A 70% Tax makes no sense…”
Recently, Congresswoman Alexandria Ocasio-Cortez states that that tax rate for the wealthiest Americans could be set at 60 to 70 percent. People would need to “start paying their fair share in taxes” was her point. The real question is what does it mean to be wealthy?
It seems unfathomable to most that a single young person earning a salary of $170,000 is not rich. Especially when the U.S. Census Bureau reported in September 2017 that real median US household income was $59,039 in 2016. But the fact is, while that $170,000 earner may be able to live comfortably and pay off their school loans, they are not rich. They can enjoy a fancy coffee, eat out often, and take a nice vacation each year. If they are frugal, they may be able to buy a place to live, but it will take them many years to save up for a down payment. What they aren’t doing is living the high life; they are not traveling by private plane, shopping in Beverly Hills, or living like the Kardashians or any of their friends. For young people who have made it through college and worked their way to a high paying job, a 70% tax would end any hope they had of owning a home, paying for healthcare, or sending their own kids to college. And that’s if they had no debt. If they have student loans, they would likely be living below the poverty level.
Meet John, a programmer, living the dream working for Google. His salary is $170, 000 per year. He lives in San Francisco, has a lot of friends and has some money to enjoy his life. Yes, he has chosen to live in a city with one of the highest costs of living. He feels lucky that he has a great apartment. The downside, it costs him $2,000 to pay to live with 5 other guys.
If the 70% tax were enacted, John’s take-home would drop from about $9,000 per month to less than $3,000 per month. (In California, state taxes are added, and they are about 10%). That would mean that after rent, John would have less than a thousand dollars per month to live on. If he has a student loan payment, his salary would not be enough for him to buy food. And, in either case, it is not enough for him to get to and from work every day.
If you are not fortunate to be as well off as John, you probably live paycheck to paycheck, struggle to have a few luxuries in your life, and making your debt payment is tough. Raising your taxes would add another strain and more stress to the financial balancing act that is your life.
It is shocking that someone serving in Congress would be so out of touch with what it means to be starting out and trying to build a life for oneself and one’s family. Punishing young people who are pursuing the promise of a better life because they have gone to college and done well makes no sense. Better to reward them if they make efforts to help others achieve the same.