Columnist Veronique de Rugy has advised us that wealth taxes won’t work because wealth inequality is exaggerated; the revenue gains are overestimated; and more taxes would simply cause revenue losses.
Her suggestion that wealth taxes are employed in relatively few nations today is true; but we must take into account that harboring the highest level of income inequality and the third highest level of poverty among industrialized nations could suggest alternatives.
If we were to search for better outcomes, we would find both a low rate of income inequality and the highest rate of upward mobility among industrialized nations in Denmark – one of those nations where people are also happier. Poverty does exist, but at a far lower rate than in the United States. Denmark’s poverty rate is 6.1 percent, the second lowest of the 37 OECD nations, while in the United States it is 17.8 percent, the third highest.
Denmark may be going too far for many of us, but their outcomes could point us in the right direction. Concerning taxes, many of us might not care to pay more for good reason. Today’s millennial is 41 percent less wealthy than he would have been in 1989. Fewer are marrying and starting families, and the U.K.’s Guardian has suggested that our “new world fairytale” may be over. “Want to get ahead? Move to Denmark,” they advised. They also suggested, “Europeans now have more opportunity to improve their lot.” And that’s true, too.
So who might pay more? Total U.S. tax revenues are relatively low. We collect 24 percent of our GDP as opposed to a 34 percent average among the 37 OECD nations. So might the wealthiest among us possibly accept rates closer to the ones we’ve experienced during our nation’s more prosperous years?
And what about that corporate rate? The OECD average is 27.7 percent. Our rate is currently 21 percent. President Biden wants 28 percent, which would easily factor down to the international average or below. With the deductions available, many of our corporations pay little or nothing today.
We might also consider taxing goods and services at higher levels, as nearly every other industrialized nation does; but as long as we maintain our current level of income inequality, that would stress the less fortunate among us disproportionately. We’ve suffered a pandemic; our infrastructure is in dire need, and our debt is now larger than our GDP. Wherever we get the money, we clearly need it. So even if revenue gains could be overestimated, we might give it a shot.