protected in a
No super-wealthy individual or household is going to pay billions in additional taxes when a fraction of that will purchase political adjustments.
Federal Expenditures (current fiscal year):
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