Visions of a 70% Tax Rate
The new socialists need a refresher course in government math.
How much money would the government reap from a 70% tax rate on income above $10 million? Authors Kyle Pomerleau and Huaqun Li looked at two scenarios—one if the rate applied only to ordinary income like wages and interest, and another if it also applied to income from capital gains.
The best case scenario: a 70% rate would raise less than $300 billion in revenue over 10 years, which is less than half of the $700 billion that has been cited in press reports.
.. A 70% top rate would generate even less revenue if extended to capital gains. Investors only pay when they realize gains by selling assets, and they are especially sensitive to tax rates when deciding whether to sell. High rates can leave money locked into a current asset instead of flowing to the next good idea.
.. Ms. Ocasio-Cortez won’t admit it, but she and her socialist friends will eventually have to go where the real money is: The middle class. That means higher tax rates on even modest wage earners; taxes on retirement savings like 401(k)s or college savings accounts.