America's soaring inequality and shameful tax system

Click here for a Robert Reich article on Substack entitled "What will Kamala Harris do about America's soaring inequality and shameful tax system?" He uses the Warren Buffett example:

Consider Warren Buffett. Several years ago, Buffett made a claim that would become famous. He said that he paid a lower tax rate than his secretary, thanks to the many loopholes and deductions that benefit the wealthy.

The 400 wealthiest Americans today still pay a lower total tax rate — spanning federal, state, and local taxes — than any other income group, according to newly released data.

According to Forbes, Buffett now has $149.9 billion in wealth. On the conservative assumption that the rate of return on his wealth is 5 percent, Buffett’s real pre-tax income last year — his share of his company Berkshire Hathaway’s profits — was roughly $7.5 billion. Yet Buffet paid an effective income tax rate of less than 1 percent.

An increase in Buffett's -- or Zuckerberg's, or Bezos's, or Musk's -- marginal tax rate would have almost no effect, since they have very little income -- their wealth appreciates because of capital gains. That's why the capital gains tax -- currently 23.8% -- must be raised.

But Biden has proposed a tax on unrealized capital gains, which would get at some of these billionaires' accumulated wealth.

A renewed political demand calls for progressive taxation to reverse these trends—to achieve greater tax justice, raise revenue to pay for important public goods, and curb the rise of inequality.