Whether you’re in the 99%, the 47% or the 1%, inequality in America may threaten your future. Often decried for moral or social reasons, inequality imperils the economy, too; the International Monetary Fund recently warned that high income inequality could damage a country’s long-term growth. But the real menace for our long-term prosperity is not income inequality — it’s wealth inequality, which distorts access to economic opportunities.
Wealth inequality has worsened for two decades and is now at an extreme
level. Replacing the income, estate and gift taxes with a progressive
wealth tax would do much more to reduce it than any other tax plan being
considered in Washington. ...
Trends in the distribution of wealth can look very different from trends
in incomes, because wealth is a measure of accumulated assets, not a
flow over time. High earners add much more to their wealth every year
than low earners. Over time, wealth inequality rises even as income
inequality stays the same, and wealth inequality eventually becomes much
more severe. ...
American household wealth totaled more than $58 trillion in 2010. A flat
wealth tax of just 1.5% on financial assets and other wealth
like housing, cars and business ownership would have been more than
enough to replace all the revenue of the income, estate and gift taxes,
which amounted to about $833 billion after refunds. Brackets of, say, 0% up to $500,000 in wealth, 1% for wealth between
$500,000 and $1 million, and 2% for wealth above $1 million would
probably have done the trick as well.