I'm going to refer my Catholic readers first of all to CCC, 2406 as the ethical basis for this idea. I did some digging to find out just what the capital gains tax rates were. To say that what I found surprised me is a bit of an understatement. Here's your summary moral judgment: the rates are too low, and the thresholds are too high.
I am not certain that a Christian society would entertain any sort of economic instrument whereupon people could make money for doing nothing, but let us suppose that we can tolerate the stock market as it is, for the sake of argument.
Capital gains are profits or dividends, if you like, from stocks and similar products. In the United States right now, capital gains are taxed at three rates: zero, 15%, and 20%. I will leave the policy wonks to handle single versus married, in these calculations. But my idea is to have four tax brackets for capital gains: zero, 15%, 35%, and 70%. The zero bracket ought to go from zero-$30,000. (If we want to give married people more of a break even in my new scheme, we can exempt them up to $40,000.) The 15% bracket will go from $30,000-$60,000. The 35% bracket goes from $60,000-$99,999. Everything beyond that would be taxed at 70%. We give middle class and poor people a break, because we recognize that investing in the stock market over the long term can be a way to save for the future, and to transfer wealth to the next generation.
Remember, capital gains are profits from other people's hard work. I think a person would be well within his rights to argue that it would not be immoral to tax capital gains at 100%. However, because we live in a country where every public expenditure that is increased is treated as though the Iron Curtain is descending again, we may well at least concede that the possession of modest wealth is not as such immoral.
Yet we ought to be aware that a certain number of our own citizens and guests are not able to be economically productive. Illness, injury, and disability are expensive. Any purported belief in the dignity of all persons in principle calls forth a commitment to significant public expenditures on their behalf. I do not believe that this rules out private expenditures on behalf of such people, but it is the state who is ultimately responsible for the common good.
None of this presupposes as such that a fantastically rich person is guilty of some moral crime. Taxation is not punishment, but the instrument by which we secure the well-being of those--for whatever reason--who are unable to secure their own well-being.
It also is something of a mystery, as to why "tax-and-spend" was ever an effective epithet against so-called "liberals." "Borrow-and-spend" is arguably worse, because significant debt passed down through generations is a sin against our children and grandchildren.
I am not a philosopher, to be able to take you through an account of why our present system is structurally disordered, or "intrinsically disordered." My task is simply to identify critical needs, and possible avenues for finding the revenue to address them.
The debate about public expenditures in the United States rarely has anything to do with tangible realities; rather, it seems that some people prefer to make rash judgments about those in need, while simultaneously, it becomes harder and harder to escape the cycle of poverty by just means. This untenable situation cannot endure. People of goodwill ought to be able to identify problems and challenges unique to particular individuals, and try to work together to address them.
The purpose is not to take from the rich because they are rich; it is because that's where the money is. To live in a disabled body, for instance, is absurdly expensive. Not to live well mind you, but simply to live. Not many of us are able to generate large amounts of wealth, which in some minds justifies a person's existence. In any case, we ought to do better than an ethical system which tells people that their value is tied to their economic production for someone else. People are not instruments; they are people.
Comments
1.) Let's say I have a large sum of money in the stock market. I need two things (1) to be able to make enough to make the risk worthwhile and (2) to be able to make enough it isn't better for me to move the money out of the country. Investing in stocks is necessarily risky business, where you weigh the value of the business's vision that you are investing in compared to the likelihood of partial or complete failure. People figuring out this equation and investing is an essential aspect of companies operating and having enough capital. A serious investor of the sort who is bringing in $100,000 or more in capital gains, might very well make $100k one year and lose $100k the next. If taxed at 70%, are you also going to give a bonus back on the "loss years"? True, someone might hold over losses if taxes allow it, but the higher the tax rate, the more insanely great the profits need to be to justify entering into the risk to begin with. If an investor gives most of the fruits of his work but gets no help with his losses, this taxation will result in more focus on "sure fire" profits, making it harder for smaller businesses to get the necessary investments to grow.
2.) Relatedly, let's say I invest in the market for two decades and then withdraw the money to buy a house. That might easily put me over $100k even if I'm not myself wealthy. But, my $100k nest egg becomes $30k. So, I am "demotivated" from saving to buy a house or I'm forced into debt, taking out a loan so that I can withdraw my profits at a rate that avoids the insane taxes, still making me "poorer" since I'm now paying interest since I can't "afford" to access my own money. That's not good at all. (Keeping in mind that capital gains are taxed when the stock is sold, since it is only when it is sold that the value is assured. There's no other reasonable way to assess them.)
3a.) So, the "average" investor who manages to do decently well in the market gets hurt /significantly/ on this. On the flip side -- my point #2 -- the really, really rich (whose capital gains would be way more than $100k) also have means to setup off shore investments. This proposal looks more like "Christian Democratic Socialism" perhaps than full fledged socialism, but notice in any case that when these sorts of policies are enacted, the insanely rich find the loopholes, so they never hit the real targets. I think that is also why the ultra rich are often fine with far Left policies; it is the middle class that make enough to feel the pain but not enough to pay the lawyers that are the collateral damage in the quest to force a moral policy of "no one should make too much."
3b.) This reminds me of how the Left often wants to charge exorbitant taxes on repatriating money, which is why companies like Apple will take out loans rather than bring money in from places like Ireland. It is literally cheaper to pay interest on borrowing money than it is to pay the taxes to bring the money they already have back into the country. It would be better to charge them little or no tax and have that money in the country creating jobs -- and, yes, then paying taxes -- than to incentivize them to keep the money out of the country and use it elsewhere. We're like the person who says, "Yeah, that double burger is nice, but I want a deluxe burger with bacon, so only give it to me if it has bacon." The person offering the free burger says, "I don't have any bacon, so I'll find someone else to give it to" and we go hungry while complaining that no one will feed us.
5.) Many retirees live off of capital gains (and not just the ultra rich). Especially in an era where pensions and such are rare, the best chance the middle class -- and those who want to be middle class -- have at maintaining a similar standard of living in retirement to their working lives is careful investment. While $100,000 of "money that was someone else's labor" sounds like a lot, that's deceptively off the mark. First, good investing is not just sitting back and watching the money come in; second, if I work hard all my life and take my money and invest it in your company, I'm not living off your back, we both worked hard; third, while $100,000 is a ton of money if it is just "extra money," a couple in many cities may find it just enough to live comfortably, have a modest house and be charitable. (Keeping in mind living here in the Lou is much cheaper than many cities.) Now, put one spouse in long-term skilled nursing, say, or have other unexpected costs, or a grandkid they want to send to college, and now $100,000 isn't THAT much at all.
6.) Churches, ministries and charities (including FaithTree) are funded probably more by capital gains than any other kind of income. If you dramatically decrease what people make off of capital gains, you will route far more capital to the government while taking it away from private charity. This is almost (if not entirely) unavoidable. Now, one might say that people can itemize and deduct charitable giving, but if you've reduced their income to live off of by 70%, they can keep giving and giving, but if the part they do keep is taxed at 70%... Also, keep in mind that a lot of those on the Left (I believe including Ms. Harris, and most of the primary pool for 2020, if not Vice President Biden) support removing non-profit status from organizations that disagree with the Left's view of marriage, so any discussion that depends on tax deductions for charitable giving at this point needs to think in terms of a future where churches and organizations like Salvation Army may not benefit from those deductions.
8.) Note the problem on the $10k bonus for marriage before the higher brackets kick in. A smart investing couple would then face a substantial penalty for getting married. "Marriage penalties" should be rejected unequivocally by Christians, since any public policy that actually incentivizes people to sexual immorality is actually a law clearly contrary to God's own.
9.) This assumes it is superior that the government handle these parts of society to give people more worth. I think that's a lot to assume and the way government handles authority does not in any way make me think it will handle more authority and money well. What if they take this money to offer completely free abortions? Contraceptives to everyone starting at age 12? (Neither are far from the Dem Primary 2020's preferred positions.) For the Left-leaning ones who actually get excited about these things, consider 10 years from now if a Neo-Con administration came back and instead dumped it into foreign wars or decided to emphasize "law and order" but putting in massive aid to increase police departments and buy every single one its own militarized fleet of vehicles beyond anything we've ever seen. We all have our parts of government we dislike spending on and our charities we like seeing money go to. My assumption on increased taxes is that it will always end up where I don't want it, rather than the lovely things I hope it funds.