TAX THE BILLIONAIRES
In nearly all nations billionaires avoid paying their fair share of taxes. In the US they pay 23% of their income in taxes, less than individuals in the bottom half of income earners, who pay 24%. How can this be? Billionaires receive relatively small salaries from the companies they own. And these companies pay small dividends. Both salaries and dividends are taxable. So how do billionaires get paid? They can take out loans using their wealth as collateral; they can establish residency in a low-tax country like Switzerland; their shares can be owned by holding companies, which pay a lower tax rate. Furthermore, in the US, taxes on corporate profits and estate taxes have been gutted. For example, in 2018 the maximum corporate tax rate was slashed from 35% to 21%.
What is the solution? One idea is a wealth tax, let’s say an annual 2% tax on assets, with a deduction for what is actually paid in income tax. This would require coordination among nations to avoid escape to low-tax jurisdictions. There are only about 3,000 billionaires in the world: it should not be hard to keep track of them.
Source: The New York Times, 5/12/24