OUR BEST WISHES TO YOUR MEMBERS. WE’LL OF COURSE KEEP THEM IN OUR
THOUGHTS AND COVERAGE.
JAY DAVID COX, THANK YOU.
>> THANK YOU.
>>> ALEXANDRIA OCASIO-CORTEZ,
THE NEW DEMOCRATIC CONGRESSWOMAN
FROM NEW YORK, IS ALREADY MAKING
WAVES BY CALLING ON AMERICA’S
UBER WEALTHY TO PAY A BIGGER
SHARE IN TAXES THAN EVERYONE
ELSE DOES.
ELSE DOES. SHE SAYS ALL INDIVIDUAL INCOME
ABOVE $10 MILLION A YEAR SHOULD
BE TAXED AT A 70% TAX RATE.
THAT WAY THE EXTRA REVENUE
GENERATED COULD BE USED TO FUND
THINGS LIKE GREEN INFRASTRUCTURE
AND MEDICARE FOR ALL.
NOW, THE CURRENT HIGHEST TAX
BRACKET ON THE BOOKS FOR
INDIVIDUALS IS 37%.
THAT’S ON ALL INCOME ABOVE
$500,000 A YEAR.
THIS IS DOWN FROM A PREVIOUS
HIGH OF 39.6% ON INCOME OF MORE
THAN $418,000 A YEAR, THANKS TO
THE REPUBLICAN TAX LAW THAT
PRESIDENT TRUMP SIGNED IN LATE
2017.
2017. NOW, YOU SEE, THE UNITED STATES
HAS WHAT’S CALLED A PROGRESSIVE
FEDERAL INCOME TAX SYSTEM IN
WHICH AMERICANS ARE TAXED AT
PROGRESSIVELY HIGHER RATES
WITHIN RISING INCOME BRACKETS.
AMERICA’S LAWMAKERS DECIDED LONG
AGO THAT A PROGRESSIVE SYSTEM
SPREADS THE TAX BURDEN MORE
EQUITABLY BETWEEN AMERICA’S RICH
AND POOR.
AND POOR. NOW, THIS IS HOW A PROGRESSIVE
SYSTEM WORKS.
SYSTEM WORKS. RIGHT NOW YOU PAY A 10% TAX RATE
ON YOUR FIRST $9,525 OF ANNUAL
INCOME.
INCOME. ANYTHING ABOVE THAT UP UNTIL
$38,700 GETS TAXED AT 12%.
IN THE NEXT TAX BRACKET, UP TO
$82,000 AND SO ON UNTIL YOU
REACH THE HIGHEST TAX BRACKET
AFTER YOU MAKE $500,000 AND YOU
PAY 37%.
PAY 37%. ALL RIGHT.
ALL RIGHT. EVERYTHING EARNED BEYOND HALF A
MILLION DOLLARS GETS TAXED AT
THAT RATE.
THAT RATE. OCASIO-CORTEZ’S PLAN IS NOT
FULLY FLESHED OUT, BUT AS
PROPOSED, IT WOULD ADD A NEW TAX
BRACKET FOR ALL INCOME ABOVE $10
MILLION A YEAR.
IF YOU EARN $10 MILLION, ONLY
THE $500 WOULD THEN BE TAXED AT
THAT 70% RATE.
THAT KIND OF INCREASE COULD
GENERATE $720 BILLION OVER THE
NEXT DECADE.
NEXT DECADE. THAT’S NOT ENOUGH, BY THE WAY,
TO FOOT THE BILL FOR MEDICARE
FOR ALL, WHICH HAS A PROJECTED
COST OF, ARE YOU SITTING DOWN
FOR THIS, $30 TRILLION OVER TEN
YEARS.
YEARS. BUT IT COULD FUND A NUMBER OF
OTHER PROPOSAL, LIKE FREE
COLLEGE TUITION OR UNIVERSAL
PRE-K.
PRE-K. MANY REPUBLICAN OPPONENTS AND
EVEN SOME DEMOCRATS WOULD HAVE
YOU BELIEVE THAT OCASIO-CORTEZ’S
PLAN CALLS FOR A 70% TAX RATE ON
ALL INCOME GENERATED BY WEALTHY
AMERICANS.
AMERICANS. THAT WOULD BE DISINGENUOUS.
OTHERS WOULD HAVE YOU BELIEVE A
70% TOP TAX BRACKET IS UNHEARD
OF, EXCEPT THE RICHEST AMERICANS
DID PAY TOP TAX RATES OF 70% OR
EVEN 90% ON INCOMES OVER A
CERTAIN AMOUNT AS RECENTLY AS
THE 1970s.
THE 1970s. THE QUESTION SHOULD REALLY BE,
HOW PROGRESSIVE DO WE WANT OUR
TAX SYSTEM TO BE?
JOINING ME NOW IS CNBC’S EDITOR
AT LARGE JOHN HARWOOD.
JOHN, I WOULD LOVE YOUR TAKE ON
THIS.
THIS. >> WELL, YOU’RE MAKING THE RIGHT
POINTS.
POINTS. FIRST OF ALL, THE FACT THAT THE
NOMINAL TOP RATE IS AT A CERTAIN
LEVEL DOESN’T MEAN THAT’S HOW
MUCH OF THAT PERSON’S INCOME IS
BEING TAKEN, AS YOU JUST
EXPLAINED.
EXPLAINED. IN THE 1950s WHEN THE TOP TAX
RATE WAS OVER 90%, THE AVERAGE
TAX RATE THAT PEOPLE PAID AT THE
HIGHEST LEVEL WAS LESS THAN HALF
THAT.
THAT. IN 1980, WHEN RONALD REAGAN WAS
ELECTED PRESIDENT, THE TOP TAX
RATE WAS 70% AT THAT TIME.
IF YOU LOOK AT THE AVERAGE TAX
RATE THAT THE TOP 1% WAS PAYING
AT THAT TIME, IT WAS ONLY 35%.
TODAY WITH THE TOP TAX RATE AT
37%, THE AVERAGE TAX RATE FOR
THE TOP 1% IS ABOUT 27%.
SO WHEN YOU ACTUALLY LOOK AT
WHAT PEOPLE ARE PAYING, IT IS
NOT THAT BIG BROTHER IS TAKING
AWAY MOST OF ANYBODY’S INCOME.
IT’S TAKING AWAY MOST OF THOSE
LAST DOLLARS OF INCOME, AND
THAT’S A VALUE JUDGMENT.
HOW HIGH SHOULD IT BE?
THAT’S WHAT POLITICIANS AND
POLITICAL CAMPAIGNS AND
ELECTIONS ARE ABOUT.
>> SO LET ME ASK YOU THIS.
IN ADDITION TO THE VALUE
JUDGMENT, THE FEAR IS IF YOU
IMPOSE THAT SORT OF MARGINAL TAX
RATE THAT’S VERY HIGH AND OTHER
SIMILAR COUNTRIES DON’T, WHAT’S
TO STOP ALL THE RICH PEOPLE
FROM, A, EITHER LEAVING, OR IN
AMERICA, AS YOU JUST SAID, THE
RICH DON’T PAY THAT PERCENTAGE
OF THEIR INCOME BECAUSE THEY
FIGURE OUT OTHER WAYS TO WORK
AROUND IT, LOOPHOLES THAT WERE
NOT CLOSED IN THE LAST TAX
REFORM.
REFORM. >> WELL, THAT’S PRECISELY WHAT
HAPPENS.
HAPPENS. I DON’T THINK THAT MANY WEALTHY
AMERICANS WOULD LEAVE THE UNITED
STATES.
STATES. THERE ARE A LOT OF GOOD THINGS
ABOUT LIVING IN THIS GREATEST
COUNTRY IN THE WORLD, SO I DON’T
THINK YOU’RE GOING TO SEE A LOT
OF DEFECTIONS, BUT YOU MIGHT SEE
AN INCREASE IN TAX AVOIDANCE.
THAT’S PART OF A JUDGMENT PEOPLE
WRITING TAX LAW HAVE TO MAKE.
DOES THE AMOUNT OF INCOME YOU
YIELD FROM THAT HIGHER RATE
OFFSET WHAT MIGHT BE TAX
AVOIDANCE THAT REDUCES REVENUE
AT THE OTHER END?
>> JOHN, WHAT A PLEASURE TO TALK
TO YOU.
TO YOU. THANK YOU, AS ALWAYS.