- The US suffers from drastic wealth inequality.
- One popular solution is a wealth tax on the country’s richest citizens, much like Argentina has done.
- Their one-time 2% tax on the wealthiest citizens raised $4 billion and helped fund their COVID relief efforts.
- Morris Pearl is the Chair of the Patriotic Millionaires and a former Managing Director at BlackRock, Inc.
- This is an opinion column. The thoughts expressed are those of the author.
Lawmakers in Argentina, a country hit hard by COVID-19, recently took a bold step to respond to their country’s pandemic-fueled economic crisis: they decided to tax the rich. The United States should follow Argentina’s lead and support enacting a similar measure to support pandemic relief efforts.
Argentina’s bold step
On December 4, Argentina’s Senate passed a one-time, 2% tax on all wealth of individuals over 200 million Argentine pesos, or about $2.4 million. This “millionaires tax” is expected to raise nearly $4 billion in federal revenue to help offset the cost of COVID relief, while in the process shrinking a wealth gap that has only grown amidst the COVID crisis.
Argentina may be the first country to pass a measure like this in response to the global pandemic, but it shouldn’t be the last. This kind of legislation should be a no-brainer for American lawmakers looking for ways to save the American economy. Because despite a booming stock market, the economy that most Americans live in desperately needs saving.
America’s growing inequality chasm
The US is facing a level of inequality that is destabilizing our country. Nearly 27 million American adults report that their household sometimes doesn’t have enough to eat. Between 7 to 13 million children sometimes don’t get enough to eat. Over 12 million renters are behind on rent. Almost 85 million Americans, one in every three adults in this country, report that it is difficult for their household to cover their living expenses in the last seven days. There are still more than 10 million unemployed workers in America, not even counting people who have dropped out of the labor force entirely.
We are living in the midst of an economic crisis of biblical proportions, and the federal government, blocked by a Republican Senate that refuses to provide adequate aid, has only passed compromise, not-nearly-enough relief bills since March.
Meanwhile, the rich are doing better than ever. The stock market has already surpassed its pre-COVID peak, leaving many millionaire investors like myself even richer than we were before the pandemic started. At the very tip-top of the ladder, things are even more profitable. Billionaire wealth in America has increased by nearly $1 trillion since March, with no sign of this absurd rate of growth slowing down.
This is the state of our economy: the rich are richer than they’ve ever been, and everyone else is struggling. It doesn’t take a PhD in economics to see how we fix this. Tax the rich, and offer support to everyone else.
It’s about equity, not funding
It’s important to point out that we don’t need to tax the rich to spend more money on economic relief. The US government issues US dollars, and we are far away from the point at which additional government spending would lead to out-of-control inflation. I am not convinced that we should be worried about the federal deficit at all when it comes to responding to a crisis of this magnitude.
But a large part of the reason the Republican Senate majority continued to block COVID relief bills is because they claim they don’t want to add too much to the national debt (which is rich given the $2 trillion in tax cuts they handed to millionaires and corporations in 2017). Taxing the wealth of the rich, or even taxing only the increase in wealth that the rich have seen this year, as Sen. Bernie Sanders proposes, provides a simple way to address those concerns while only asking more from those who can most afford it.
Speaking as a millionaire, I know that I and my peers can afford to pay more in taxes. We should be expected to do more to support the country that helped make us rich in the first place, especially in this moment.
We’ve asked so many Americans, from medical workers to retail workers to business owners, to sacrifice this year for the sake of others – it’s only right that those of us with so much more to give be asked to do the same. If Argentina can do it, why can’t the United States?