Why raising taxes is good

If you favor driving the country deeper into debt, that's a sure-fire way to do it. The numbers also show that imposing a small tax increase on the 1. Supercommittee members are unlikely to let such data points intrude on their talking points, of course. But like most Americans, I wish they would. Please enter email address to continue. Please enter valid email address to continue. Facebook Twitter Instagram. Tax Policy. What this Means:.

Swensen and Krishna Regmi. Written by The EconoFact Network. To contact with any questions or comments, please email [email protected]. To learn more or opt-out, read our Cookie Policy. Whether the government should tax rich people more to pay for spending priorities is a source of endless debate.

The White House and many Democrats in Congress are wondering how and whether to pay for it. Some are pushing to increase taxes on the wealthy and corporations, arguing that they at least need to raise some revenue if they want to send so much money out the door.

They have disproportionately reaped the benefits of economic growth and the stock market in recent years, contributing to increasing inequality in the United States. The divide has become even more obvious during the Covid pandemic , during which billionaires have managed to add heaps of dollars to their wealth even as millions of people were knocked on their heels.

Some ultra-rich people in the US keep getting richer no matter how much of their money they give away. They literally cannot stop adding to their coffers.

So why not take a few chips away? Sign up to receive our newsletter each Friday. Rich people have done very well in the economy in recent decades. According to the Congressional Budget Office , the share of before-tax income captured by the richest 20 percent of households increased from 46 percent in to 54 percent in For the top 1 percent, income share went from 9 percent to 16 percent — more than the entire income brought in by the bottom 40 percent of households. The tax cut bill disproportionately benefited rich people and corporations.

During the pandemic, many high-income Americans say that their financial situation has improved over the past year. They saved money they would have ordinarily spent on vacations and going out to eat, and as the stock market soared, so did their net worth. The wealthy are simply the group best able to afford to pay higher taxes. The US tax code is already somewhat progressive, though several other rich countries have significantly higher top income tax rates , and the top income tax rate in the US used to be much higher, too.

Still, there are plenty of ways that the wealthy use the tax code to their advantage — an advantage the White House is seeking to cut off. As it stands currently, long-term capital gains on investments such as stocks are taxed at a lower rate than income.