Editor's note: Abigail Disney is an Emmy Award-winning documentary filmmaker, activist, and member of Patriotic Millionaires. Her latest film, The American Dream and Other Tales, co-directed with Kathleen Hughes, had its world premiere at the 2022 Sundance Film Festival. Morris Pearl is chairman of Patriotic Millionaires and former managing director of BlackRock. The opinions expressed in this commentary are their own. View more opinions on CNN.
CNN
—
Tuesday is Tax Day in America, one of the busiest days of the year when many taxpayers will finally stop procrastinating, file their federal returns and hope for a refund from the IRS. But for many of the country's richest people, it's just another Tuesday.
Tax Day isn't just a filing deadline, it's also an annual reminder that the super-wealthy exist in an entirely separate world when it comes to taxes. For us, the loopholes are larger and the stakes are sometimes lower. Meanwhile, the rich continue to get richer. wealth billionaires, in particular, have grown by more than $1.5 trillion over the past few years.
This status quo is unfair, but more importantly, it is unsustainable. These high levels of inequality are pushing our economy and our democracy to the breaking point. That's why we must examine how we can prepare our country for long-term stability and prosperity. And we must start by ensuring that the super-rich pay more than what they owe to the country that made their success possible.
There are three changes to the Tax Code that will help us do this:
Currently, the US tax system values money more than sweat. If you work hard for money instead of earning it passively, you are essentially punished for it. People who earn a salary pay significantly higher tax rates on their income than wealthy investors who earn passive income. capital gains income.
Inheriting money is an even better deal. Thanks to former President Donald Trump in 2017. tax lawthe first $12.92 million (or $25.84 million for a married couple) is completely free of any taxes. inheritance taxAnd loophole in reinforced base allows wealthy families to permanently write off millions in capital gains taxes by restoring the market value of those assets to their value at the time of the original owner's death. This makes it relatively easy for the wealthy to inherit tens, even hundreds of millions of dollars and pay next to nothing in taxes. On the other hand, someone who works for that money will pay more than a third of it in federal income taxes.
Why do we have a tax code that says working people have to pay more in taxes than wealthy investors and those who got rich just because they were born into the right family? After all, money is money, whether you worked for it or inherited it. As an heiress and investor, we should not have to pay lower tax rates than people who earn money by working.
It's time for the tax code to treat all income equally, taxing all capital gains over $1 million at the same rates as ordinary income, and replacing our loophole-ridden estate tax with a simpler estate tax that treats inherited wealth as income.
However, we can't focus on income alone, since many of the richest Americans earn virtually no taxable income in a normal year. Capital gains are only taxed when assets are sold, so instead of selling them, the super rich use their assets as collateral to borrow huge amounts of money at extremely low interest rates to live on, and then declare little or even negative “income” on their tax forms. This “Buy, lend, dieStrategy is the main reason billionaires pay lower effective tax rate in recent years than working class families.
By rethinking what is taxable, we can access trillions of dollars of billionaire wealth that is untouchable under our current tax structure. That's why President Biden proposed Minimum income tax for a billionairewhich would tax the unrealized capital gains of the wealthiest households and why others are proposing a wealth tax on billionaires.
Finally, one of the simplest changes needed is to simply tax the extremely wealthy more than the merely wealthy. Our income tax the top rate is 37% for any income over $578,125 (or $693,750 for married couples). No matter how much more someone earns, they will never pay more than 37% in federal income taxes.
While someone making $600,000 certainly makes enough to live a very comfortable life, they are in a different world than someone making $600 million a year. To reflect the real differences between the rich and the super-rich, we need to go back to highest prices we experienced the most prosperous decades of the 20th century and added significantly more tax brackets. For people earning more than $100 million a year, they should reach 90%.
These three changes will certainly not solve all of our country's problems on their own, but they will go a long way toward stopping the steady flow of our country's wealth toward a smaller and smaller group of people, changes that will make both our democracy and our economy more stable. The tax code can be a powerful tool for both social and economic change. We just need to use it more effectively.
