Speaker 1: being interviewed by now, CNN's Chris Wallace, formerly of Fox News.
In this clip, Bernie Sanders effectively says confiscate all income above $999 million per
year.
How many people in the United States does this even apply to?
It's very few.
I'll tell you roughly the number in a moment.
But what we're talking about here is a 100% effective tax rate on income at $1,000,000,000
a year or more.
But don't take my word for it.
Here's Bernie explaining it himself.
Speaker 2: So you're saying, sir, billionaire should not exist?
So are you basically saying that once you get to $999 million, that the government should
confiscate all the rest?
I'm saying that we should go back to a very progressive tax policy like what we had under
Dwight the I's, which would mean that that over $1,000,000,000, basically it all goes
to the government.
And you may disagree with me, but I'm just fine.
Yeah, I think people can make it on $999 billion.
Speaker 1: Now, there is some it's not even debate.
It's sort of a lack of clarity.
Is Bernie talking about a 100% marginal tax rate on all income at a billion or more per
year?
Or is Bernie talking about a wealth tax?
Such that you are always brought back down to a net worth of $1,000,000,000.
It's not completely clear, but because he says the times of Dwight Eisenhower tax policy
under Eisenhower was a very, very high marginal tax rate on income.
So for the sake of today's discussion, let's assume Bernie is talking about income taxes
rather than a wealth tax.
So the first question is, has this ever been done before?
The answer is no.
There is no historical precedent for a 100% marginal tax rate, essentially confiscating
all income above a certain threshold.
There are governments that have put in place very high tax rates on the wealthy at high
levels.
That effectively is close to a 100% tax at an extremely high level.
But we never had 100%.
Now, just because you haven't done something doesn't mean it's a bad idea.
It's just that it hasn't been done so we don't have something to look to.
But that's what really we're talking about here.
For the sake of argument, a 100% tax bracket that starts at $1,000,000,000.
On your first ten, I forget exactly where the tax brackets are right now, but on your
first ten grand, everybody pays zero federally, of course.
And then on that next bit, you pay 10%, 15%.
You get all the way up to 35, 37% at about half a million bucks.
And then at $1,000,000,000, it's a 100% tax rate, The highest it ever got in the US, as
Bernie mentions, is under Eisenhower in the mid 20th century with a roughly 90% marginal
tax bracket.
But again, that's on income above a certain threshold.
There are European countries with very high tax rates on the wealthy, but it's not 100%.
Now, what I want to talk about, we're not going to have a 100% tax rate any time soon.
So what I think is more useful to talk about is how can we achieve the goal that Bernie
is espousing?
And the goal here is to actually collect more in taxes from the very, very, very rich.
And as we know, there are complex season, the complexities and difficulties to actually
enforcing this sort of thing for all of the different reasons that we've talked about
it.
And I will talk to you again now the question of how many people this applies to is an interesting
one.
In 2022, the Forbes billionaire list said there were 724 billionaires in the US.
I believe now it's gone up a little bit to like 735 billionaires in the U.S. They don't
all earn a billion a year, but some of them do.
So we're talking about a policy that would apply to a fraction of the 700 something billionaires
in the United States.
Now, one of the first issues, as I know many of you know, is that many of these billionaires
don't actually earn income.
They receive dividends and are subject to capital gains.
So then it's well, it's not just about income over 999 billion.
It's other forms of proceeds as well that are not actually subject to income tax rates.
The point here is what are the mechanisms through which we might achieve a goal that
is quite frankly, quite popular among the American people.
When you survey the American people and you say, should taxation be used to collect more
money from the very rich in order to fund social programs, it's relatively uncontroversial.
Most Americans say, yes, you should.
Now, I do a deep dive into this in my clip called How to Actually Tax the Rich.
There is no one policy that would cover all situations, but some of the things that could
or should be looked at is okay, raised the top marginal income tax rate that will cover
income, earned income.
But many of these folks don't earn wages and they're able to reduce actual taxation in
a lot of different ways, including by receiving income in other ways.
So then you could look at, well, we could impose a wealth tax.
The problem with the wealth tax would be that these folks would move assets to countries
with no wealth tax or invest in assets that are difficult to value, like artwork or rare
collectibles.
Okay.
But again, remember, it's like with gun violence, no one policy would cover every situation.
But the idea is to get some of the low hanging fruit.
You can close tax loopholes like the carried interest loophole.
The counter to that is you can move assets offshore, you can change business structure.
You can lobby for a different loophole.
You can shift investments to tax exempt assets like municipal bonds.
And it's not realistic for most hedge funds, certainly.
But that's another possibility.
You can better fund the IRS.
US to do more audits.
Some of the people that we're talking about are doing everything legally and correctly
and paying every dollar that they should be paying in taxes.
So audits wouldn't recover any money from them.
But there are some that that that are not.
And so increasing IRS resources is an idea a financial transaction tax with the ultra
wealthy engaging in certain types of transactions that average income people do not engage in.
A financial transaction tax is a possibility.
Of course, the way to avoid that would be Wait, just wait.
Move assets to countries that don't have such a tax, etc.
You could require country by country income reporting for companies.
One of the ways that companies can avoid corporate tax is now we're talking about companies rather
than individuals is shifting income to other countries that is no longer subject to American
taxation.
You could pass a law that says no, that has to be reported and there has to be some kind
of corporate minimum tax that is paid.
You can also look at raising the tax rate on capital gains.
And so that would get around this issue of a lot of these very rich folks aren't earning
income subject to income taxes.
So you can raise the tax on capital gains the way around.
That would be you just wait to realize the gains or look at other mechanisms.
And you can also expand the alternative minimum tax.
We already know that with a minimum tax, high earners can still reduce their taxable income
through deductions, tax credits and other strategies.
But increasing that minimum tax is another approach.
So those are ideas to achieve.
What is the underlying principle that Bernie is espousing here?
I don't expect a 100% tax bracket any time soon in the United States.
I never say never, but certainly not in at least the next five years.