WASHINGTON – A growing chorus of wealthy Americans is publicly advocating for higher taxes on themselves, arguing that current tax structures exacerbate wealth inequality and threaten the foundations of American democracy and economic stability. This movement,comprised of millionaires and billionaires,proposes basic shifts in how the U.S. taxes income and wealth, including taxing unrealized capital gains and reinstating top marginal tax rates not seen since the mid-20th century.
For decades, the American tax system has increasingly favored those at the very top, allowing wealth to concentrate in the hands of a shrinking elite. this trend isn’t simply a matter of fairness; it poses a systemic risk to the nation’s economic health and democratic institutions. By rethinking taxation, proponents believe trillions of dollars in currently untaxed wealth can be unlocked to fund public goods and create a more equitable society.
President Biden has proposed a Billionaire Minimum Income Tax, designed to tax the unrealized capital gains of the wealthiest households. Others are championing wealth taxes specifically targeting billionaires. These proposals aim to address a key loophole in the current system where wealth appreciation isn’t taxed until assets are sold, allowing the ultra-rich to defer or avoid taxes indefinitely.
Currently, the U.S. income tax is capped at a top rate of 37% for income exceeding $578,125 for individuals (or $693,750 for married couples). Advocates argue this flat rate fails to reflect the vast difference between high earners and the ultra-wealthy. Someone earning $600,000 lives a comfortable life, but their financial reality is drastically different from someone earning $600 million annually.
To address this disparity, proponents suggest a return to top marginal tax rates seen during the 20th century’s most prosperous decades, coupled with the addition of significantly more tax brackets. Some propose rates reaching up to 90% for individuals earning over $100 million per year.
These changes, while not a panacea for all of the nation’s challenges, are viewed as crucial steps toward reversing the flow of wealth towards a select few and fostering a more stable democracy and economy. The tax code, they contend, is a powerful instrument for social and economic change, and it’s time to wield it more effectively.
