President Trump’s tax plan, which recently passed in both the House of Representatives and the Senate, is an attempt to encourage investment and spur job growth. Although the new plan cuts taxes across all tax brackets, Congress’s Joint Committee on Taxation predicted that tax cuts for lower- and middle-income American earners would decrease in the coming decade, while those for high-income taxpayers were expected to stay constant.
But not all millionaires are in favor of the plan. Many have argued that the plan not only will disproportionately benefit the wealthy, but also will cut spending to vital social services. The fear is that this will reduce social safety net programs and, ultimately, further aggravate inequality in the country. Moreover, the bill is projected to add more than $1 trillion to the deficit over the course of the next decade.
In early November, over 400 U.S. millionaires and billionaires sent a letter to Congress urging lawmakers to refrain from making any cuts to their taxes. The letter was pulled together by Responsible Wealth, an advocacy group for progressive causes. It boasts a number of prominent signatories, including Ben & Jerry’s Ice Cream founders Jerry Greenfield and Ben Cohen, wealthy hedge fund manager George Soros, fashion designer Eileen Fisher, and Rockefeller heir and philanthropist Steven Rockefeller, as well as a number of other millionaires in the upper 5 percent (deemed to be those making more than $250,000 per year or those with more than $1.5 million in assets), all of whom expressed concern that the new tax plan would divert funds away from key social services, like healthcare and education, to the disadvantage of the middle class.
“As you consider changes to the tax code, we urge you to oppose any legislation that further exacerbates inequality,” they wrote in the letter. “We are deeply concerned that revenue loss would lead to deep cuts in critical services, such as education, Medicare, and Medicaid, and would hamper our nation’s ability to restore investments in our people and communities. We call on Congress to raise our taxes to bring in additional much-needed revenue and to restore investments to vital services. Doing so will help create jobs, strengthen the middle class, and ensure America’s economic success. Under no circumstance should tax reform lose revenue, especially to provide tax cuts to the wealthy and corporations.”
In addition to taking issue with cuts to income taxes, the letter also criticized the eradication of the estate tax, which only benefits the upper quartile of the 1 percent – around a few thousand families – each year. The letter writers allege this will facilitate the tax-free transfer of wealth from generation to generation.
“I’m particularly concerned about the estate tax. For many of the wealthiest people in the country, that’s the only tax they ever pay,” millionaire Morris Pearl, a signatory of the letter, recently told Vox. “If we have no estate tax and no tax on capital gains until realized, and step-up basis on inheritances, we’re going to have a small group of people who are just sort of the permanent oligarchy class, forever. And they’ll completely lose sight of the rest of the country. And I don’t think that is what America was supposed to be.”
Ultimately, although the future of the plan remains unclear, it is unlikely that the millionaires’ letter will have an impact. The House and the Senate passed two different (but largely overlapping) versions of the bill, which now need to be reconciled. The expectation is that they will hash out a final deal and then pass it before Christmas – with the new tax regime coming into effect on Jan. 1.
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