Millionaires and billionaires have several options. They can:
A. Do nothing except enjoy their wealth.
B. Make an effort to position their money so that they avoid paying taxes.
C. Continue working and investing, leveraging their wealth to become even richer.
D. Sign a letter to Congress asking to pay higher taxes.
At least 17 millionaires have chosen to circle option D.
They have signed a letter, sponsored by an organization called Wealth for the Common Good, in support of a bill filed in Congress last month by U.S. Rep. Jan Schakowsky, D-Ill. The bill proposes five new federal income tax brackets with higher tax rates:
$1 million-$10 million in annual income: 45 percent
$10 million-$20 million: 46 percent
$20 million-$100 million: 47 percent
$100 million to $1 billion: 48 percent
$1 billion and up: 49 percent
Those tax rates would bring about $78 billion in new federal tax revenues.
One of the 17 millionaire signers lives in Texas. John Kortenhaus is a North Texas investment banker. For privacy reasons, he wants his exact residence undisclosed.
“The tax code is broken,” Kortenhaus said. The country is in a fiscal crisis but finds itself with tax rules that favor the wealthy, he said. Theoretically, the wealthy will create jobs and boost incomes when allowed tax breaks to invest their money, he said. “But ‘trickle down’ doesn’t work in reality.”
Kortenhaus said he would pay even less taxes under a flat tax system that some people advocate. The wealthy, he said, ought to pay progressively higher percentages of their incomes in taxes because they benefit more from national security, education and other government services than people with lower wages.
Most of the wealthy would disagree, Kortenhaus acknowledged. “There are too many people who are arrogant. They think they worked hard to get their wealth. In some cases, that is true. But many inherited their wealth or are people who have been fortunate or lucky in business or their inventions,” he said.
He cited obscenely high incomes for entertainers and athletes.
“I have trouble with people who think they are worth that much, but that’s the way the system is set up,” Kortenhaus said.
How top-heavy have the wealthy become in the United States?
A separate analysis by the Economic Policy Institute last month states that the top 5 percent of wealth holders own 63.5 percent of the country’s wealth, using 2009 figures. The bottom 80 percent hold just 12.8 percent of the country’s wealth.
Ten years ago, the argument from the George W. Bush administration was that if income taxes were going to be cut to stimulate the economy, the cuts should be for the people who pay most of the taxes, the wealthy.
If that is true, then when it becomes necessary to raise taxes at a time of frighteningly large federal debt levels, the wealthy must accept that they must shoulder most of the increase.
But Schakowsky’s bill won’t become law. Kortenhaus knows why.
“There will be no tax code reform unless there is also lobbying reform,” Kortenhaus said. “There’s too much self-interest” to do lobbying reform.