Briefs

On September 12, Senator Elizabeth Warren released a plan to expand Social Security for all current and future beneficiaries. Warren’s plan would impose new contribution requirements on income above $250,000 to increase Social Security checks by $200. When you factor in that the current average Social Security check is $1,350, Warren’s plan would increase checks by roughly 15 percent. This increase would be significant given that recent cost-of-living adjustments (COLAs) to Social Security, according to the AARP, “may not adequately cover [beneficiaries’] expenses that rise faster than inflation including health, prescription drug, utility and housing costs.” (Warren’s plan also includes a provision to make COLAs more adequate in the future.) It would help secure the lives of elderly Americans and Americans with disabilities, many of whom survive on fixed incomes.

The plan involves two new contribution requirements on incomes greater than $250,000—which is to say, the top 2 percent of earners in America. The first requirement, a contribution of 14.8 percent, would be on wages, divided between employers and employees, and the second, also 14.8 percent, would be on net investment income. The plan will also extend the solvency of Social Security by “nearly two decades,” according to Warren, and it will close various loopholes that the rich use to escape contributing their fair share.

A recent post by Samuel Hammond of the Niskanen Institute, a center right think tank, criticized Congresswoman Alexandria Ocasio-Cortez’s recent proposal to impose a 70% marginal tax rate on income over 10 million dollars. A few of the points raised in the piece are interesting jumping off points for discussion.

Hammond presents a figure on the wealth shares held at different levels of the wealth distribution in Sweden over the 20th century, which shows that the top 1% of Swedes held over half of the wealth in the early 1900s. This amount dropped to the neighborhood of 20% by 1970, and has held relatively stable since. Hammond suggests that this stability is proof that high marginal income tax rates in Sweden cemented the country’s old dynastic families in their positions of wealth, while locking out everyone else. This is ultimately a good point that the left should take seriously, but it’s not a particularly good argument against raising marginal rates on income.