Proposals to hike taxes on the rich have long elicited a predictable response, New York Times columnist David Leonhardt writes: “It will wreck the economy.” That argument has become less common, though, “because it’s become so obviously false,” Leonhardt says. Instead, a cynical new argument has arisen: “There’s no point in trying to tax rich people, because they’ll just figure out a way to avoid paying taxes.”
Don’t buy it, Leonhardt says. Just look at where tax rates on the wealthiest among us have been over the past century (see chart below). That top rate has come down in recent decades because the federal government has slashed the top marginal rates, cut taxes on stocks and other investments and shrunk the estate tax.
The government made those changes, and it can change the tax picture again. “The long history of American policymaking actually shows that raising taxes on the wealthiest taxpayers is entirely possible,” Leonhardt writes. “History shows that when the government tries to collect more taxes from its richest citizens, it succeeds. So don’t give in to cynicism.”
The liberal Center for American Progress just issued a report outlining several options for taxing what they call “extreme wealth” and pushing back on what they describe as “an array of dubious arguments and outright falsehoods” used to argue against higher taxes on the rich. You can read the full report here.