In this paper, we describe a tax policy idea that would simplify the proposals President Biden presented during his campaign to raise personal income taxes for those with annual incomes greater than $400,000. Our proposal would replace the cap on state and local tax (SALT) deductions with a broader limit on tax breaks for the rich that would raise more revenue than the personal income tax hikes that Biden proposed during his campaign. Our proposal would also achieve Biden’s goals of setting the top rate at 39.6 percent and raising taxes only on those with income exceeding $400,000.
Taxing Wealth and Income from Wealth
ITEP analyzes proposals to address the many special breaks in loopholes for income from wealth, such as capital gains and stock dividends. We also analyze the federal estate tax, which is a tax on wealth itself, as well as proposals to create a comprehensive federal wealth tax.
report April 8, 2021
A Proposal to Simplify President Biden’s Campaign Plan for Personal Income Taxes and Replace the Cap on SALT Deductions
blog March 1, 2021
Senator Warren Introduces Federal Wealth Tax Legislation
With the onslaught of news about billionaire wealth soaring while low- and moderate-income families have trouble making ends meet, a federal wealth tax makes good economic and fiscal sense—and the public supports it. One poll found that 64 percent of respondents favor the idea, including a majority of Republicans.
blog February 18, 2021
Enacting a Federal Wealth Tax Is Playing the Long Game
Should lawmakers enact laws that they believe are sensible and constitutional, or should they shape their legislative agenda around what they believe ideological Supreme Court justices will allow? This is a dilemma facing Americans who support a federal wealth tax.
blog March 2, 2020
The Latest Wildly Misleading Argument Against Taxing the Rich
Anti-tax activists’ convoluted claims that the rich pay too much in taxes broke new ground with an op-ed published last week in the Wall Street Journal. Penned by former Texas Sen. Phil Gramm and John Early, a former official of the Bureau of Labor Statistics, the piece is particularly misleading. The so-called evidence in support of their argument against raising taxes on the rich fails to correctly calculate effective tax rates.
blog February 19, 2020
How Democratic Presidential Candidates Would Raise Revenue
One of the biggest problems with the U.S. tax code in terms of fairness is that investment income, which mostly flows to the rich, is taxed less than the earned income that makes up all or almost all of the income that working people live on.
blog January 13, 2020
Time to Throw Cucumbers
A basic understanding and idea of fairness is a trait we share with intelligent primates, which is precisely why more than two years ago as Congress was debating the Tax Cuts and Jobs Act, the American public disapproved of the tax bill.
blog October 15, 2019
Emmanuel Saez and Gabriel Zucman’s New Book Reminds Us that Tax Injustice Is a Choice
Cue Emmanuel Saez and Gabriel Zucman. In their new book, The Triumph of Injustice, the economists, who already jolted the world with their shocking data on exploding income inequality and wealth inequality, tell us to stop acting like we are paralyzed when it comes to tax policy. There are answers and solutions. And in about 200 surprisingly readable pages, they provide them.
blog October 2, 2019
How a Federal Wealth Tax Can Help the Economy
A New York Times article explained that proponents of a federal wealth tax hope to address exploding inequality but then went on to list the fears of billionaires and economic policymakers, finding that “the idea of redistributing wealth by targeting billionaires is stirring fierce debates at the highest ranks of academia and business, with opponents arguing it would cripple economic growth, sap the motivation of entrepreneurs who aspire to be multimillionaires and set off a search for loopholes.” A wealth tax will not damage our economy and instead would likely improve it. Here’s why.
blog September 25, 2019
Wealth Tax Proposals from Warren and Sanders: What You Should Know
Earlier this year, Sen. Elizabeth Warren proposed a federal wealth tax on a handful of U.S. households with the highest net worth. Sen. Bernie Sanders has just announced his own wealth tax proposal, which is similar to Warren’s. A few other presidential candidates say they support the concept although they have not provided any details. Here’s what you need to know about the potential for a federal wealth tax.
blog September 19, 2019
Capital Gains Tax Breaks Are Finally on the Defensive
One of the most glaring sources of unfairness in the federal tax code are rules that tax capital gains, which mostly go to the rich, less than wages and other types of income that most of us depend on. The capital gains tax breaks have for decades been comfortably ensconced behind trenches filled with special interests who would defend them until the end. But the end is now conceivable.
blog September 16, 2019
The Case for a Federal Wealth Tax
A federal wealth tax on the richest 0.1 percent of Americans is a viable approach for Congress to raise revenue and address economic inequality. This new video from ITEP makes the case for a federal wealth tax.
September 12, 2019
Comments on Senate Finance Committee Paper on Anti-Deferral Accounting
Comments on Senate Finance Committee Paper on Anti-Deferral Accounting
blog September 10, 2019
How Tax Policy Can Help Mitigate Poverty, Address Income Inequality
Analysts at the Institute on Taxation and Economic Policy have produced multiple recent briefs and reports that provide insight on how current and proposed tax policies affect family economic security and income inequality.
blog July 31, 2019
A Wealth Tax Might Be Easier to Implement than You Think
A direct federal tax on wealth, as described in a January report from ITEP and proposed by Sen. Elizabeth Warren, could raise substantial revenue to make public investments, curb rising inequality, and is supported by a large majority of Americans. But would it work? Recent research highlighted in a new academic paper outlines approaches that would make it easier than you might think.
brief July 26, 2019
Election 2020: Tax Policy Essentials
The nation’s tax policies and their role in economic inequality are front and center during this election cycle. For those interested in how the nation can move toward a fairer tax system and or more detailed information about progressive tax policy ideas, ITEP created this quick guide.
blog June 28, 2019
Why Trump Administration’s Plan to Index Capital Gains to Inflation Is Just Another Giveaway to the Wealthy
The White House is reported to be planning to unilaterally adjust the way capital gains are assessed to benefit the wealthiest Americans. The proposal would adjust capital gains for inflation, reducing taxes disproportionately for the wealthiest households who own most assets by limiting their taxable gains to those above and beyond the inflation rate.
blog June 27, 2019
Wealth Tax Is Supported by Basically Everyone Who Is Not a Politician
A February survey found that 61 percent of registered voters supported a wealth tax proposal, including 51 percent of Republican voters. And it’s not just the non-rich wanting to tax the very rich. A June survey found that 60 percent of millionaires support the idea.
blog June 25, 2019
What to Watch for on Tax Policy During the Presidential Primary
America needs a new tax code. The Democratic presidential debates beginning this week present an opportunity for candidates to make clear how they would address inequality or to raise enough revenue to make public investments that make the economy work for everyone. Here are some of the big tax issues that we hope they will touch on.
blog June 4, 2019
File Under “No Surprise”: Wealthiest Taxpayers Use Offshore Tax Shelters More Than the Rest of Us, New Research FindsTax evasion matters. It drains needed revenues from the public treasury, and saps public confidence in rules of the game. A recent Pew Research poll finds that 60 percent of…
April 26, 2019
ITEP Testimony Supporting H.B. No. 7415, An Act Concerning a Surcharge on Capital Gains
Comments are intended to offer some perspective on the broader tax policy context in which this proposal is being considered. We find that this proposal would help to lessen long-running inequities in Connecticut’s state and local tax law that have allowed high-income taxpayers to pay lower overall effective tax rates than most low- and middle-income families.
blog April 2, 2019
Sweeping Reform Would Tax Capital Gains Like Ordinary Income
Sen. Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, announced that he would soon release a proposal to eliminate massive tax breaks enjoyed by the wealthy on their capital gains income. If successful, the proposal would ensure that income from wealth is taxed just like income from work.
report February 5, 2019
Progressive Revenue-Raising Options
America has long needed a more equitable tax code that raises enough revenue to invest in building shared prosperity. The Tax Cuts and Jobs Act (TCJA), enacted at the end of 2017, moved the federal tax code in the opposite direction, reducing revenue by $1.9 trillion over a decade, opening new loopholes, and providing its most significant benefits to the well-off. The law cut taxes on the wealthy directly by reducing their personal income taxes and estate taxes, and indirectly by reducing corporate taxes.
report February 1, 2019
Congress Should Reduce, Not Expand, Tax Breaks for Capital Gains
Even though income derived from capital gains receives a special lower tax rate and is therefore undertaxed, some proponents of lower taxes on the wealthy claim that capital gains are overtaxed due to the effects of inflation. But existing tax breaks for capital gains more than compensate for any problem related to inflation. Congress should repeal or restrict special tax provisions for capital gains rather than creating even more breaks.
blog January 30, 2019
Why We Should Talk about Progressive Taxes Despite Billionaires’ ObjectionsIt was the tone-deaf remark heard ‘round the world. Last week on CNBC’s Squawk Box, Commerce Secretary Wilbur Ross suggested that furloughed government employees who hadn’t been paid in a…
blog August 1, 2018
The Preferential Tax Treatment of Capital Gains Income Should Be Curbed, Not Substantially Expanded
For true believers in supply-side economics, however, one major flaw of the TCJA is that it did not further cut taxes for the wealthy by reducing capital gains tax rates. But now the Trump Administration is considering using executive action to remedy this by indexing capital gains to inflation for tax purposes.