The richest states in the US tax millionaires to finance social services

Each and every Republican president of the last half century, starting with Ronald Reagan, have stormed the White House with major tax cuts and trade conflicts, with tariff increases. On some occasions, like that of the former Hollywood actor turned ultra-defender of liberalism, with a certain success of prosperity brought about more by the geopolitical, economic and financial deterioration of the former Soviet bloc than by liberalizing merits. In the majority, however, the tax reduction has not prevented periods of economic recession, such as during the mandate of George Bush Sr., in the double presidency of George W. Bush son, or Donald Trump.

But the neoliberal doctrine is stubborn and does not address issues that are covered under the derogatory term of capitalism wokewith which they identify progressive positions to advance civil rights, social justice or the fight against climate change and with which they intend to counteract criticism for their fallacies (fakes) both political, economic, social or media. The more than presumed candidacy of the former president donald trumpdespite its 91 accusations in various states of the country (the majority for inciting suspicion of electoral fraud in his defeat against Joe Biden in 2020) leaves no room for doubt.

Inflation will be the throwing weapon of the Grand Old Party (GOP) under the domination of the trumpismbut tax cuts will feature prominently in its strategy to Make America Great Again (its famous MAGA, according to its acronym in English). Despite the fact that its double tax reduction in 2017 included in the Tax Cut and Jobs Act drained the Treasury coffers and made difficult the financial framework of the successive stimulus plans for homes and companies during the health crisis, the Republicans have already insisted that their tax dogma will extend beyond 2025 the effects of the tax liberalization decreed in the first year of the Trump’s mandate and which, with complete certainty, will be followed by new fiscal relaxations.

However, the stubborn liberal recipes of right-wing national-populism could receive a severe setback. Even in the US.
Up to half a dozen North American states, all with medium and high incomes such as Maine, Massachusetts, California, Connecticut, New York and New Jersey, have a specific tax aimed at their large millionaire fortunes with which to pay for social services. Also Washington DC. And they could soon be joined by Vermont, the senator’s homeland. Bernie Sanders (perhaps the voice that has contributed most to raising the sensitivity of the Democratic Party to postulates closer to correcting inequalities between rich and poor).

Income destined for education and transportation

In Massachusetts, the last of the states that has increased the tax burden on its millionaires, the collection from this tax figure has served to add more than 1,000 million dollars to the state budget in 2023 and, more specifically, to provide for its students of public schools with free menu and breakfast. The applicable rate is 4% for all residents who earn more than 1 million dollars annually. Almost half of these resources were allocated to the area of ​​education, while the rest was mainly injected into the modernization of its transportation network, especially in Boston, its capital, he highlights. Business Insider.

Vermont legislators aim to emulate that of their southern neighbor. Its legislators have chosen a variant: establish a 3% tax, but on income greater than $500,000 annually. With the intention that it come into force in the fiscal year of 2024, with readjustments each year with inflationary evolution. Emilie Kornheiserits representative in the state house for the Democratic formation and promoter of the proposal, expressed his pride in “the growth of a movement that works to reduce the wealth gap” in the United States and for the contribution of this initiative to the creation of a “fairer and more equal” tax system.

Fair Share for Vermonta support group for the initiative, told ABC News that the measure was going to generate almost 100 million additional annual income to the state accounts.

This succession of reforms, all in territories with a tradition of Democratic voting, fit like a glove to several of the president’s tax approaches. Joe Biden that have been left out by the Republican majority in the House of Representatives: for example, his February 2023 proposal that the Capitol impose a 25% minimum on households with net wealth above $100 million ; or the fiscal tightening contained in the 2024 budget plan to increase the tax burden on high-income residents; or the establishment of a minimum tax of 15% on the profits of companies that invoice more than 1,000 million dollars, which was introduced in the Inflation Reduction Act (IRA), in force for a year, and which is considered to be the most emblematic law of his mandate.

Is it time to tax billionaires? In Financial Times They respond affirmatively. Not only for him affair Elon Musk and the annulment, by a Delaware court (a state that is considered a tax haven due to its low taxation) of the 55.8 billion dollars that he had managed to accumulate to his personal fortune from his automobile emporium, Tesla, as a reward for his advice. of administration.

The British newspaper questions the extent to which someone needs to be rich and whether governments should increase tax obligations on them. Despite the fierce opposition of a large part of the wealthy classes, from businessmen to bankers or even owners of SMEs. Thomas Pikettythe famous French economist, proposes that assets exceeding 2,000 million dollars be taxed at 90%, recalls the FT (Magazine Forbes identified last year more than 2,640 billionaires in the world). Perhaps Musk would like to use those 55.8 billion to overcome the historic barrier of 200 billion personal fortune, emphasizes the FTan amount similar to Hungary’s GDP.

Initiative to create a global wealth tax

In Europe, the EU Fiscal Observatory estimates that raising the tax pressure on large assets by two points would increase common resources between the countries by $42 billion. 499 billionaires declared. Although its experts detect drawbacks in countries like the United States, whose jurisdiction, like other international jurisdictions, including tax havens, are the subject of analysis because its Supreme Court could declare a specific tax for the rich unconstitutional.

Even so, several states, such as California, the one with the highest fiscal pressure, raise this rate to 50% due to the capacity they have to raise sections in their territories, from the federal ceiling of 37%; no less than 13 additional points to its residents with more than 1 million earnings in 2023. It is followed by Hawaiiwhich taxes the personal income of millionaires with up to 11 points in married couples with separate declarations with more than $200,000 in taxable income, in households with joint personal income tax exceeding $300,000, or in individual income with more than $400,000.

The EU Fiscal Observatory argues that a proposal like Biden’s in the G20 similar to that imposed on large companies (a minimum tax of 15% of their profits) would combat evasion and increase the income of global tax coffers by 250 billion dollars; According to a study by the Paris School of Economics, this would represent less than 2% of the almost 13 trillion of patrimonial wealth held by the 2,700 largest fortunes on the planet.

To make matters worse, the report Global Evasion 2024 The European research center estimates that billionaires currently pay significantly less than other groups of taxpayers (in the US, 0.5% of personal income tax collection, and in France, a percentage close to zero). Biden’s idea was to tax the richest 0.01% of the US with a minimum of 25%.

“Governments must open an international front to promote a global tax agreement on the taxation of the rich,” warn the authors of the report.

Proud to Pay More It is the movement of thousands of large fortunes who declare themselves patriotic millionaires and who claim to be willing to “happily” pay a 2% rate on their wealth as proposed by the European observatory.

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