Joseph Stiglitz, a Nobel prize-winning economist, has issued a call for nations to impose a 70% tax rate on the ultra wealthy, and to impose aggressive inheritance taxes as well. He justifies the call by arguing that the overwhelming majority of billionaires are rich merely “out of luck.”
He argued such a high rate of taxation “would clearly make sense” in n interview on Oxfam’s ‘Equals’ podcast recently.
He said, “People at the top might work a little bit less if you tax them more. But on the other hand, our society gains in having a more egalitarian, cohesive society.”
Once a chief economist of the World bank, in 2001 Stiglitz won the Nobel prize in economics for contributions to the theory of information asymmetry, which examined how people reach decisions when one party has more information than the other.
A proponent of a variety of taxes, from stronger carbon and land taxes, to higher corporate taxes on profits and additional taxes on millionaires, Sitiglitz has been a supporter of President Joe Biden’s calls for a global minimum corporate tax rate.
In the Oxfam interview, he also expressed support for taxes on inheritances.
He argued, “We should be taxing wealth at a higher rate, because much of the wealth is inherited wealth, [for example] – the young Walmarts, inherited their wealth. One of my friends describes [this] as winning the sperm lottery – they chose the right parents. I think we have to realize that most of the billionaires have gotten much of their wealth out of luck.”
Those who oppose inheritance taxes point out however, that inheritance taxes involve the government taxing earned wealth twice, and they only encourage the rich to transfer their wealth overseas, to jurisdictions where their wealth will be able to find its way to their heirs.
While there is no federal inheritance tax in the US on estates under $13 million, the federal government claims from 18% to 40% of estates over $13 million, and six states impose their own inheritance taxes, including Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. The UK imposes a 40% inheritance tax on any inheritance above £325,000 ($403,000).
Stiglitz advocates for proposals by Senator Elizabeth Warren to impose an additional 2% tax on households with assets of more than $50 million, and a 3% tax on households with assets of more than $1 billion, calling the proposals “very reasonable.”
