12 Myths About Taxing the Rich | Robert Reich

Summary

This script debunks 12 common myths about taxing the wealthy, clarifying that higher tax rates apply only to income or wealth beyond certain thresholds. It highlights historical tax rates, public support for such measures, and refutes claims that wealth taxes are unconstitutional or detrimental to economic growth. The script argues that taxing the rich fairly can generate significant revenue, reduce inequality, and protect democracy, challenging the notion that the rich have earned their wealth independently of societal support.

Takeaways

• 📊 The script debunks 12 common myths about taxing the rich, highlighting misconceptions and providing factual counterpoints.
• 💼 A top marginal tax rate only applies to income or wealth exceeding specific thresholds, not the total amount.
• 🗳️ Public opinion supports higher taxes on the wealthy, with 70% of Americans in favor, including a majority of Republicans.
• 📉 Historically, higher top marginal tax rates were common in the U.S., with rates exceeding 90% in the 1950s and 60s.
• 🏦 The script argues that wealth taxes are not unconstitutional, drawing parallels to existing property taxes.
• 📈 Contrary to popular belief, there is no evidence that higher taxes on the rich slow economic growth; in fact, the opposite may be true.
• 💼 After tax cuts for corporations, job creation did not increase, and tax savings were often used for stock buybacks, benefiting executives and investors.
• 💰 The argument that the rich pay more than their fair share is misleading, as it overlooks the regressive nature of other taxes.
• 🔄 Wealthy families often avoid capital gains taxes through inheritance and the non-taxation of unrealized gains.
• 🏠 The estate tax, often criticized as a 'death tax,' only affects a small fraction of the wealthiest families.
• 🚫 While some argue that the wealthy will evade higher taxes, research suggests that significant revenue can still be raised, such as through a 2% wealth tax.
• 🌐 The purpose of raising taxes on the wealthy is not solely for revenue but also to address inequality and protect democracy.
• 🤔 The script challenges the notion that the rich have 'earned' their wealth entirely on their own, emphasizing the role of societal and governmental support.

Q & A

What is the misconception about a top marginal tax rate according to the script?

The misconception is that a top marginal tax rate applies to all of a rich person's total income or wealth. In reality, it only applies to income or wealth in excess of a certain threshold, such as the 70% income tax rate proposed for income over 10 million dollars a year.

Is raising taxes on the rich considered a far-left idea according to the script?

No, raising taxes on the rich is not a far-left idea. The script states that 70% of Americans, including 54% of Republicans, support raising taxes on families making more than 10 million dollars a year.

What historical tax rates are mentioned in the script for the period between 1930 to 1980?

The script mentions that from 1930 to 1980, the average top marginal income tax rate was 78 percent, and from 1951 to 1963, it exceeded 90 percent.

Is the wealth tax unconstitutional as suggested by some myths?

No, the script refutes this myth by stating that the Constitution gives Congress the power to lay and collect taxes, and that many locales already impose an annual wealth tax in the form of property taxes.

What is the script's stance on the belief that cutting taxes on the rich leads to more investment and benefits for everyone?

The script strongly disagrees with this belief, stating that it is 'utter baloney' and that there is no evidence that higher taxes on the rich slow economic growth. In fact, it suggests that economic growth has been higher when top marginal tax rates were higher.

What happened after the corporate tax rate was lowered in 2018 according to the script?

The script states that after the corporate tax rate was lowered in 2018, America's largest corporations cut more jobs than they created and used their tax savings largely to increase their stock prices by buying back their own shares, benefiting executives and wealthy investors but not the economy.

Why is the claim that the rich already pay more than their fair share in taxes considered misleading in the script?

The claim is misleading because it focuses only on income taxes and ignores other taxes such as payroll taxes, state and local sales taxes, and property taxes, which disproportionately affect lower-income families.

How does the script address the myth about the estate tax being a death tax that hits millions of Americans?

The script refutes this myth by explaining that the current estate tax only applies to assets in excess of 11 million dollars for individuals or 22 million dollars for couples, affecting fewer than 2,000 families.

What would be the potential revenue from a 2% wealth tax as mentioned in the script?

The script suggests that a 2% wealth tax, as proposed by Senator Elizabeth Warren, would raise around 2.75 trillion dollars over the next decade with very little tax evasion.

What are the two main reasons for raising taxes on the wealthy according to the script?

The script identifies two main reasons: to generate revenue to reduce the national debt and invest in public services, and to reduce inequality to safeguard democracy against oligarchy.

Why does the script argue that it's unfair not to raise taxes on the rich?

The script argues that it's unfair not to raise taxes on the rich because most Americans have seen no income growth in the last 40 years while the incomes of the wealthy have skyrocketed, and more than 60% of wealth in America is now inherited.

How does the script respond to the argument that the rich have earned their money and it's their money?

The script rejects this argument by stating that the rich could not maintain their fortunes without the infrastructure, education, and other services provided by America, and that they have benefited from various forms of government support and subsidies.