A group of US billionaires including hedge fund manager George Soros and Facebook co-founder Chris Hughes has come out in support of a tax on the super-wealthy, as economic inequality emerges as one of the defining issues of the 2020 election.
Eighteen of the richest Americans published an open letter on Monday morning calling for a “moderate” tax on assets of the wealthiest 0.1 per cent in the US.
“America has a moral, ethical and economic responsibility to tax our wealth more,” they wrote in a post on the Medium website. “A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity and strengthen our democratic freedoms.”
While the respondents said the letter was non-partisan and not an endorsement for any one presidential candidate, they mentioned a wealth tax proposed by Elizabeth Warren. The Massachusetts senator and Democratic hopeful has proposed an annual 2 per cent levy on those with $50m or more in assets, predicting that it would raise $2.75tn over 10 years. The letter said her proposal would “provide millions of families with a better shot at the American dream”.
Wealth taxes have been more common in Europe, but a Hill-HarrisX poll found in February that 74 per cent of US voters supported such a measure, including 65 per cent of Republicans.
I’ve heard some [presidential] candidates say it’s class warfare and we wanted to say: don’t worry about us; we’re fine
Donald Trump proposed a one-off wealth tax in 1999 to cut the national debt, but has not renewed that call since being elected US president. Most of the recent pressure for higher wealth or income taxes on the richest Americans has come from Democrats, however, including Vermont’s Senator Bernie Sanders and New York congresswoman Alexandria Ocasio-Cortez.
The richest 0.1 per cent of Americans hold nearly a fifth of the country’s wealth, up from 7 per cent in the late-1970s and equal to the wealth of the bottom 90 per cent, according to a working paper published this year by the National Bureau of Economic Research.
According to the Internal Revenue Service, taxpayers in that bracket already pay the highest average tax rate of any income bracket last year, at 27.4 per cent last year, although the richest 0.01 per cent pay a lower average rate.
Liesel Pritzker Simmons, one of the heirs to the Pritzker family wealth and one of the letter’s signatories, said that the individuals had decided to go public after having conversations about the topic “quietly and organically amongst ourselves”.
“I’ve heard some [presidential] candidates say it’s class warfare and we wanted to say: don’t worry about us; we’re fine,” she told the Financial Times.
Another co-signer, Molly Munger, whose father Charlie Munger is vice-chairman of Berkshire Hathaway, said: “To strengthen the future of our country, we need to look for new tax revenues from those, like us, who have benefited most.”
Justin Rosenstein, co-founder of Asana, said: “Despite the enormous wealth that’s been created over the past few decades, our country has gotten farther away from an economy that works for everyone.”
Wealth taxes have come under fire from some who argue that the wealthy are likely to avoid paying the tax. Others including Gary Burtless, a senior fellow at the Brookings Institution, have cited the “formidable challenge” in accurately valuing assets such as closely held family companies.
But Ms Pritzker Simmons said: “Even if we only capture 50 per cent of what we could it’s absolutely worth the fight. I think it’s a lazy argument to say it will be too hard.”
Asked whether the multimillionaires and billionaires signing the letter could voluntarily pay a sum to the government equivalent to the wealth tax, Ms Pritzker Simmons said: “I think that’s a fair point, we could be doing that, but I think the tax policy needs to be fixed by our legislators and policymakers.”
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