Higher top income rates can’t solve – a wealth tax is key
Alexandra Thornton 6-4-2019, Senior Director, Financial Regulation, "Ending Special Tax Treatment for the Very Wealthy," Center for American Progress, https://www.americanprogress.org/article/ending-special-tax-treatment-wealthy/,LMS
Myth #2: A higher top income tax rate is an effective substitute for a wealth tax
Higher top marginal tax rates on the highest labor incomes alone would not affect a great deal of wealth or the gains that wealth generates. To begin with, a very large share of the reported income of the wealthy—namely, capital gains and dividends—is taxed at much lower rates, meaning that the tax code would be more progressive at the top if there were no preference for this type of income. Moreover, because the tax code does not tax gains until assets are sold, a large amount of wealth is not included annually as part of taxable income and may never be subject to income tax at all if held until the owner dies. The tax code would still be tilted heavily in favor of the uber-wealthy if the only change were a higher top tax rate on ordinary income, especially if the tax rate on dividends and realized capital gains remained low.