Senior Tax Legal Analyst
Policymakers who seek to raise more revenue from the nation’s wealthiest individuals could, for instance, strengthen the estate tax, raise the top personal income tax rate, end preferential treatment of capital gains and dividends, or impose new taxes on very wealthy households, our new report explains.
Much income of the wealthy doesn’t show up on their annual tax returns, and much of what does enjoys special breaks. Our report outlines a range of proposals to tax high incomes and large fortunes more effectively, either by taxing more types of income or by improving the taxation of income that is already taxed.
These options don’t constitute elements of a single, overall proposal — rather, some options are complementary to others, while other options are alternatives. Nor are they the only possible ways to raise revenue in a progressive manner. But all would help counter the decades-long increase in wealth inequality and generate significant revenue that our nation badly needs.
Taxing More Types of Income
Improving Taxation of Income Already Taxed
Finally, there is an urgent need to rebuild the IRS’ enforcement function, particularly its ability to ensure that wealthy people pay the taxes they owe. Policymakers should increase IRS funding — particularly its budget for enforcement and related operations support, which has been cut by roughly one-quarter since 2010, after adjusting for inflation. The agency plays an essential role in government, collecting nearly all of the revenue that funds federal programs. Policymakers should give it the money it needs to do its job.