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Abolish the Billionaires?

With the richest people in the world continuing to amass ever more wealth, few would dispute that economic inequality is on the rise, or that current disparities will keep growing in the absence of more progressive taxation. But while tax reform is certainly necessary to solve the problem, it is not sufficient.

MILAN – The march of the billionaires has seemed unstoppable. Even as the International Monetary Fund warns of a synchronized global slowdown, the wealth of the very rich continues to grow unabated. According to Oxfam, the number of billionaires in the world has almost doubled since the 2008 financial crisis, with a new billionaire created every 48 hours. Last year, the 26 richest people on Earth had a combined net worth equal to that of the poorest half of the world’s population – some 3.8 billion people.

But political attitudes toward the wealthy are changing, particularly in the United States, where great fortunes have always been considered a reward for talent, creativity, and risk-taking. In 1992, while campaigning for president against the incumbent, George H.W. Bush, Bill Clinton promised tax policies that would create more millionaires than each of the previous two administrations had done. But now, aspiring Democratic presidential candidates are proposing wealth taxes, steeper income-tax rates, and more biting inheritance taxes.

Senators Elizabeth Warren and Bernie Sanders, in particular, have advanced highly contentious wealth-tax plans. Warren wants to tax wealth above $50 million at 2% and wealth above $1 billion at 3% (and she has since suggested doubling these rates to pay for a “Medicare for All” plan). Sanders, who has explicitly stated that “billionaires should not exist,” would impose even higher taxes on the extremely rich, with rates reaching 8% for wealth over $10 billion. And if American tycoons try to renounce their US citizenship to escape the levy, they would face an exit tax of 40% on their net worth (and 60% on assets worth more than $1 billion).