Opinion Pieces

USA TODAY: Our millionaires surtax is a simple way to help more people achieve the American dream

This tax on upper-end income will help level the playing field and ensure we reward people for hard work and not just for earning money off of wealth.

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Washington, November 20, 2019 | comments
Our millionaires surtax is a simple way to help more people achieve the American dream
 
BY CHRIS VAN HOLLEN & DON BEYER (OP-ED) - 11/20/2019

We have all heard President Donald Trump crow about how his tax cuts have dramatically boosted our economy. But once you look past the very wealthy in our country, it’s apparent that the Republican tax law passed in 2017 has done very little for working Americans. Instead of being a boon for hiring and wages, the Trump plan has been a windfall for special interests and big corporations — making the gap between the rich and everyone else in the United States even wider. That is why we are proposing a simple system to ensure the wealthy are doing their part to invest in strengthening America’s future for everyone: a Millionaires Surtax.

We’ve heard many good ideas offered by Democratic presidential candidates about how to improve the tax code. The Millionaires Surtax can be passed by itself or in concert with these other reforms, because it is simple and easy to enforce.

Investing in people is a bipartisan idea

The concept is easy to understand: Multimillionaires would pay a federal tax rate 10 percentage points higher than their current top rates on annual income above $2 million for married couples and $1 million for individuals. Those are the richest 0.2% of taxpayers. The other 99.8% of families wouldn’t pay a dime.

This is also an idea with broad support from voters across the political spectrum. In fact, a new survey found that 73% of likely 2020 voters — including 53% of Republicans — support the surtax. And that’s not surprising when you think about the fundamental concept behind the plan. Ensuring that millionaires do their part to help our country succeed by investing in our kids’ future and growing the middle class — rather than concentrating wealth among an increasingly tiny group — isn’t a partisan idea. It’s about making the American dream more real for everyone. 

A key advantage of the Millionaires Surtax is that it would apply to both regular income — which mostly means salaries — and to investment income, including from stocks. This is a critical feature, because unlike middle-class Americans, very wealthy households tend to receive most of their income from investments of their wealth rather than from their work.

It’s just another way that the rich get richer in our country while workers are left behind. Under our bill, wealthy CEOs would pay a 10-percentage point higher tax rate on income above $1 million or $2 million, and it would apply to both their sky-high salaries and their returns from bulging stock portfolios. 

The need for real tax reform is clear and growing. New research documents the huge decline in tax rates paid by the wealthiest Americans — a problem made significantly worse by the 2017 Republican tax law. The total tax rate for the nation’s richest 400 people — combining all federal, state and local taxes — has fallen from 70% in 1950 to 23% in 2018. 

Chasms on income and wealth

Continuing to give tax windfalls to the rich has serious consequences. It further widens America’s already troubling income and wealth gaps — destabilizing our economy, fracturing our society and threatening our democracy. The same “Fortunate 400” people own more wealth — a combined $3 trillion, per Forbes — than the least wealthy 150 million Americans put together. Their staggering fortunes insulate them from the everyday concerns of their neighbors, and many use their riches to wield outsize political influence to perpetuate their advantages. 

Adopting our Millionaires Surtax would raise $634 billion over 10 years, according to the Tax Policy Center. But we’re not interested in raising taxes just to raise them. We can use this revenue to reduce inequality in our country by investing in educational opportunities, building a 21st century infrastructure and providing more affordable health care, child care and housing for the Americans who need it most.

These investments will raise incomes and reduce costs for the 90% of Americans who, combined, have less wealth than the top 1%. Right now, we’re losing billions every year because Republicans are so committed to pampering the rich. It’s time to say enough.

The Millionaires Surtax isn’t a silver bullet for every economic issue we face. But it’s a good first step — one that will help level the playing field and ensure we aren’t only rewarding people who earn money off of wealth instead of hard work. The super wealthy must do more to open the doors of opportunity to their fellow Americans.

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