Wealth tax: Why one millionaire thinks it's necessary
This post was originally published on Yahoo Finance.
Numerous high-net-worth individuals have spoken out against presidential candidate Sen. Elizabeth Warren (D-MA)’s Ultra-Millionaire Tax. But there is one millionaire who believes that a wealth tax is the key for the country to prosper.
Morris Pearl, former managing director at BlackRock and the current chair of the Patriotic Millionaires, explained why a wealth tax is needed.
“I think the point is the unfairness of the existing system,” Pearl told Yahoo Finance’s The Final Round. “We’re not here to advocate for spending more money for schools or whatever. We’re here to talk about how the rich are getting richer and everyone else is just staying the same. And people are not accepting that anymore.”
Warren’s Ultra-Millionaire Tax has been one of the main points of her campaign. Her plan would impose an annual tax of 2% on every dollar a household has above $50 million, which increases to 6% for households with more than $1 billion.
“Understand this: You built a great fortune here in America. I guarantee you built it at least in part using workers all of us helped pay to educate,” Warren said during a recent campaign event. “All we’re saying is if you make it big, I mean really big, I mean top 1/10th of 1% big, pitch in two cents so everybody else gets a chance at this.”
‘The rich are getting richer and richer and richer’
Despite the fact that Pearl is considered a millionaire, he is still in favor of paying more if it means others pay less.
“Middle class people have been paying a wealth tax on their wealth, their homes, every year for generations,” he said. “And it’s about time for the wealthy people to pay a wealth tax too.”
He added: “People said the current system is not working for us. We need a different system. Turned out they got a different system that’s making the inequality even worse, not better. But I think what people are looking at is the fact that the rich are getting richer and richer and richer. I make more money in my investments not working than I ever made when I worked for a living. And it’s not right.”
Two different polls have found that a majority of Americans support taxing the rich more.
However, not everyone is on board. Billionaires who would be forced to pay this wealth tax, such as Leon Cooperman, Bill Gates, and Jamie Dimon, have all voiced their displeasure at the idea of it.
“The kind of taxes that Ms. Warren is talking about will never make a billionaire a non-billionaire, because their wealth increases faster than it’s taxed away,” Pearl said.
‘We’re going to see a breakdown in civil society’
Still, the richest Americans have paid quite a lot in taxes in recent years. Yahoo Finance previously reported how the top 10% of incomes paid 70% of all income taxes in 2016 and the top 1% paid more than 35%.
“We do value people’s wealth when we do estate taxes,” Pearl said. “And I think if you look at somebody like Warren Buffett who came up with the Buffett rule, he was saying he only pays a few million dollars a year on his $12 million income. He has $12 million of taxable income — it’s nothing compared with the several billion dollars a year that his wealth increases every year.”
Buffett is one billionaire who has voiced support for a wealth tax, at least in the past.
“My friends and I have been coddled long enough by a billionaire-friendly Congress,” he wrote in a 2011 op-ed for the New York Times. “It’s time for our government to get serious about shared sacrifice.”
Until the issue of economic inequality is settled in the U.S., Pearl will remain worried for what lies ahead for society.
“I was in Athens, Greece. The beginning of democracy was there,” Pearl said. “And I saw social unrest. I saw people rioting in the streets. And that was a new thing… and I’m afraid of getting to the point where people are not just voting, but they’re marching with pitchforks or whatever. And we’re going to see a breakdown in civil society. I’m actually afraid of where our country is going.”
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