Tax the Rich: Let Them Stop Eating Cake

Taxing the rich is not a new idea by any means. But the call to take more money from them has become louder. People with some power to act have begun to unabashedly call for higher taxes on the rich.  Much to the chagrin of many wealthy Americans and those in attendance at Davos for the Economic Forum (and likely many readers of this blog), the idea is gaining momentum. Those in Davos were caught between taking it seriously and dismissing it as fantasy. My former boss, Scott Minerd, Global CIO of Guggeneheim Partners said “It’s scary…I think the likelihood that a 70 percent tax rate, or something like that, becomes policy is actually very real.”

While there is bipartisan appeal of taxing the rich, the most vocal proponents are on the left with newly minted congresswoman Alexandria Ocasio-Cortez and Massachusetts senator Elizabeth Warren leading the charge.  Ocasio-Cortez has called for 70% marginal tax rates for filers with incomes above $10M, while Warren has proposed taxing acquired wealth. The proposal from Ocasio-Cortez actually has some momentum behind It. A recent poll from The Hill and HarrisX shows that 59% of those surveyed support imposing a 70% marginal tax rate on high earners (including 45% approval from Republican respondents). 

Since our clients are people whose clients may actually earn enough to be impacted by this tax rate, I thought I would look the issue in a bit more detail. And since proposals are notably lacking at this time, I will simply focus on a 70% marginal tax rate at incomes greater than $10M with no other changes to the tax code.

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