No, Mr Bloomberg, We Do Need a Wealth Tax: Too Much Income Inequality Is Bad, Even for the Rich

No, Mr Bloomberg, We Do Need a Wealth Tax: Too Much Income Inequality Is Bad, Even for the Rich


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Janet Ybarra
Former Washington Journalist
Contributor on The Bipartisan Press

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Perhaps I was a bit too free the other day to ascribe pure motives to former New York mayor Mike Bloomberg in his potential run for president.

Further news reporting has indicated that Bloomberg, unfortunately, may be as eager to defeat the progressive Democrats to his left such as Bernie Sanders and Elizabeth Warren as he is to take down Donald Trump.

The idea being that Bloomberg sees himself as the defender of his billionaire class against the sorts of progressive wealth taxes that Sanders and Warren have proposed, should either be elected.

The truth is that the nation needs some sort of tax on extreme wealth to begin to swing the pendulum back after decades of federal tax cuts which, again and again, have been tilted to benefit mostly the very well-off.

What we have now in the United States is a situation of wealth inequality which isn’t just not good for society as a whole, it’s not even good for the wealthy anymore, either.

Washington Post reporter Christopher Ingraham took a deep dive on this topic last year, finding the nation at levels of income inequality not seen since before World War II (see chart).

“Some of the pain is economic: The studies suggest that the inequality depresses economic growth, leaving less for society to divvy up — regardless of how its members decide to do so. And some of it is social: Studies have found that inequality, particularly the high level seen in the present-day United States, gives rise to criminal behavior,” Ingraham wrote.

“Those effects can take a chunk out of your paycheck, regardless of whether you’re in the bottom 99 percent or the top 1 percent. Leading economists and economic organizations are coming around to the idea that to maximize income and wealth for everyone — including those at the top — there have to be meaningful checks on income and wealth inequality,” he added.

In 2014 the Organisation for Economic Co-operation and Development (OECD) found that rising inequality in the United States from 1990 to 2010 shaved about five percentage points off cumulative GDP per capita over the period.

As Ingraham noted, reason for concern here is not only altruistic. Henry Ford famously paid his workers a good wage so that they could afford to buy his automobiles.

Even in countries like ours, not all inequality is harmful, Ingraham noted.

“A report by the International Monetary Fund last year found that inequality could be beneficial to growth at low to moderate levels. On a 0-100 scale known as the Gini coefficient, where 0 means everyone has the same income and 100 means just one individual has it all, inequality spurred growth in countries with index values below 27. Unfortunately for us, our current Gini index value is somewhere around 41, well beyond the threshold where inequality becomes harmful,” he said.

And Ingraham isn’t the only one talking about these issues. The Federal Reserve reported earlier this year that about 40 percent of Americans don’t have the financial wherewithal to handle a financial emergency of $400.

Now, it’s not that nearly half of the nation’s population suddenly became financially stupid or foolish. No. It’s that a very sizable amount of the population no longer has access to that capital, because it was sucked upwards: sort of reverse Robin Hood-style.

This situation is not only not ethical or moral, it’s also not sustainable over the long run.

I honestly can’t see what’s in the hearts of Mike Bloomberg, or those relatively few extreme billionaires like him.

No one is proposing a tax which would financially ruin these folks. It’s just like a generation ago when Republicans warned hysterically that President Bill Clinton’s intended tax increase would “wreck the economy.”

The tax hike passed, and a long period of job growth and prosperity followed.

So unless you have real avarice in your heart, I don’t understand how you cannot be willing to be part of the solution.

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