In Case You Missed It: July 6 - July 12

From the Expert

Joe Biden is rich, but his taxes tell us more

McCaffery weighs in on Biden’s tax returns. A surface-level reading observes that he made a lot of money writing and speaking since the Obama administration (which is admirable, given that he is known for walking around with his foot in his mouth). But that is not surprising - we would expect the same from any other vice president after their tenure. What the taxes do reveal is that his income is almost exclusively “ordinary income,” which is very unusual among the wealthy elite and very unhelpful for things like avoiding taxes. That is, Biden actually paid his taxes.

In the News

Americans slashed their charitable contributions by $54 billion after Republican tax-code overhaul

Altruism, indeed. It turns out that an increase in the Earned Income Tax Credit means a drop in people who itemize their deductions - which, in turn, means less motivation to give to charity.

Around the Web

How much would a wealth tax raise? Dueling Economists reflect new split in Democratic Party.

There is a liberal economist cat-fight out there, and if you aren’t paying attention, you are missing out; Lawrence Summers, “former treasury secretary and longtime economic guru of the democratic party,” wrote an Op-Ed questioning the estimates of what a wealth tax could raise. Part of being extremely wealthy, after all, is being able to hide your money. Emmanuel Saez and Gabriel Zucman, from UC-Berkeley, responded essentially by saying that even if it captures some of the wealth, it is worth trying and that the wealthy will not be able to hide as much as Summers thinks. Summers again responded; you can see the tl;dr in the above link and the Op-Eds are linked therein.

This discussion necessitates two considerations: first, is wealth itself what we want to be taxing; and, second, would a wealth tax actually tax that wealth? I plan to write an independent post on the first, so pay attention because that is forthcoming. To the second, we don’t really believe so.

Part of being rich is hiding wealth through anonymous trusts and shell corporations. The wealthy already do this to avoid the inheritance tax (which starts at $22M), which tries to tax the wealth of the dead but is instead known as the optional tax, so we have no reason to believe they wouldn’t do the same to avoid a wealth tax (which was proposed to start at $50M). McCaffery has written at length as to why the inheritance tax should be scrapped and how the USA is an anomaly in keeping it anyways (even Canada, ever the conservatives, repealed their inheritance tax!). The same applies here. A wealth tax would do nothing but enrich lawyers (now that’s the kind of redistribution this law student can get behind!). Instead, the government should embrace wealth and tax consumption. Every wealthy retiree understands you can’t take it with you more than you or I ever could.