HomeOpinionHow a wealth tax would create an opportunity to equalize America’s ever-present economic divide

How a wealth tax would create an opportunity to equalize America’s ever-present economic divide

BY PETER ELLISON

American history is littered with the stories of daring and tenacious men and women pulling themselves from poverty to success through hard work and sheer force of will: Andrew Carnegie, Alexander Hamilton and even Mark Zuckerberg. We call it the American Dream. This dream propels people to ever greater heights with the promise of great rewards to those persistent enough to stick it out to the end. This dream brings hundreds of thousands of immigrants to our great nation every year.

This dream is also a lie.

In truth, income and wealth inequality have skyrocketed to the point where, according to the Forbes Institute for Policy Studies in 2016, the three wealthiest individuals in America—Bill Gates, Jeff Bezos and Warren Buffett—have personal wealth greater than the bottom 50 percent of Americans. This economic divide has been steadily increasing and shows no signs of stopping.

While the adage “The rich get richer and the poor get poorer” is often repeated, rarely has it been more true in our society. Large donations to prestigious universities guarantee admittance to the children of the wealthy, lobbying efforts in Congress and campaign donations ensure tax cuts from policymakers, and legislators such as the tax cut on the wealthy championed by Donald Trump in 2017  and the current banking system of investments and interest ensure that the fortunes of the mega-rich will only continue to grow.

There are no simple or easy solutions to these problems, but there are some ideas currently circulating in the debates swirling around the 2020 election that might begin to take recompense for the wealth inequality in America.

Graph courtesy of Mother Jones from Its the Inequality Stupid by Dave Gilson and Carolyn Perot

One of these ideas, proposed by senator and 2020 hopeful Elizabeth Warren, is a wealth tax on the richest in American society, initially proposing a tax of one percent on wealth over 10 million and two percent over 1 billion. An article by Voxused data from the 2016 Forbes 400 and predicted that such a tax would raise $158 billion while only taxing .05 percent of households in America. This figure includes a 15 percent ‘avoidance rate’ or the predicted amount of wealth hidden or otherwise secured overseas and unable to be taxed.

Vox calculated that this money would be sufficient to fund federal food stamps by 154 percent or free public college tuition by 265 percent. It’s apparent that this money, skimmed from the pockets of a few mega-rich citizens, could greatly increase the quality of life for millions of people at the economic bottom of our society. These tax plans are relatively moderate, and more aggressive tax schemes could do even more good throughout our society.

One of the major complaints against these taxes is that the wealthy have earned their wealth and that it’s morally wrong to take it from them, while others say that these kinds of programs encourage slothfulness and indolence: By introducing these taxes, you discourage the wealthy from working hard and the unemployed to work at all.

While these are real outcomes of taxes and programs of this ilk, these negative outcomes don’t outweigh the collective benefit accrued by trying to equalize our predatory and exploitative system. That money is a lot more meaningful to a parent struggling to feed their family when compared to the billionaire who is left questioning how many yachts he ought to buy with his $980 millionremaining.

Ultimately, these taxes are not about rewarding the unemployed or achieving some kind of revenge against the corporations that effectively rule our lives, but about raising the entire American tide in an effort to raise all American ships just a little bit closer to the illusion of the American Dream.

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