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Supporters of taxes on the very rich contend that people are emerging from the COVID-19 pandemic with a bigger appetite for what they’re calling “tax justice.”
Bills announced in California, New York, Illinois, Hawaii, Maryland, Minnesota, Washington and Connecticut vary in their approaches to hiking taxes, but all revolve around the idea that the richest Americans need to pay more.
All of the proposals face questionable prospects. Similar legislation has died in state legislatures and Congress. But the new push shows that the political left isn’t ready to give up on the populist argument that government can and should be used as a tool for redistributing wealth.
“Under the pandemic, while people struggled to put food on the table, we saw billionaires double their wealth,” said California Assembly Member Alex Lee, a Democrat.
The Tax Foundation, a conservative-leaning policy organization, called wealth taxes — which levy taxes not just on net income, but on a person’s total assets — “economically destructive.”
It also said in a statement that such taxes create “perverse incentives” for the rich to avoid taxes, including simply moving to states with a lower tax burden.
“Very few taxpayers would remit wealth taxes — but many more would pay the price,” the group said in a statement. Progressive Democrats, however, argue they are not seeing wealthy taxpayers leaving their states due to higher taxes.
California already taxes the wealthy more than most states. The top 1% of earners account for about half of the state’s income tax collections. But Lee proposed a “wealth tax,” similar to one promoted for years by U.S. Sen. Elizabeth Warren, a Massachusetts Democrat.
In Connecticut, progressive lawmakers are proposing more traditional hikes: a higher tax rate on capital gains earnings for wealthy taxpayers and higher personal income tax rates for millionaires.
One obstacle to such proposals is that some states where the idea might be popular are currently running budget surpluses, meaning there is little pressure to raise revenue.
This article was provided by The Associated Press.