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January 12, 2020

Majority of Americans favour wealth tax on very rich: poll

Business

January 12, 2020

WASHINGTON/NEW YORK: The idea of imposing a wealth tax on the richest Americans has elicited sharply divergent views across a spectrum of politicians, with President Donald Trump branding it socialist and progressive Democratic presidential contenders Senators Elizabeth Warren and Bernie Sanders prominently endorsing it. But it may have broad public support, according to a Reuters/Ipsos poll that found nearly two-thirds of respondents agree that the very rich should pay more.

Among the 4,441 respondents to the poll, 64 percent strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs” - the essence of a wealth tax. Results were similar across gender, race and household income. While support among Democrats was stronger, at 77 percent, a majority of Republicans, 53 percent, also agreed with the idea.

A wealth tax is levied on an individual’s net worth, such as stocks, bonds and real estate, as well as cash holdings, similar in concept to property taxes. It is separate from an income tax, which applies to wages, interest and dividends, among other sources.

Asked in the poll if “the very rich should be allowed to keep the money they have, even if that means increasing inequality,” 54 percent of respondents disagreed. “Rich people have a right to blow their money on Lamborghinis and world-wide cruises or whatever,” said Esin Zimmerman, 53, a lifelong Republican from Madison, Minnesota, who wants higher taxes for the wealthy. “But that money could be used in other ways that help people.”

Zimmerman said she would especially be in favor of a wealth tax that would help pay for government programs for US military veterans, or help single parents with young children. “It could put the border wall up,” she said.

The results may reflect how the economic changes of the past roughly 20 years, from globalization to the financial crisis, have shaped attitudes about economic policy.

According to polling by Gallup, concerns about the rich paying too little actually declined through the 1990s and early 2000s, a relative boom period for the United States. But the concerns have been climbing since the crisis years of 2007 to 2009, from 55 percent to more than 60 percent as of 2016 here

The Reuters/Ipsos results suggested even stronger support for an annual levy on total wealth, not just income. Warren and Sanders have touted the idea as a way to help pay for major social programs like Medicare for All and to reverse a stark rise in the share of wealth owned by the very richest Americans, known as the “1 percent.”

The poll also points to changing attitudes toward basic ideas such as “keeping what you earn.” That notion, central to a winner-take-all brand of capitalism, got mixed reviews. While 56 percent of Republicans agreed the very rich should keep what they have regardless of the impact on inequality, 35 percent of Republicans disagreed with the statement, as did 71 percent of Democrats.

Republican survey respondents interviewed by Reuters said they did not see their support for a wealth tax conflicting with their party ideals or their support for Trump.

Kathy Herron, 56, a Republican who lives in Santa Rosa, California, said her support for Trump - a self-proclaimed billionaire - stems from his hardline policies on illegal immigration. In her view, the president would do well to support higher taxes on rich Americans. “We’re taxed from one end to the other, and it just seems the rich don’t pay their share,” she said. In recent years in particular, mainstream economic institutions like the International Monetary Fund and the Federal Reserve have taken seriously the possibility that high levels of wealth and income inequality may be not just politically corrosive, but bad for economic growth.

At the most recent Fed policy meeting, staff members presented research on how families’ differing access to credit might make a recession worse – the sort of exercise that shows how unequal starting points among households can influence national outcomes.

Economic and market trends have likely reinforced doubts about who gets ahead, and how fast. Since the start in 2009 of a now-decade-long recovery, the top 1 percent’s share of national net worth has grown from 27.8 percent to 32.2 percent, driven by a record-setting boom in the stock market, according to Fed data.

Trump has cited the rise in equity markets as a selling point in his campaign, which is centered on taking credit for historically low unemployment, and a tariff-heavy trade policy that he says will restore manufacturing jobs. But that has not changed the country’s wealth picture. While the share of wealth held by the bottom 50 percent of Americans has increased since the crisis, to 1.5 percent percent, longterm the trend is down, with their share at less than half what it was in 1989. The shares of wealth held by the middle and upper middle classes - or all other Americans save for the richest 1 percent – have all fallen since the crisis.

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