For decades, nearly every cent of economic growth in the United States has gone straight into the pockets of the wealthiest Americans.
While wealthy investors and business executives have built their fortunes on the backs of hard-working Americans, fewer and fewer of those workers have seen any of the benefits.
At a time when our economy is vibrant and thriving, this defies logical explanation — until you realize that the rich have deliberately designed our tax code to benefit themselves, leaving the tab of running the country to a shrinking middle class.
Americans know exactly who pulled the rug out from under them, and they’ve decided they’ve had enough. Poll after poll shows that the overwhelming majority of Americans want to raise taxes on the rich.
In many ways, the current bipartisan popularity of taxing the rich is a response to the 2017 Trump tax cuts, which gave egregiously preferential treatment to the wealthy and powerful through provisions like corporate tax cuts, a weaker estate tax and slashing the top marginal tax rates. But these changes only made a bad problem worse.
Our tax code has long rigged the economy in favor of wealthy people like us, and it does so at the expense of everyone else.
Through a series of special rates and loopholes big enough to sail a luxury yacht through, the rich get richer while working people bear the brunt of the tax burden amid stagnating wages, soaring health-care costs and mountains of debt.
It doesn’t have to be this way. Our nation must regain the trust of those millions of Americans, and we have to start by transforming our tax laws. Here are three simple ways we can ensure the wealthy start paying their fair share:
First, we need to tax capital gains and qualified dividends at the same rate as regular income. There is no justifiable reason that an individual making $100 million in capital gains should pay a lower top tax rate than a worker earning just $40,000 (20 percent vs. 22 percent).
A married investor couple can receive $103,150 completely tax-free while a couple who works for a living can earn the same amount but pay $9,000 in federal income taxes. This is heinous.
Second, we have to raise the top marginal tax rate. Someone making $550,000 shouldn’t pay the same tax rate as someone making $10 million. Millionaires like us have reaped the most benefits from our system and have the most to give in return.
Finally, we need to defend and strengthen the estate tax. Thanks to the Trump tax bill, a wealthy couple can now bequeath up to $22.4 million to their heirs while paying no tax whatsoever.
America has an alarming concentration of wealth problem due in large part to dynastic wealth that’s passed down from generation to generation without ever being taxed.
Thousands of heirs who did nothing to earn their wealth except be born into the right family receive millions of dollars tax free while working Americans pay taxes on every dollar they earn.
It’s no wonder that Americans don’t believe the system is working for them; for most of them, it isn’t. We believe that a system that only benefits the ultra-wealthy isn’t just morally wrong, it’s unsustainable. If we do nothing, the millions of Americans our politicians have abandoned will reach for the pitchforks.
We can fix our economy and our tax code, but we need to act decisively. Changes at the margins aren’t enough anymore. As momentum for taxing the rich builds, lawmakers and our fellow wealthy Americans have a choice to make: They can either get on the bus, or they can be run over by it.
Morris Pearl is chair of the Patriotic Millionaires and the former managing director of BlackRock, Inc. Karen Seal Stewart is a former certified financial planner and a member of the Patriotic Millionaires. Follow them on Twitter: @PatrioticMills.