04/05/2024
For the first time in history, billionaires have a lower effective tax rate than working-class Americans.
[See the graph below.]
America's billionaires now collectively hold a record $5.8 trillion. That’s more than the wealth of the entire bottom half of the US, roughly 65 million households. But virtually none of the wealth growth experienced by the richest Americans over the past few decades may ever be taxed.
That’s because the income tax doesn’t cover billionaire wealth, which is tied up in the value of stocks and other assets. Stocks, for example, are only taxed when they are sold. (And the capital gains tax rate is substantially lower than income tax rates.)
But the super wealthy don't have to wait to sell stocks or assets in order to benefit from their massive fortunes. They can take advantage of increases in the value of their stock portfolios by using stock as collateral to borrow all the money they need instead of taking taxable income. Elon Musk, for example, used his shares in Tesla as collateral to rustle up around $13 billion in tax-free loans to put toward his acquisition of Twitter. And with acquisitions comes more power and wealth. It’s a way for the super-rich to have their cake and eat it too.
None of us should accept an economy where teachers, nurses, and firefighters pay a higher tax rate than billionaires. If we want billionaires to pay what they owe, we’ve got to tax their wealth — not just their income.
Wealth tax. Now.
