A Wealth Tax Is the Perfect COVID Stimulus Measure

If you think back to the beginning of the COVID-19 crisis in the US in March, you might remember all the doomsday headlines about the stock market tanking to record lows and investors losing millions of dollars as a result. Three months later, those headlines have entirely disappeared, and there’s a reason for that: the stock market has recovered almost all of the losses incurred since the pandemic began, and many investors have recovered all of their losses – and even started to get richer

In other words, the stock market (and all the wealthy folks who benefit from it) is doing just fine, and many rich investors are even turning a quick buck off the greatest crisis this country has faced in a century. For all their whining, there’s never been a better time to be a rich person in America – and never a worse time to be on the other side of that inequality gap. That inequality gap was dangerous for all of us before the pandemic, but it could tank our entire economy for years to come now. 

Luckily, a wealth tax offers the perfect solution to fight inequality and keep our economy afloat.

To understand why a wealth tax is one of the most effective stimulus measures we could take right now, it’s important to note that a whopping 84 percent of stocks are owned by the wealthiest 10 percent of people in this country, or households earning over about $150,000 per year.  Breaking that down even further, just over 50 percent of stocks are owned by the top 1 percent, or households who earn over $737,000 per year. That is trillions of dollars in almost entirely untaxed wealth owned by the very richest people, thanks to our country’s ridiculously low capital gains tax rate and our dizzying array of loopholes and special tax breaks for investors. 

A wealth tax on the richest individuals could rein in much of that pandemic profiteering while opening up new funding to help low-income folks who need it most in this crisis. President Trump and Republicans in Congress are already pushing back on Democratic efforts to provide any additional stimulus, saying that extending financial support for more Americans would add too much to the debt. They’re wrong to prioritize deficit reduction over protecting millions of at-risk Americans, but if they’re dead-set on not adding to the debt, a wealth tax would be an easy way to raise trillions of dollars for economic relief programs. 

That tax wouldn’t just make a serious dent in curbing our rapidly growing inequality – it would strengthen our economy by pumping billions of dollars into the pockets of low-income earners who tend to spend every dollar they have. Consumer spending is the backbone of the American economy, and if we don’t take action to get money into the hands of folks who will spend it, we will likely face an unnecessarily dragged-out and damaging economic recovery. 

If preventing an economic depression isn’t reason enough, a wealth tax and increased financial support for Americans affected by the crisis would also stave off looming financial collapse for millions. As infections continue to rise, the pandemic is as threatening as ever to the economic livelihoods of the 45 percent of Americans who don’t own any stock whatsoever. Eviction courts have started back up, potentially forcing the 1 in 3 Americans who couldn’t afford their April rent onto the streets and threatening to completely wipe out Black renters. The $600 boost to unemployment is set to expire at the end of the month, forcing millions of people back onto a job market that remains as unstable and unfriendly as it was back in March. And a deadly disease disproportionately affecting low-income Black and brown families underwrites all of that financial uncertainty. 

A wealth tax would be an elegant, efficient solution to a problem as complex and deeply-entrenched in our society as inequality – especially right now. Wealth taxes are designed to specifically target only the ultra-rich, so the risk of average Americans getting caught in the crosshairs of a tax increase during a recession are much lower than a host of other revenue-raising options. It also strikes at the heart of the problem, which is taxing intangible forms of money like fine art, jewels, investments, and so on, which is how most very wealthy people retain and grow their wealth in the first place. Our tax code doesn’t effectively deal with intangible assets like this, and a wealth tax would be a sorely needed addition to round it out. 

The central problem of our economy right now is that too few ultra-wealthy people have all the money, and too many low-income folks have too little. The solution is as obvious as it is effective: take just a little bit from the few and give it to the many. A wealth tax is the perfect way to do that, and we need it now more than ever.

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