Espousing such a move would be deemed unfair and maybe a disincentive for investments, which could hurt the economy in the long term. Income inequality in the United States has been worsening as time progresses, but this is not a reason to tax American wealthiest on their wealth. As of 2018, the top 20% of the American population earned 52% of all U.S income, indicating that the wealth disparity emanates from income inequality. Ideally, what would remedy the current situation would be an implementation of tax policies that will ensure the American government maximizes its revenue collection from this cluster.
America’s overall tax system is barely progressive, indicating that they only pay a bit more taxes as a share of their income than other people.
Rich Americans have already paid income tax on the earnings that made them rich in the first place. Isn’t taxing wealth double taxation? Implementing taxes on wealth would be double taxation, which would not only be unfair but unethical.
The prevalent inequality may be a result of bad tax policies that have been embraced in America. As Stiglitz (2018) noted, the tax rates for those at the top have been declining to make their share of income and wealth rise dramatically. Giving capital gains special privileges, which is the American tax code, may have been the reason for the wealthy to accumulate riches. Rather than taxing the rich on their wealth, the government could adjust the capital gains tax rates to align them with income tax rates.
Should wealthy American taxpayers pay inheritance and gift taxes in order to give their money to their family? Keep in mind that you don’t have to die to have to pay inheritance and gift taxes under the current tax code. Anyone who gives a family member more than $5 million is subject to the tax. Is that amount too high or too low, and why? Yes. The amount of $5million that is set as the threshold of inheritance and gift taxes is too high and maybe denying the American administration a considerable amount of revenue. Statistics documented indicate that the inheritance tax raised in 2012 amounted to only $8.5 billion, which was less than 1% of $1.2billion inherited that year. It is also noted that only 1 out of every700 deaths results in paying the inheritance tax today, which an insignificant percentage is.