dougthonus wrote:Graduated tax is the only tool in our toolbox right now to solve wealth inequality.
I don't think that's entirely true. At least at a national level, you could argue that Scandinavian income tax rates are less graduated and more regressive than US ones. E.g., Denmark has a top rate around 60%, but it kicks in around 80K USD. Any income over ~7K USD is taxed. Denmark also has a VAT (a form a sales tax) of 25%, which most Americans consider regressive.
But the main thing is that taxes are higher across the board and spending is also higher. That spending - on things like health care and post secondary education - is more impactful on the less wealthy. The total sum seems to be better for wealth inequality.
dougthonus wrote:The problem is when people get uberwealthy, the capital gains tax law supercedes all graduated tax laws and we know from things like the panama papers that the really, really wealth are basically lying and cheating on their taxes and not remotely paying what they should.
If you removed the capital gains exception and were able to keep the existing graduated rates and actually collect them legitimately and stop all off-shoring of money and close all the other loop holes so that the rich actually had to pay their graduated tax rates, then I think that might actually be enough to solve the problem, if not, it'd sure make it a lot closer than currently.
Of course no one in Washington is even looking at removing the capital gains rate, and we don't remotely collect all the taxes we should from the uber wealthy (say top .1% or maybe even .01%, we probably get more than our fair share for the top 1% excluding those super wealthy individuals).
If you mean folks should pay (higher) ordinary income tax instead of (lower) long term capital gains / qualified dividend rates, then I certainly agree. From a fairness standpoint, income, whether it be from labor or capital, is income. If you're sufficiently wealthy, you've got tools to change the same income from one form to the other to game the system. Sadly, it doesn't seem like many countries unify it all though.