Howard Schultz, the billionaire founder of Starbucks, might run for president as an independent. His potential candidacy illustrates the deep-seated economic divide we face: while the majority of Americans call for higher taxes on the wealthy, many billionaires still remain oblivious to how they have benefited from a system rigged to their advantage.
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As a fellow high-net-worth American, I’ve witnessed how the excessive concentration of wealth and power in a small group of elites can corrupt a government meant to respond to the majority of its citizens. But unlike Schultz, I’m not fighting the wave of resistance coming out of the left. I say bring it on. Tax the rich.
However, I would like to offer another proposal to compete with Sen. Elizabeth Warren’s wealth tax, Sen. Bernie Sanders’s estate tax expansion, and Rep. Alexandria Ocasio-Cortez’s 70 percent marginal tax. One that is informed by my experience with how the wealthy actually earn, invest and live their lives: a 10 percent surtax on the earnings (including both income and capital gains) of the top 0.1 percent of taxpayers – those reporting $2 million or more in taxable earnings.
This might not sound like much at first, but despite the fact that this would raise taxes on the wealthy by only 10 percent, it has a few significant advantages compared to other plans to tax the rich.
For one, it applies to more people. Ocasio Cortez’s higher tax rate on individuals earning income of over $10 million is certainly more aggressive, but just a few thousand people earn that much in income each year. By lowering the bar to $2 million, you drastically increase the pool of wealthy taxpayers that are required to pay more.
It also has the advantage of applying to capital gains earnings as well as income. Most rich people earn their wealth through investments, and are rewarded with a significantly lower tax rate on their earnings for doing so. Rather than working, they invest their wealth to work for them, and they end up paying a lower tax rate than what most middle-class Americans pay on their income.
This proposal, which peaks at 37-47 percent depending on how much of an individual’s income is in capital gains, would admittedly leave high-income earners with a slightly lower tax burden than AOC’s 70 percent rate. That may end up not being enough, and the surtax certainly wouldn’t completely eliminate the gap between income and capital gains rates, but it’s a start, one that is much more widely targeted and, critically, politically feasible.
This surtax, along with the bills coming from Senators Warren and Sanders, aren’t just about raising revenue. They’re about fixing the unprecedented concentration of wealth and power in my wealthy cohorts that is slowly killing this country, an epidemic I call Excessive Wealth Disorder.
With income inequality at record levels, underfunded government programs, and unprecedented political and philanthropic giving, the excessively wealthy have outsize influence in vital parts of civic life. They influence who gets to run for office, what issues are discussed, and how Congress votes. They shouldn’t.
This should be a no-brainer. The vast majority of Americans want to raise taxes on the rich, and virtually all economic data suggests it’s the right thing to do. We can’t continue to let Excessive Wealth Disorder pollute our economy and our political system. It’s time to dream bigger.
If we can put a man on the moon, we should be able to eradicate Excessive Wealth Disorder. Let’s do it soon … before the rich own the moon, too.
Alan Davis is a member of Patriotic Millionaires, a group of hundreds of high-net-worth Americans who are committed to making all Americans, including themselves, better off by building a more prosperous, stable, and inclusive nation.