Tax reform shouldn't be limited to the income tax. It should be across the board
to all the taxes because over the last 50-70 years all taxes in
the United States, virtually every one, has been shifted from corporations (who used
to pay a lot) to individuals. And among individuals it's been shifted from the
top to the middle and the bottom. And to correct that, to reverse, that is easy and
will raise more than enough money to do a whole host of things that the American
people need and want and deserve. I'm only gonna give you four simple examples
to show what tax reform could be to expand on what Ocasio-Cortez pointed out.
Let's go. Number one: the Social Security tax in this country.
It already raises almost half the money that the federal government gets. In
other words the federal government gets roughly half from the income tax and
roughly half from the Social Security tax, sometimes also called the payroll
tax. Here's how the Social Security tax works: a certain percentage is taken out
of your income for Social Security and it is matched by money provided by the
employer. But here's the rub. It's only the first $125,000, roughly,
that gets this tax applied to it. So if you're a wealthy
person, suppose you earn $200,000 a year, or $400,000
a year or many millions a year, you don't pay the Social Security tax on all
of it. You just pay on the first $120,000. Since that's way
more than the vast majority of Americans get here's the result: the vast majority
of Americans pay a Social Security tax but [for] the richest Americans, most of their
income is not subject to the Social Security tax. That's unreasonable. That's
unnecessary. The Social Security tax which is designed to give us a
society in which people who spent a lifetime of working are now retired and
are decently able to live, that's something a civilized society does for
itself. Everybody should pay their share of that
and if you applied the Social Security tax, the same rate everybody pays, to all
of the income a person earns then the wealthy would finally have to pay and
that would deliver billions of dollars in new revenue to the government for
public services and it would come from the pockets of those most able to afford
it. Good idea on both counts. Let me give you a second example. Capital gains
are taxed at a lower rate than labor income. That's right. You work
for an hour using your brains and muscles, you pay a higher tax on whatever
you earn for your labor then if you got capital gains. What is capital gains? It's
when you buy a share of stock for $5, hold it for awhile, and sell it
for $10. The difference between what you paid ($5) and what you get when
you sell ($10) that's a capital gain. Now you didn't have to work for that, you
don't have to do anything. You just had to have something called money to play
this game. And the income you earn is taxed at a much lower rate than if you
had worked. Now there's no reason for that. That isn't fair. That isn't
appropriate. The argument that only if you give the capital gains folks a break
will they invest has been disproved all over the place because we have many
historical examples with higher capital gains tax and lower and there's no
relationship that we have to worry about here. And that would generate a huge
amount of money. Let me give you the third example. We have a property tax in
the United States. Cities and towns rely heavily on a property tax. That's a tax
that measures the amount of property you have and then puts a tax on that
property, not on your income, on what you own. But here's something you may not
understood. Property taxes applied to property in land, the value of the land
you have, the value of a building you have, the value of the automobile you own
and the value perhaps of the inventory of your business,
But here's the kind of property that isn't subject to a property tax: stocks,
bonds, cash. Wow. Wow. Now here's an interesting fact that may help you
understand this. The top 10% of shareholders own something on the order
of 70 to 75% of the shares. By exempting what's called "intangible property,"
property in stocks and bonds, from the property tax
you're exempting the richest people in the country from paying a tax. You're
making the property tax apply only to the property the mass of people have; a
car, a home, some land on which the home sits and so on. So if you wanted to be
fair you'd extend the property tax to all property. Suddenly trillions in
stocks and bonds would be considered property, subject to tax and that would
bring in a revenue that is way larger than what we now have and enable
governments to do all kinds of things. And the fourth example, and by the way
there are more, but the fourth example is the inheritance tax. Not that many years
ago you could leave the first $600,000 worth of wealth
when you die to your heirs tax-free. They would only have to pay an inheritance
tax on whatever was left to them when you died that was more than $600,000
You know what the limit is today? $11 million per person. So for a
couple, leaving to say their wealth to the children, $22 (2x11). $22 million
can be left with no tax attached to it. You know the United States
was once a country where the idea, at least a majority idea was, we should all
start equally, have an equal chance in life, so that our well-being depends on
how hard we work, how talented we may be, etc. We didn't like the idea that some
people would start with a silver spoon in their mouth and other people with
not enough to eat. We thought that was unfair that two babies with no
responsibilities either way should start with such an unequal chance in life. And
an income tax equals it if you apply it to inheritance. Inherited wealth
should pay a tax. We once did that in the United States. We don't do that anymore.
We could go back to what we did generating enormous income from the
government and from who, from only the very wealthiest who leave, say, more than
a million dollars or more than half a million dollars to their kids. Give them
that advantage if that's so important. But$ 22 million per couple is
extraordinary. So Ocasio-Cortez was right more than she said.
Tax reform can and should be done across the board, wherever taxes are
unfair [and] discriminatory, because they're always unfair and discriminatory in one
particular way: the more you have, the more the tax system has been manipulated
and changed over several decades (at least since the Second World War) to
favor those at the top at the expense of everybody else.