Raise Taxes on Millionaires like Me

On Sunday’s 60 Minutes interview of Rep. Alexandria Ocasio-Cortez (D-NY), she discussed returning to a top marginal income tax rate of 70%. Many who heard this, including those who would never have incomes reach anywhere near the proposed 70% threshold, were enraged. As a high earner who might see his tax bill go up should anything similar to Rep. Ocasio-Cortez’s proposal become a reality, I say “go for it.” If the American people were not so woefully misinformed about how our tax brackets work, they would understand just how uncontroversial this idea really is. In fact, many of the enraged might become angry about what the truth really is.

Our current marginal tax rates are woefully inefficient, unfair, and, I believe, not in the best interest of all Americans. Our current wage stagnation, poverty rate, and growing income inequality are examples of this. Therefore, rather than jumping down the throat of a junior congresswoman for soundbites (which are historically sound), we might want to try to understand the details.

First, for those that believe Rep. Ocasio-Cortez’s suggested 70% highest marginal tax rate is too extreme, history says otherwise. For more than two decades, the top marginal rate was higher than 80%, maxing out at 94% for two years in the 1940s. What’s more, her proposed 33 point jump wouldn’t even be the most drastic, as the highest marginal rate was once increased by more than 50% in one year.

In the details that just couldn’t fit in headlines or 280 character tweets, Rep. Ocasio-Cortez’s suggested higher marginal rates would also not go into effect until a person earns more than $5,000,000.00, $10,000,000.00, etc., a year. So, we’re talking higher, tiered marginal rates for annual income, not net worth. While economists can haggle over an exact threshold and tax rate, the fact remains incomes of $500,000, $1 million, and $10 million a year are vastly different. Only in a fundamentally flawed tax overhaul would they be treated similarly andtaxed at a lower rate, and yet that’s just what Republicans did in their Tax Cuts and Jobs Act. If anything, it’s the writers of that tax bill who need a history lesson, as the richest 1%, which includes my wife and I, now own more of the nation’s wealth than at any point in the past five decades.

I’m old enough to have parents who distinctly remember the state of our country when millionaires and billionaires paid a greater tax on their income.

Part of the reason JFK’s New Frontier programs were even possible were due to the high marginal tax rates on the nation’s top earners. Many Baby Boomers would probably agree that government programs and higher marginal rates helped them receive an education, business loan and more. They were concerned with theircurrent circumstances, not advocating for lower taxes on a class of Americans whose wealth they would never, ever see even in their dreams. Thanks to a well-funded government, our country’s infrastructure was improved, unemployment benefits were expanded so workers could get back on their feet, people could afford college, and urban transportation systems were enhanced.And because of this,I grew up in our country’s vast middle class and was able to benefit from the many government programs and social services.

As a business executive and in my wife’s case, a business owner, we can say with confidence that higher marginal tax rates will not make us, or most other wealthy Americans, quit earning after reaching a certain threshold. Rather, we will continue working because 30% of any income over, say, $10 million, is still worth earning, especially when we consider we would be building on an income less than 1% of Americans have the fortune of even earning.

Ultimately, something must be done about the gross income inequality that is making the American dream less of a reality for more citizens. The clearest solution is making our tax code work for the middle class, not millionaires like me. The collective, meaning all of us, will benefit. After all, if it wasn’t for the opportunity, safety, and public goods this country provides, many of the 1% would not be where they are.

Related Posts