The 70 Percent Solution
Last month, freshman New York Rep. Alexandria Ocasio-Cortez, 29, pitched a proposal for a 70 percent marginal tax rate on incomes of $10 million and beyond. In similar style, Vermont socialist Bernie Sanders seeks to escalate the estate tax and Sen. Elizabeth Warren, a candidate for president, wants an “ultra-millionaire” surtax on wealthy families. Soaking the rich is not a new tactic but some of the nuances may have escaped notice.
Jacking up the marginal tax rate to 70 percent comes packaged as a “progressive” move but in reality, it’s punitive. Those who earn at high levels find themselves punished with higher taxes. Those who earn in the millions tend to draw their income from investments, businesses and such. Promoters claim that punitive marginal tax rates will exempt the working class but workers have problems of their own.
Through the practice of withholding from workers’ paychecks, the government gets the workers money before they do. This grab dates from World War II and it was supposed to be temporary. The government likes getting workers money up front, so it became permanent. No politician is currently pushing to abolish this unjust, confiscatory practice, least of all the “soak the rich” crowd. They like to claim that the government gives tax cuts to the rich, but to allow anybody to keep more of what they earn is not to give them anything.
Meanwhile, Ocasio-Cortez’s proposal for a “Green New Deal” would give money even to those unwilling to work. It also aims to eliminate air travel and all gasoline-powered automobiles. FDR’s New Deal was at odds with Adam Smith and F.A. Hayek. The Green New Dealers also detest capitalism but they also have a beef with the Wright Brothers and Henry Ford.