Paul L. Caron
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Friday, July 17, 2020

Batchelder & Kamin: Policy Options For Taxing The Rich

Lily L. Batchelder (NYU) & David Kamin (NYU), Policy Options for Taxing the Rich, in Maintaining the Strength of American Capitalism (Melissa Kearney & Amy Ganz eds., The Aspen Institute 2019):

The U.S. economy exhibits high inequality and low economic mobility across generations relative to other high-income countries.

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The United States will need to raise more revenues in order to reduce these disparities, finance much-needed new services and investments, and address the nation’s long-term fiscal needs. This paper outlines policy options for raising a large amount of revenues primarily from the most affluent, first discussing potential incremental reforms and then focusing on four main options for more structural reform: dramatically increasing the top tax rates on labor and other ordinary income; effectively taxing the wealthy on accrued gains as they arise and at ordinary rates; a wealth tax on high-net-worth individuals; and a financial transactions tax.

Although we summarize the relative advantages and disadvantages of these approaches, we generally conclude that they all merit serious consideration. Several options are also complementary to one another. In practice, however, the relative strengths of each of these policies will depend to a large extent on how each is designed after it has made its way through the legislative and regulatory process.

https://taxprof.typepad.com/taxprof_blog/2020/07/batchelder-kamin-policy-options-for-taxing-the-rich.html

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Comments

I don't suppose not beating up on the rich is on the table? Funny, the Uber rich live in the bluest of the blue areas and have the greatest inequality, e.g., Manhattan and Silicon Valley. Do you suppose this inequality might have been created by the Federal Reserve pumping trillions into the stock market? Curious minds want to know.

Posted by: Dale Spradling | Jul 17, 2020 9:00:00 AM

Also according to the OECD, the U.S. has the *most* progressive federal tax system in the industrialized world. And yet, that system does a terrible job redistributing income. Ironically, the only way to actuall reduce these income disparities, if that's even a policy, is to broaden the base and tax middle income households more. Not my suggestion, but it's definitely in the Bernie/Biden playbook.

Posted by: MM | Jul 17, 2020 8:03:59 PM

Dale is correct. IMO the Federal Reserve should not be inflating asset prices (so much?).

Posted by: Anon | Jul 17, 2020 8:12:23 PM

I wasn't impressed at NYC's results with high taxes, lots of rich people to impose them on, and all of us filed into a little easy-to-tend grid. If they can't make it there...

Posted by: Anand Desai | Jul 18, 2020 6:55:29 PM