Why 2%? A couple reasons, let’s start with the more mathematical one:
2% is the rate that would effectively address the regressive features of the current tax system. On average, billionaires earn a 6% return on their wealth each year. A 2% tax on their wealth would be similar to a tax of 33% (two divided by six) on their income, typically what the rich (but not the super-rich) already pay.
Thus the 2% wealth tax would simply close the gap between the principle of tax equality and the current tax laws. If you make it less than 2% you continue sending the message that it is acceptable for billionaires to contribute less to public goods and services than the rest of the population.
The other reason is that 2% is a moderate starting point to make it politically more tenable. We have to adopt the concept of course correcting as we go, embracing the idea that we won’t get to the goal in a straight line but we have to start running towards it. We may not pick the fastest route but we have to start moving first. And this 2% has to be in our minds the floor, not the ceiling rate.
And as a clarification this is 2% on wealth, not income. 25% wealth tax would be DOA since as I said above their wealth increased on average by 6%. And 2% wealth tax comes out to be proportional to a 33% income tax which is in line with your thinking. So it all works out!
Why 2%? A couple reasons, let’s start with the more mathematical one:
2% is the rate that would effectively address the regressive features of the current tax system. On average, billionaires earn a 6% return on their wealth each year. A 2% tax on their wealth would be similar to a tax of 33% (two divided by six) on their income, typically what the rich (but not the super-rich) already pay.
Thus the 2% wealth tax would simply close the gap between the principle of tax equality and the current tax laws. If you make it less than 2% you continue sending the message that it is acceptable for billionaires to contribute less to public goods and services than the rest of the population.
The other reason is that 2% is a moderate starting point to make it politically more tenable. We have to adopt the concept of course correcting as we go, embracing the idea that we won’t get to the goal in a straight line but we have to start running towards it. We may not pick the fastest route but we have to start moving first. And this 2% has to be in our minds the floor, not the ceiling rate.
And as a clarification this is 2% on wealth, not income. 25% wealth tax would be DOA since as I said above their wealth increased on average by 6%. And 2% wealth tax comes out to be proportional to a 33% income tax which is in line with your thinking. So it all works out!
…but…I only have one upvote to give.
This is a great explanation. Thanks!