The idea of taxing the rich continues to gain momentum among Democrats, but at what cost to the economy?
Bernie Sanders wants a higher income tax to pay for college and universal healthcare. Elizabeth Warren is calling for a two-percent wealth tax starting at $50 million in earnings. Alexandria Ocasio-Cortez wants a 70 percent tax on anyone earning more than $10 million for her "Green New Deal."
“The entire capitalist system is built on incentives to invest and incentives to innovate, and those are the things that create jobs,” says economist Ray Perryman, president and CEO of The Perryman Group.
“If you destroy that incentive or weaken that incentive, you can have adverse consequences affect the people who 'benefit' from those jobs.”
Dr. Perryman says lawmakers must look at the big picture, both in revenue and spending.
“You would find some changes that would probably generate more income being paid by the wealthier groups, but not the type of 70 percent tax rates or wealth taxes, which I'm not even sure is constitutional, that are being proposed.”
“There are some things in terms of equity and fairness we could do that would end up with people with higher income levels paying more in taxes, but still have a fair system,” he says.
Taxes are expected to be a main feature during next year's Democratic primaries.