Leading Democrats Differ Sharply on Ways to Close ‘Wealth Gap’Posted: July 11, 2019, 9:28 am
In the cacophonous race for the Democratic presidential nomination, where two dozen candidates face a daily struggle to make themselves heard, many are promoting plans to tackle income and wealth inequality in the United States. It’s a topic that both addresses a real issue confronting the country, and allows Democrats to contrast their policies to those of U.S. President Donald Trump, whose signature tax bill funneled vast amounts of money to the wealthiest Americans while offering only modest benefits to lower income taxpayers.
It’s an issue tailor-made for stump speeches, with eye popping statistics that can leave a candidate’s supporters frothing for some sort of action to be taken.
Earlier this year, Elise Gould, a senior economist with the non-partisan Economic Policy Institute, testified to the House Ways and Means Committee that “the top 1 percent of household income has grown 229 percent since 1979, far in excess of the slower 46 percent growth—just 1.0 percent annualized growth—for the bottom 90 percent of households.”
If anything, the wealth gap has become even more pronounced than the income gap. According to the Institute for Policy Studies, the three richest people in the U.S., Jeff Bezos, Bill Gates, and Warren Buffet together hold more wealth than the bottom 50 percent of the country’s population combined. Together, the richest 5% of Americans hold two-thirds of the country’s wealth.
Sanders blazed the wealth-gap trail
If there is any one person who can claim credit for making income inequality and the wealth gap a top tier issue among Democratic candidates, it’s Vermont Senator Bernie Sanders, who is making his second run for the Democratic presidential nomination despite not actually belonging to the party. Identifying as a “democratic socialist,” Sanders has long called for punitive taxation on the rich, and vows to raise $2.2 trillion from what he says are nearly 600 billionaires in the U.S. by, among other things, increasing the cap on inheritance taxes to 77%. He is a longtime supporter of a $15 minimum wage.
In his unsuccessful run against Hilary Clinton in 2016 for the Democratic presidential nomination, Sanders laid the groundwork for many of the policies that are being pushed by his primary opponents today.
Biden straddles progressive and moderate plans
Former vice president Joe Biden’s proposals for bridging the gap between rich and poor are aimed at striking a balance between the “soak the rich” proposals of those on the far left of the Democratic Party and the more moderate positions he helped champion during the Obama administration. Biden would take aim at laws that protect large inheritances from significant taxation, and has criticized the tax cuts passed during the early part of the Trump administration for being badly skewed in favor of the rich. At the same time, he has repeatedly vowed not to target the wealthy with punitive taxation.
Warren pushes an 'ultra millionaire tax'
Among the most aggressive candidates in targeting the ultra-wealthy, Massachusetts Sen. Elizabeth Warren has proposed what she calls and “ultra-millionaire tax” that would slap a 2% wealth tax on all net worth above $50 million, and a 3% tax on all net worth over $1 billion. The trillions of dollars in revenue this would produce, she says, would be directed to programs aimed at easing the financial burdens on lower-income families by providing universal childcare and funding the construction of affordable housing.
Harris’ refundable tax credit
Working from the bottom up, California Sen. Kamala Harris has proposed a refundable tax credit that would return up to $6,000 per year to families. She supports a $15 per hour minimum wage floor, and has proposed programs that would protect people from paying more than 30% of their income on rent and more than 7% on childcare. She has called for eliminating the Trump tax cuts.
Mayor Pete favors a $15 minimum wage
Currently floating somewhere between the top tier of candidates and the mass of also-rans at the bottom, South Bend, Indiana, Mayor Pete Buttigieg’s proposals related to income and wealth inequality are relatively vague compared to others in the field. He supports a $15 minimum wage and stronger overtime protections. He also wants to strengthen unions and their ability to bargain for higher pay. Buttigieg has also nodded toward paid family leave and greater access to childcare.
O’Rourke offers few details
Former Texas Congressman Beto O’Rourke, of all the candidates polling above 2%, has been the most vague on wealth and income inequality. His campaign announcement pledged to break up the “unprecedented concentration of wealth, power and privilege in the United States” but provided little detail as to how he would accomplish it. His campaign website doesn’t list economic inequality among the issues O’Rourke has a policy for.
Booker promoting 'baby bonds'
Some of the most unique proposals for addressing the wealth and income gaps have been put forward by candidates who, so far, have failed to attract significant voter support. New Jersey Sen. Corey Booker’s signature policy is what he calls “baby bonds.” The idea would be to give every child born in the U.S. $1,000 per year ($2,000 for children of low-income families) that would grow in Treasury Department managed accounts until they reach adulthood. The money, which could total as much as $46,000 by then, could be used to purchase housing, fund education, or be invested for retirement.
Yang’s 'freedom dividend'
Political newcomer Andrew Yang, who made a fortune building and selling an educational test prep company, has received more attention than his relatively slim resume might warrant because of his proposal to institute a universal basic income. Calling it a “freedom dividend,” Yang would have the government write a check for $1,000 per month to every adult American. He would fund it, in part, by a financial transactions tax, and has also called for an end to the special tax treatment of investment income.
Regardless of who it is that survives the Democratic primary to take on President Trump in 2020, it’s safe to assume that some amalgamation of the policy proposal currently being floated on the campaign trail will coalesce into a more explicit Democratic agenda for narrowing both the income and wealth gaps.