James Cross
Taxes are a contentious issue in America. The older generation and Conservatives want to pay less taxes, and Democrats and the younger generation want the right people to pay more taxes. The question of where taxes are going is always an interesting debate, of course, but at the end of the day, it comes down to the nickels and dimes that are being taken out of every American paycheck.
Strong Opinions About Taxes
The youngest generation of voters, in particular, have strong opinions about taxes, and wealth. The wealth gap in America is vast, and Gen Z have grown a chip on their shoulder around the super-wealthy, believing that millionaires and billionaires aren’t contributing their fair share of taxes to the government.
This has led to a movement online calling for accountability in financing on the part of the government. The “Eat the Rich” movement in particular has called for the abolishment of all billionaires; Gen Z believes that there’s no such thing as an ethical billionaire, given that the accumulation of that amount of wealth is often predicated on taking advantage of others.
Billionaires Take Advantage
Those who believe in abolishing billionaires point to modern examples such as Jeff Bezos, the Walton family, and the Disney family. These billionaires have predicated their wealth and companies on taking advantage of their workers, paying subpar wages and providing little benefits in order to swell corporate profits.
It is this pattern of corporate greed that Gen Z has a problem with. In their eyes, anyone who would choose profit over humanity doesn’t deserve the wealth that they have, and many believe in a system that would allow for the reallocation of wealth from those who are hoarding money to those who have far less than they need to survive.
A Heavy Tax Burden on the Middle Class
Changes in the tax code in recent years has done nothing to soften Gen Z’s and younger Millennials’ opinions regarding wealth. The 2017 Tax and Jobs Act, signed into law by former President Donald Trump, offered corporations and the wealthy significant tax cuts, without providing an alternate income for the lack of tax revenue.
This means that a more substantial portion of the American tax burden has fallen on the middle and lower classes. Particularly this year, everyday Americans noticed a significant increase in their tax bill, as the cuts that were signed into law in 2017 started to taper off. Americans who were expecting a refund found themselves owing the government for their increased taxes, and many people were deeply unhappy with the revelation.
Biden’s Platform on Wealth
This is an issue that President Biden has made a significant part of his platform, both in 2020 and this year. A significant portion of Biden’s voter base is the younger generations, and appealing to their sense of fiscal justice is one of the ways that Biden won their vote in the first place.
It’s a tactic that he appears to be trying to use again. During his State of the Union address, Biden commented on the issue of billionaires and taxation. “There are 1,000 billionaires in America,” he said. “Do you know what the average federal tax is for those billionaires? No? They’re making great sacrifices – 8.2%. That’s far less than the vast majority of Americans pay.”
Proposing a Minimum Billionaire Tax
This statistic, while horrifying, has an obvious solution, which Biden has proposed. “No billionaire should pay a lower federal tax rate than a teacher or sanitation worker or a nurse,” he said. “I propose a minimum tax for billionaires of 25%.”
The idea of taxing millionaires and billionaires is not new in America. In fact, it was a significant part of Elizabeth Warren’s campaign when she ran for president in 2020. The Ultra-Millionaire tax, as it’s known, would place a 2% tax on any wealth more than $50 million, and a 6% tax rate on wealth greater than $1 billion.
Raising Taxes Isn’t a Popular Idea
This is a bill that has been proposed in the Senate multiple times over the last several years, and it’s died on the cutting room floor every time. Raising taxes, even on individuals with more than enough wealth to pay them, simply isn’t a popular idea.
However, that hasn’t stopped Biden from raising the issue again. He believes that his proposed tax hike on billionaires would raise $500 billion in tax revenue over the next 10 years, and the proposal was met with a standing ovation of some audience members during his address.
Kevin O’Leary is Unimpressed
Others were less than impressed with the idea, though. Kevin O’Leary, the star of Shark Tank, was one such individual. In a recent interview with the Daily Mail, O’Leary was adamant that Biden’s wealth tax will “never happen.”
O’Leary has been clear in the past about his opinion on wealth taxes: he doesn’t like them. He doesn’t see them as successful strategies to raise revenue, and in his interview, he pointed to wealth tax failures in other countries as an example.
Wealth Taxes Have Been Tried in Other Countries
“The problem with wealth taxes is they’ve been tried,” he said. “They’ve been tried in Britain and in France, and it doesn’t work. People just leave. Now, these people pay 46 percent of taxes, so you’ve got to be careful. You don’t want them leaving the country.”
This comment is in reference to a recent statistic that was listed in a report by the national Taxpayers Union Foundation. This statistic suggested that the top 1% of earners in America paid 46% of all income taxes in the country for the tax year 2021.
Good Campaign Rhetoric, Very Little Substance
When referring to Biden’s comments on wealth in his State of the Union address, O’Leary added, “None of this stuff is ever going to become law, and everybody knows that. But it’s great campaign rhetoric. There was not a whole lot in terms of substance.”
He was clear that he wasn’t criticizing, though. “I’m not being critical, I’m just saying he did the right thing: rallied the troops by bringing out the themes like ‘tax the rich,’ which worked for him last time.”
Inflation as a Barrier to Reelection
Despite the fact that O’Leary thinks that Biden’s campaign rhetoric is good, he also believes that there is a major barrier to the president’s reelection, one that is largely out of his control: inflation.
Inflation is always the enemy of the incumbent. It doesn’t matter who you are in the white house when there’s inflation,” he explained. “People go to the voting booth remembering what it cost for them for their cornflakes and milk in the morning, and what it cost to fill up the car to drive there.”
Americans Voting With Their Wallets
And unfortunately for Biden, O’Leary is right. When polled, a significant majority of Americans point to inflation as their number one concern ahead of the 2024 election. Biden’s approval rating has taken a significant hit in the last year, and inflation and the economy are an important reason why.
This low approval rating is at odds with the reality of the economy, though. While inflation is higher than the Fed would currently like to see, it’s significantly lower than it was for the entirety of 2022, and by all measurable metrics – unemployment, wage increases, etc. – the economy is doing very well.
People Are Feeling the Squeeze
Unfortunately, people’s feelings very often are not reflective of reality. And Americans are feeling the pinch of the economy, and inflation. Many people blame the president for wages not increasing fast enough and for inflation not coming down fast enough, though there’s objectively very little that Biden can do to affect these things.
This is why, in O’Leary’s eyes, Biden has to rely on rhetoric like “tax the rich” in order to appeal to his voting base. Inflation is poison to any presidential campaign, and Biden is slowly feeling the burn of an economic situation that is out of his control. Appealing to the younger generation with rhetoric around taxing the wealthy is a good way to get them on his side again.
A Wealth Tax is Unlikely To Pass
Unfortunately for Biden, O’Leary is correct, in that it’s unlikely that any sort of substantial wealth tax will pass in the current political climate. A heavily divided Congress is a significant barrier to any sort of tax reform, no matter how often and how strongly Biden advocates for it.
If the Democrats can win more seats in the House and Senate, as well as keeping the White House this fall, a different situation may slowly develop. For now, though, Biden is relying on promises of future changes to appeal to his voters. Whether or not the strategy will work remains to be seen.
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