The notion that the wealthy do not pay their “fair share of taxes” has been an article of faith for the Left for many decades. Based on that notion, President Joe Biden has proposed a “billionaire’s tax” to strip the rich of their wealth, not only imposing a minimum tax rate of 20% on the full income of households worth over $100 million, but the same tax rate on “unrealized” investment income — in effect, a wealth tax.
The proposed tax neglects a number of inconvenient facts.
First, according to the Tax Foundation, the rich not only pay their “fair share” of taxes, but they pay considerably more. The top 1% of income earners paid a 25.6% average tax rate, about seven times the average paid by the bottom half. The top half of all taxpayers paid 97% of income taxes, with the bottom half paying the other 3%. The U.S. tax code is already the most progressive in the world.
Second, as the National Taxpayers Union Foundation notes, a direct tax on wealth is likely unconstitutional, as it is an unapportioned direct tax.
Finally, any effort to fleece the wealthy of their riches would tend to undermine both space and environmental goals championed by the Biden administration.
Private individuals such as Elon Musk and Jeff Bezos are providing the means by which people can travel to and explore space. Musk’s SpaceX is providing rides to and from the International Space Station for both crews and cargo. SpaceX’s Starship rocket has been assigned the goal of landing America’s astronauts on the lunar surface by 2025. Bezos’s Blue Origin is due to compete for the second Human Landing System. Blue Origin is also developing the New Glenn orbital rocket that will help launch satellites and other payloads and the BA4 rocket engine that will replace Russian-made engines.
The wealth tax would also undermine Biden administration policies designed to combat climate change. The dirty little secret is that private entrepreneurs are investing in technologies that will lessen the emission of greenhouse gases.
Musk owns an electric car company called Tesla, is building solar and battery systems to supplement power grids, and is getting into the carbon capture business. Bill Gates is developing new nuclear power technology that is cheaper and safer than conventional nuclear power plants. Bezos, Gates, Richard Branson, Ray Dalio, Jack Ma, and Michael Bloomberg, billionaires all, are investors in a company called Commonwealth Fusion. Commonwealth Fusion, in partnership with the Massachusetts Institute of Technology, has recently had a breakthrough in developing a superconducting magnet that will be crucial for bringing solar power to Earth and turning it into clean, carbon-free electricity.
The Biden administration seems not to have thought things through when it ventured into “soak-the-rich” territory. The proposal is obviously a sop to Sen. Bernie Sanders, an independent from Vermont, and members of “the Squad” who have targeted wealthy, successful taxpayers as enemies of the people. However, the more money that people such as Musk, Bezos, and Gates must pay to the government, the less they will have to invest in innovative technologies that will address the problems of space travel and climate change.
The situation is a feature and not a bug to Sanders. Recently he offered a bizarre tweet: “Jeff Bezos is worth about $180 billion. If he wants to go to the moon or to Mars, hey, that’s his business — knock yourself out. But in my view, the taxpayers of this country do not need to subsidize his space travel.” Bezos, while he has taken a suborbital jaunt on his New Shepard rocket, has not to anyone’s knowledge expressed an interest in going to the moon or Mars personally. His proposed Blue Moon lunar lander would, if accepted, provide NASA with a second means of sending astronauts and cargo to the lunar surface.
On his official website on the “Green New Deal,” Sanders dismissed technologies such as nuclear power and carbon capture as “false solutions.” He seems more interested in ending the oil and gas industries than proposing real solutions to climate change, especially if they come from the hated billionaire class.
Hopefully, Congress will keep in mind the Biden wealth tax’s downsides when considering it.
Mark Whittington, who writes frequently about space and politics, has published a political study of space exploration entitled Why is It So Hard to Go Back to the Moon?, as well as The Moon, Mars and Beyond and, most recently, Why is America Going Back to the Moon? He blogs at Curmudgeons Corner.