Progressive rising star Alexandria Ocasio-Cortez isn't alone in her belief that the rich don't pay their fair share, as a new OECD report has established that nearly 70% of people living in developed countries support hiking taxes on the wealthy to reduce income inequality. The…
Progressive rising star Alexandria Ocasio-Cortez isn’t alone in her belief that the rich don’t pay their fair share, as a new OECD report has established that nearly 70% of people living in developed countries support hiking taxes on the wealthy to reduce income inequality.
The OECD study polled respondents in 21 countries around the world including the U.S., Mexico, Finland, and Germany. Describing the survey results as “deeply worrying,” OECD said that the results show a deepening lack of trust between people and their governments, as fully 60% of those polled believe that they are not getting sufficient value for the amount of tax they pay.
There are many striking insights in the report, but what jumps out immediately is the fact that two problematic ideas are widespread. First of all in all the 21 countries polled, more than half of the respondents claimed that the government needs to tax the rich more to support the poor. This holds true even in countries like Finland and Lithuania, where inequality is not nearly as big an issue as, say, Mexico.
Despite their widely varying economic positions, almost 80% of respondents in Germany, Portugal, and Greece want their government to tax the wealthy some more. In the U.S., the number falls to just over half of all respondents.
The problem is that the OECD did not set a specific income level to describe what “wealthy” is, and some of these countries on this list already have eye-watering top tax rates. Clearly, the “wealthy” are already paying a proportionate tax burden, yet the perception persists that the situation is somehow unfair to those in the middle classes.
More interestingly, when asked if they believe that they are getting value for their tax burden, a significant majority of respondents across board responded negatively, citing unsatisfactory healthcare and lack of easy access to social benefits as their reasons. Again, this happened even in countries with excellent social support systems.
Inevitably, U.S. House Democrat Alexandria Ocasio-Cortez must feature in any discussion about reforming the tax system. Over the past few months, she has dominated headlines due to her support for a 70% top marginal tax rate for incomes above $10 million. Despite the policy proposal coming from a distinctly left-of-center position, data shows that it enjoys widespread bipartisan support among American voters, which could yet turn into a major problem for the pro-tax cut Donald Trump administration.
Similar proposals have been put forward in France by the so-called gilets jaunes (yellow vests) protesters. The problem with such policies, as explained recently by Bill Gates, is not so much that they are wrong, but that wealthy individuals will find tax code loopholes.
In other words, politicians like AOC have successfully sold a dream to voters around the world, convincing them that they deserve a lot more than what they are getting with their tax money – and that someone else should pay for it.
Last modified: January 10, 2020 3:30 PM UTC