When it comes to taxing the super rich, there’s no need to reinvent the wheel
Summary
California voters will decide on a one-time 5% tax on fortunes over $1 billion in November. Experts say instead of creating new wealth taxes, the U.S. should close tax loopholes and improve current tax rules that already tax the richest 1% of earners.Key Facts
- California may impose a one-time 5% tax on fortunes bigger than $1 billion.
- The richest 1% in the U.S. paid about 31.5% of their income in federal taxes in 2024.
- This tax rate is roughly 8 percentage points lower than it was around 2000.
- Closing tax loopholes and reducing special tax breaks could raise around $300 billion more per year.
- Only Norway, Spain, and Switzerland had some wealth taxes among advanced economies in 2024.
- Wealth taxes are hard to enforce because it’s difficult to value some assets and it may cause rich people to move money or stop investing.
- Experts suggest focusing on estate and inheritance taxes instead of new wealth taxes.
- Wealth taxes can feel like double taxation since they tax money already taxed as income.
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