The top billionaires and leading wealth managers aired their worries on the proposal of Rep. Alexandria Ocasio-Cortez of New York to impose 70% tax rate on corporations and individuals earning above $10 million.
Billionaires and millionaires attending the World Economic Forum in Davos are afraid that Ocasio-Cortez’s proposal would push through. One of them, Scott Minerd, global chief investment officer for Guggenheim Partners and a multi-millionaire, voiced his concern. He worried that the freshman lawmaker’s proposal would gain momentum, especially during the coming presidential election.
A recent survey by Hill-HarrisX revealed that 59% of Americans favour an increase in the marginal tax rate for the wealthy.
Minerd also raised concern that the proposed tax – which is almost double the current rate of 37% – would force the mega-rich to find out ways to preserve their income, which he said will affect productivity.
Meanwhile, billionaire Glenn Hutchins, private equity firm founder and a Democratic party donor, said in an interview with CNBC that 70% tax rate is very high.
But one billionaire whom CNBC granted anonymity was doubtful of the passing of the proposal, stressing that “it’s not going to happen.”
Effect on Wall Street
Ocasio-Cortez’s recent appointment to the House Financial Services Committee also strikes fear to financial markets. Greg Valliere, the chief global strategist for Horizon Investments, said that even though her designation does not pose an “imminent” threat to the markets, the newly elected lawmaker can “make life miserable” for executives in the industry with endless hearings.
Valliere also said her tax agenda would further raise the federal deficit, which is already forecast to reach $1 trillion in 2019.
Tax for Narrowing Wealth Gap
Ocasio-Cortez’s proposal is in line with Oxfam’s call to the governments to increase tax rates for the corporations and the super-rich to address the growing wealth gap. One of the organization’s report claimed that governments are fueling inequality by releasing lower funds to public services while taking low taxes from corporations and the wealthy. It also alleged that politicians have failed to stop tax evasion.
The report asserted that adding taxes on the wealth of the world’s richest 1 per cent by half a per cent would raise funds to educate 262 million children and save 3.3 million lives through access to better health care.