First, it was AOC. Earlier this month, newly-elected New York Rep. Alexandria Ocasio-Cortez called for raising the marginal income tax rate to 70 percent—a rate that would apply only to each taxable dollar earned above $10 million in a given year, mind you (Got that, Scott Walker? Do you need us to explain it more slowly?).
Now, Massachusetts Sen. Elizabeth Warren is proposing a companion piece, namely a 2 percent annual tax on wealth over $50 million, with the rate rising to 3 percent for those households who have $1 billion or more. This is not based on income, but accumulated assets. Additionally, her plan would enact an “exit tax” on those who would renounce U.S. citizenship to get out of paying the wealth tax. Warren’s plan has been called an “ultramillionaire tax”—although the moniker certainly applies to AOC’s plan as well. These proposals represent the new vanguard for progressive economic policy, and they could not have come at a better time.
AOC’s plan has been out there longer, and has already been discussed widely. Not every Democrat is on board, for sure, but she has fundamentally changed the debate. Her plan polls very strongly, with a 59-41 percent majority in favor, according to a poll from The Hill-HarrisX. A Fox News poll (see image to the right) showed even stronger numbers. As Ocasio-Cortez herself noted, the polling shows that:
The majority of Americans respect when you break down reasonable policy proposals that are designed to combat runaway income inequality and help fund priorities they value most.
There are other proposals out there aimed at addressing economic inequality, including one that projects to bring in more than the $700 billion over 10 years that AOC’s does:
Betsey Stevenson, a former economic adviser to President Barack Obama, favors other targets: eliminating the "step-up" valuation that lets some inherited assets avoid capital gains taxes, and capping tax deductions for the wealthy.
While AOC’s proposal deals with annual income, Warren addresses the other key source of economic inequality: accumulated wealth. As Lily Batchelder, a top Obama administration economic adviser, noted: “We tax the very wealthiest less than everyone else because we tax income from capital and inheritances at much lower rates than income from good, old-fashioned hard work.”
Here’s Sen. Warren making her argument:
“It’s time to fundamentally transform our tax code so that we tax the wealth of the ultrarich, not just their income,” Ms. Warren said on Thursday. “By asking our top 75,000 households to pay their fair share, my proposal will help address runaway wealth concentration and at the same time accelerate badly needed investments in rebuilding our middle class.”
The data on this is staggering, as Daily Kos’ Meteor Blades presented in a recent post. The gap between the very rich and the rest of us has sharply widened since Ronald Reagan entered the White House and Republican trickle-down tax and economic policies were implemented—policies that shoveled wealth up the economic chain, from the 99 percent to the 1 percent. Despite progress on tax rates and other economic and tax policies made by Democratic presidents Clinton and Obama, their moves were largely undone by their Republican successors, G.W. Bush and Individual 1, both of whom had Republican-controlled congresses that passed new legislation with bare majorities (avoiding the filibuster by utilizing reconciliation).
The need for Ocasio-Cortez’s and Warren’s proposals is made crystal clear by the graphs to the right. America cannot continue on as a country where a tiny percentage capture the lion’s share of our wealth. And it doesn’t have to be this way. Only four decades ago, our country did significantly better when it comes to economic inequality.
Furthermore, there is no way to address the racial wealth and income gap without addressing the wide disparities between the overwhelmingly white top 1 percent and the far more diverse rest of the American population. Both Warren and AOC have spoken clearly about the connections between economic and racial inequality. Additionally, as recent research data from Demos has shown, explaining these connections to voters will help elect Democrats, and thus help enact the policies required to make real progress on both fronts:
An honest conversation with voters about how the right has weaponized racial fear to build support for plutocracy can create a new progressive majority, a coalition of economic populists and racial-justice advocates who recognize that economic and racial justice will be won together.
Finally, this is about power. The concentration of wealth at the very top has given the ultra-millionaires and billionaires—and the corporations they control—far too much power over our government. When a society is ruled by the very wealthiest, it is called an oligarchy, and our society is moving dangerously close to falling into that category. We progressives must fight to ensure that power remains in the hands of all the people, including those of every economic level, every race and ethnicity, every gender, and every religion.
While Democrats are out there defining themselves as the party that will restore opportunity for the 99 percent by making sure everyone benefits from economic growth, Republicans are, literally, out there sounding like Marie Antoinette. Speaking about federal employees who are currently going without pay, a number of Republicans revealed an incredible lack of either sympathy for, or understanding of, what life is like for those who do not have enough money to pay the bills because they are missing paychecks thanks to the Trump Shutdown. For example, when discussing unpaid federal employees having to visit homeless shelters and food banks in order to eat, Commerce Secretary (and billionaire) Wilbur Ross—he of the $600 embroidered slippers—replied:
Well, I know they are, but I don't really quite understand why. Because, as I mentioned before, the obligations that they would undertake, say borrowing from the bank or credit union, are in effect federally guaranteed. So the 30 days of pay, which some people will be out – there's no real reason why they shouldn't be able to get a loan against it.
Nancy Pelosi’s response was perfect: “Is this the ‘let them eat cake’ kind of attitude? Or call your father for money?” A New York Times news article referred to the “Let Them Eat Cake Shutdown.”
Going beyond the shutdown, Republican policy under Trump, and G.W. Bush, and Reagan, has long favored the economic elites over the rest of us. The one thing of significance that Trump and a Republican Congress managed to pass was cutting taxes on millionaires. At least the American people are seeing through that sham of a plan, which has done essentially nothing so far to improve the lives of average Americans, while sending money up the economic ladder and massively inflating our national debt. That’s what Republicans do. As Ocasio-Cortez and Warren have made clear with their recent proposals, we do the opposite.
The marker has been laid down. Whose side are politicians on? Democrats and progressives are fighting for the 99 percent, and Republicans are fighting for those at the tippy-top. When the American people understand that, our side wins. And when our side wins, so do the American people.
Ian Reifowitz is the author of The Tribalization of Politics: How Rush Limbaugh's Race-Baiting Rhetoric on the Obama Presidency Paved the Way for Trump (forthcoming in May 2019).