Jeffrey Pennell has published an article on TaxNotes, titled “An Alternative to a Wealth Tax: Taxing Extraordinary Income.” The article begins as follows:
Asking the rich to pay more tax has been a consistent concern for politicians. Rising inequality and concentrations of wealth in the United States have caused some policymakers to question whether to reduce tax benefits that significantly lower the tax bills of high-net-worth (HNW) individuals. Suggested changes include raising the moderately low income tax rate, decreasing the federal estate tax exclusion amount, and altering or repealing the section 1014 new-basis-at-death rule. More dramatically, scholars and political candidates propose to impose a “wealth tax” on HNW Americans who often own substantial wealth but do not realize significant taxable income (as defined by the code). The most widely recognized of these proposals were advocated by Senate Finance Committee member Elizabeth Warren, D-Mass., and Sen. Bernie Sanders, I-Vt., during the 2020 presidential election season. Each advocated an annual wealth tax. Because the negative attributes of these proposals are likely to preclude their success, even if enacted, this article offers in skeletal detail an alternative, aimed at the same taxpayers but more consistent with historical taxation and less likely to fail.
To view the full article, click here: “An Alternative to a Wealth Tax: Taxing Extraordinary Income.“
Posted by Bella Hoang, Managing Associate Editor, Wealth Strategies Journal.