Taxes Are Due Soon. Should the Rich Pay More?

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It's a call that's become increasingly popular, from New York City to London.

Taxis are due next Wednesday in the US, and while you put those finishing touches on your filing,

many states are weighing what the future of taxes might look like for the country's wealthiest.

California is weighing a ballot initiative to impose a one-time well-tax on residents worth

$1.1 billion or more. Massachusetts Senator Elizabeth Warren and Vermont Senator Bernie Sanders

are pushing for new taxes on ultra-millionaires and billionaires at the federal level.

A New York City mayor is around Mamdani, one on a promise to tax the wealthy too.

And ultimately the reason I want to increase these taxes on the top 1%

of the most profitable corporations is to increase quality of life for everyone.

But the battle over weather and how to do this is pretty heated.

Some of the people who'd be impacted argue that more taxes will stifle innovation,

that they'll be forced to move. New Yorkers are going to flee.

They're going to flee New York because of Zorod Mamdani.

California's ultra-rich are threatening to leave the state over a proposed billionaire tax.

This debate gets incredibly emotional and incredibly quickly.

London-based Bloomberg reporter Charlie Wells has been covering the worldwide movement

to tax the rich from across the Atlantic, where European countries, from the UK to France,

have been weighing similar proposals too.

I always kind of think taxes are supposed to be boring, right?

Like it's just policy, but this speaks to how money really is a representation of power.

So at a time when the US government has cut taxes on the nation's highest earners,

what's the state of the push to do the opposite?

And how have past governments attempts to do this succeeded or failed?

I'm Sarah Holder and this is the big tick from Bloomberg News.

Today on the show, we unpack the growing, hotly debated push to tax the rich more.

How could it work? Where has it happened before?

And we take a closer look at New York City, where Mayor Mamdani is fighting an uphill battle

to tax the wealthy and pay for his campaign promises.

Charlie, when we hear calls to tax the rich, there are a few ways we can interpret that, right?

Let's just start by defining those. Aren't the rich already taxed?

If I were going to give people one takeaway in this whole debate about wealth taxes,

about policy changes, it's to just remember that there are roughly three different ways

that governments throughout time have taxed people, right?

So it's been on wealth, which is kind of what's in the news.

It's been on income and then it's been on consumption.

Income taxes, like the kind that come out of your paycheck,

and consumption taxes, like sales taxes, have their limitations.

They collect levies on salaries, shopping or dining,

but not on accumulated wealth, like people's assets.

What wealth tax advocates are saying is, hey, look,

you know, income tax policy really isn't working.

We need to tax the value of the assets that these people hold beyond income, right?

wealthy people don't always make their money from traditional salaries.

They may hold stocks, which can appreciate in value over time,

or they may hold on to physical assets, which are typically only taxed when they're sold.

And so valuing the properties, maybe giving a break for a primary residence,

but looking at secondary, tertiary, and beyond.

Residences looking at financial assets, looking at art, looking at wine collections,

and then taxing that.

The idea is to tax the value of these assets, because those assets,

financial or otherwise, are what can really help wealthy individuals get wealthier.

These super wealthy people are basically able to say, you know what,

I've got all these assets, I'm going to borrow against them for a really long time,

so I'm not going to bring in a big income.

I'm going to borrow against these assets that I have,

keep my tax right low and then just pass those on to my heirs for many generations.

That's contributed to a wealth gap between the richest people and everyone else.

A gap that in the US is only growing.

So this group of economists at Berkeley took a look at the cumulative assets of the 400 richest

American households in the United States.

And in 1982, those families are,

cumulative assets made up 2% of GDP.

Now it's 20%.

Wow.

So you see this, you see this big increase, right?

400 of the richest families.

Those families over that time, they've had an increase in wealth of about 7.5% a year.

You think about income growth for the average American.

1.5% a year.

So that's a part of it, right?

It's this kind of growth in inequality, right?

A small number of people holding this big amount of assets.

As inequality widens, there's been a debate over how and whether the government

should be capturing more of that wealth through taxation.

So this group of economists at Berkeley, the same group,

they looked at effective tax rates, right?

So the amount of tax that these really wealthy people pay,

and what they found is that the effective tax of the top 100 households in the United States

was about 22% on average.

Compare that even to the top tax rate for people in the top income bracket, right?

So someone who might be making like $500,000 a year, they're working at a bank,

they're working incredibly hard, their tax rate is 45%.

Right?

So these incredibly wealthy people, 22%, people who are working a lot,

who are getting their money through income, 45%.

And then for the entire population on average, it's about 30%.

It's a pretty stark divide, and that imbalance exists in other countries too.

So increasingly, around the world, there's been momentum around designing tax policy to account

not only for income, but for assets.

Norway, Switzerland, and Spain, all levy taxes on citizens whose wealth is valued over a certain

threshold. Some have done it for centuries. The Netherlands has its own levy,

that effectively works as a wealth tax. The US has never had a federal wealth tax,

but at the local level, lawmakers across the country have been pushing for them.

And so there have been a number of proposals in Europe in the United States and a number of states

that say, hey, look, let's take the value of wealth. Tax at, you know, at a low percentage point,

say 2%, you've had calls for a global tax. This is from Gabrielle Zuckman, the French economist saying

we need a global 2% tax on wealth, not just income. We also have a call in California that's been

really getting a lot of attention. This ballot initiative for a one time 5% levy on assets of

residents of California who have a net worth of 1.1 billion or more. So this push to look not just

at income, but to look at assets. What are the goals of lawmakers and advocates who back these

kinds of taxes? Is it only about raising revenue? There are pressures that governments across

the world face, growth has slowed, interest rates are higher. We have populations living longer.

There's a lot of pressure on government budgets. I would say based on my reporting, that is the

the number one aim is to close gaps. There also is this issue of perception and a lot of the

policy experts I talked to said that if you have this widespread sense of unfairness in a system,

there is a need in some way to rectify it or at least make people feel like it's being addressed.

Charlie says part of the reason some US states are so motivated to increase taxes on rich

Americans is to offset recent federal tax cuts benefiting higher income earners that were extended

and expanded last year. But actually implementing a wealth tax is easier said than done.

France actually used to have a wealth tax. In the 1990s, so did about a dozen other countries.

Over time, many of them were phased out. Because they just didn't bring in the sort of revenue

that advocates hoped. And you know, one business school professor told me basically, you know what,

both sides here tend to overestimate the efficacy or the danger of wealth taxes.

You know, they never bring in a huge amount of revenue. The percentage that they take is usually,

you know, between one percent to about three percent. There's sort of a substitute for other taxes

that maybe some of these countries don't have. There are also challenges when it comes to calculating

them. There were administrative issues, right? So if you think about what a wealth tax is,

you're tallying up the value of all the stuff that someone owns every year and then figuring out

how much you're going to tax on that. Like that is a really big administrative challenge.

And so it can sound really simple to say, oh, okay, all we got to do is 2% wealth tax around the

world done. Making that happen is hard. It's expensive. But the other big problem is rich people

tend to hate them. One of the most experienced tax advisors I spoke with who helps wealthy people

with their tax planning. What she said to me was rich people have a lot of resources to lobby

against the sort of thing. That's what happened in the UK. Britain is a really interesting case

because it's a lot. It's sort of between Europe and the United States. So like the United States,

it has never had a full on wealth tax. But it faces similar pressures that a lot of advanced

economies have, that issue of slowing growth, that issue of a consumer under strain, that issue

of inequality. And over the past two years roughly, since the labor government has come into power,

there has been pressure on the government in the United Kingdom, at least in the labor party,

from the left flank of that party, to bring in something like a wealth tax. And that kind of mirrored

some policy discussions that we were also seeing in France. But in both countries, these policies

at least right now, from the parties in power have not come into place. And I think that's because

there was a lot of debate. There were a lot of threats from incredibly wealthy people to leave.

And I think the threat of departures has been very, very real and very, very live in the UK.

As you saw, a lot of wealthy people either go to lower tax jurisdictions or threaten to go. And I

think that really scared the government. Charlie, how often do people actually leave? What is the

data say about how these measures have played out over time? A lot of these policies have not really

been in place for really long enough to see what would actually happen. And I think that's in a

lot of ways why a wealth tax in the modern era is such an experiment. And so there's some numbers

coming out of Massachusetts, where you didn't have a wealth tax, but you saw this 4% surcharge on

people from 2023 who had an income of over a million dollars. And what you saw was a big amount

of assets leaving, but also a big amount of revenue coming in. Residents exiting Massachusetts

took a net $4.2 billion in adjusted gross income with them in 2023. But then again, you can make

another story here when you look at the Massachusetts government brought in more than $6 billion in

revenue from this policy. And so it's easy to kind of slice and dice. I think another thing is people

are always coming and going, right? wealthy people are very mobile. There's also a lot of entries.

There's a lot of re entries. It's really easy to hear one number and think that the sky is falling,

but look at the other numbers, right? And I think we need that data over time. We don't have it yet.

After the break, we zoom in on one of the closest watch battles over a plan to raise taxes on

high earners, playing out in the richest city in the country. I'm Iris Palmer and my new

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I think we need to increase taxes on the top one percent by two percent. Why we need to raise the

state's top corporate tax rate to match that of New Jersey and in doing so this would raise

nine billion dollars. New York City Mayor Zoraan Mamdani was elected on a progressive platform

that he pledged to pay for with higher taxes on higher earners and big corporations.

But instead of pushing a well tax proposal like in Spain or California,

trying to levy taxes on the wealth that lives in yachts or fine wine, Mamdani is focusing on

boosting taxes on wealthier New Yorkers income. The plan has a lot of people riled up. I would hazard

a guess that part of the reason this is getting so much attention is because of the mayor himself.

Bloomberg reporter Laura Namias covers New York State and City politics.

Attracts incredible amount of attention, both good and bad. And so this idea is drawing

even more criticism than it usually has. Mamdani has proposed raising corporate taxes and

increasing the tax rate on New Yorkers who make over a million dollars a year. And since he can't

raise income or corporate taxes himself at the city level, he needs the state to act. That's

proving difficult. Previous millionaire tax income hikes have been proposed in response to

economic downturns or like huge economic problems after the the Great Recession amid the COVID pandemic.

Those were the times when there was the most political support and Albany for raising

the taxes and were not technically in a downturn. So there's some concern about using this lever

at a moment when it's not like of maximum importance. Or is this the pole lever in case of

emergency or should we just pull it whenever we feel like it? Mamdani is facing pushback from Albany

right now. Where New York governor Kathy Hocal has resisted boosting the tax rate at all.

The back and forth is an example of the political challenges that proposals to fund progressive

measures with taxes on the wealthy can face. Mayor Mamdani was elected on this platform of providing

a couple of really bold campaign promises that were pretty expansive. Now he has said that he would

take whatever money he could get to fund the programs. But after his election and this year,

he announced that the city was facing a massive budget deficit. So he is agitating heavily for

tax increases at the state level. Mamdani has also offered a counter proposal,

something he does have control over as mayor. Raising property taxes across the board.

Faced with no other choice, the city would have to exercise the only revenue lever

fully within our own control. We would have to raise property taxes. That would require city

council approval. So far Mamdani's hardball at both the city and state level has hit political

roadblocks. Hocal has continued to reiterate that she doesn't want to increase income taxes.

Here she is speaking at a political summit in March. What I want to make sure we are smart about

is having a system in place where it's not just taxing for the sake of taxing

and being conscious of the fact that I need people who are high net worth to support the generous

social programs that we want to have in our state. She's facing a re-election fight in November

in a state that is not as blue as New York City is. Without her approval, it's very unlikely

that a tax increase could go through. I mean, New York state has raised income taxes repeatedly.

It's not a totally out there idea at all and it pulls incredibly well. There's like more than

a simple majority support for raising income taxes on millionaires and that's not like a new

phenomenon either for years and years. I think that that has been the case in New York. People

support the idea of taxing the rich. It's just that there are a lot of taxes already. I mean,

from Mamdani's perspective, why focus on increasing income tax? We've seen other proposals that

are focused on taxing wealth. I think he's not opposed to wealth taxes. It's just incredibly

difficult to do in practice. Income taxes work in New York. It yields a tremendous amount of

revenue. It's easier to catch. The state tax department is notorious or lauded depending

on where you're coming from for their ability to track people and track their residency and

make sure that people are paying. But a wealth tax is just very difficult to do on a state level.

Well, one of the concerns that often comes up around these local or state level wealth tax

proposals is that businesses or wealthy individuals will just leave rather than pay,

which could lead to further economic strains. How is that dynamic potentially different in a city

like New York, which has all of these other reasons that people move here and want to stay?

The data actually shows that it's inconclusive. The last time that New York raised taxes on

millionaires, it did not appear to lead to an exodus of rich people out of the state. The kind of

people who can afford to live anywhere. It doesn't, they're not that sensitive to changes in income

taxes. The data suggests more that people are leaving from more middle income brackets than from

the very top and that that is potentially likely because of housing prices, which is just another

one of these cost pressures that people face. But what some detractors would say and groups like

the citizen budget commission, which is sort of this non-partisan budget watchdog that also

opposes increasing income taxes, they would say that New York's share of the number of millionaires

in the country has shrunk compared to other states. New York state is so reliant on the income

taxes from incredibly wealthy people that if a few people leave who are extraordinarily wealthy,

that could have an impact on the state's bottom line and they use that revenue to fund things that

are just sort of baseline expenses like Medicaid and school funding.

New York City has a deadline of June 30th to adopt a balanced budget.

New York state's deadline was April 1st. They've blown past that, but the budget is expected to

be done in the coming weeks. And regardless of where they land on Mamdani's hoped for tax changes

and how other proposals across the country shake out, Bloomberg's Charlie Wells reminds us that in

the US and in the UK, even the concept of income taxes for anyone was an experiment once upon a time.

There was incredible debate on whether or not it was even appropriate to tax income.

There were a lot of concerns that the government asking people how much money they made

was this huge invasion of privacy. There were kind of national debates about this. So this incredible

kind of push pull for something that now feels very normal. It feels very not controversial.

There's a world where the changes that we're seeing in the economy, the changes that we're seeing

in tax policy kind of have that kind of influence on a wealth tax.

Thanks for listening. We'll be back tomorrow.

Hey there folks, Amy Robock and TJ Holmes here.

And we know there is a lot of news coming at you these days from the war with Iran to the ongoing

Epstein fallout government shutdowns, high profile trials, and what the hell is that

Blake lily thing about anyway. We are on it every day all day.

Follow us, Amy and TJ for news updates throughout the day.

Listen to Amy and TJ on the iHeart Radio app Apple podcasts or wherever you listen to podcasts.

I'm Anna Navarro and on my new podcast, Bleep with Anna Navarro. I'm talking to the people closest

to the biggest issues happening in your community and around the world because I know deep down

inside right now we are all cursing and asking what the bleep is going on. Every week I'm breaking

down the biggest issues happening in our communities and around the world. I'm talking to people

like Julie Kay Brown who broke the explosive story on Jeffrey Epstein in 2018.

They just this apartment through we counted four presidential administrations failed these

victims. Listen to Bleep with Anna Navarro on the iHeart Radio app Apple podcasts or wherever you

get your podcasts. Hello gorgeous it's Lala Kent, host of untraditionally Lala. My days of filling

up cups it's sir may be over but I'm still loving life in the valley. Life on the other side of

the hill is giving grown-up vibes but over here on my podcast untraditionally Lala, I'm still that

Lala you either love or love to hate. It's unruly, it's unafraid, it's untraditionally Lala.

Listen to untraditionally Lala on the iHeart Radio app Apple podcasts or wherever you get your

podcast.