Members of the Patriotic Millionaires propose three changes to the tax code: taxing all types of income equally for high earners, inheriting wealth as income, and taxing the highest earners more. They suggest returning to top rates from the 20th century and adding significantly more tax brackets, reaching up to 90% for people making over $100 million a year.
Three Changes to the Tax Code
There are three changes to the tax code that would help us do just that:
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Tax all types of income the same for high earners: Right now, the US tax system values money over sweat. If you work hard for your money instead of earning it passively, you’re essentially penalized for it.
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Inherit wealth as income: Inheriting money is an even better deal than working for it. Thanks to former president Donald Trump’s 2017 tax law, the first $12.92 million (or $25.84 million for a married couple) is completely exempt from any estate tax, and the stepped-up basis loophole allows wealthy families to permanently erase millions in capital gains taxes by resetting the market value of those assets to their value at the time of the original owner’s death.
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Tax the highest earners more: Finally, one of the most straightforward changes needed is to simply tax the extremely rich more than the merely rich. Our income tax caps out at a top rate of 37% for any income over $578,125 (or $693,750 for married couples). No matter how much more someone makes, they’ll never pay more than 37% in federal income taxes.
Taxing the Highest Earners More
Our income tax caps out at a top rate of 37% for any income over $578,125 (or $693,750 for married couples). No matter how much more someone makes, they’ll never pay more than 37% in federal income taxes. We need to return to the top rates we had through the most prosperous decades of the 20th century and add significantly more tax brackets, reaching up to 90% for people making more than $100 million a year.
The US tax system is designed to favor the wealthy, allowing them to accumulate vast fortunes with minimal tax liability. As members of the Patriotic Millionaires, we believe that it’s time for a change.
Taxing All Types of Income Equally
Currently, the tax code values money over sweat, penalizing those who work hard for their earnings while rewarding passive income from investments. It’s unfair to tax working-class individuals at higher rates than wealthy investors who earn capital gains income. We propose taxing all types of income equally for high earners.
Inheriting Money is an Even Better Deal
Thanks to the 2017 tax law, the first $12.92 million (or $25.84 million for a married couple) is completely exempt from any estate tax. The stepped-up basis loophole allows wealthy families to permanently erase millions in capital gains taxes by resetting the market value of those assets to their value at the time of the original owner’s death.
Taxing the Highest Earners More
The Billionaire Minimum Income Tax
President Biden has proposed the Billionaire Minimum Income Tax, which would tax the unrealized capital gains of the wealthiest households. We also propose wealth taxes on billionaires, getting access to the trillions of dollars of billionaire wealth that is untouchable under our current tax structure.
Tax the Highest Earners More
Finally, one of the most straightforward changes needed is to simply tax the extremely rich more than the merely rich. Our income tax caps out at a top rate of 37% for any income over $578,125 (or $693,750 for married couples). No matter how much more someone makes, they’ll never pay more than 37% in federal income taxes.
While someone earning $600,000 is certainly making enough to live a very comfortable life, they’re in a different world than someone making $600 million a year. In order to reflect the real differences between the rich and the ultra-rich, we need to return to the top rates we had through the most prosperous decades of the 20th century and add significantly more tax brackets. They should reach up to 90% for people making more than $100 million a year.
As the nation’s wealthiest individuals, we are often portrayed as being opposed to paying more in taxes. However, nothing could be further from the truth. In fact, many of us believe that it is time for the tax code to treat all income equally by taxing all capital gains over $1 million at the same rates as ordinary income.
Tax Wealth or Unrealized Capital Gains
We can’t just focus on income, however, because many of the richest Americans earn basically no taxable income of any kind in a typical year. Capital gains are only taxed when assets are sold, so instead of selling them, the ultra-rich use their assets as collateral to borrow vast sums of money at extremely low interest rates to live on, and then declare little or even negative “income” on their tax forms. This “Buy, Borrow, Die” strategy is a major reason billionaires paid a lower effective tax rate over recent years than working-class families.
By rethinking what is taxable, we can get access to the trillions of dollars of billionaire wealth that is untouchable under our current tax structure. That’s why President Biden has proposed the Billionaire Minimum Income Tax, which would tax the unrealized capital gains of the wealthiest households and why others have proposed wealth taxes on billionaires.
