Former Clinton Labor Sec. Robert Reich on why US needs a wealth tax

Marcus's argument I assume could be applied to any tax at all any tax on higher incomes we've had a progressive income tax since the start of the last century if we want to talk about the merits of taxation we're taxing the wealthy we could certainly do that but I don't think that that's the issue I think that a lot of people in this country right now in fact a remarkable majority of Americans are in favor of Elizabeth Warren's and Bernie Sanders proposals which is a turnaround from what it was let's say 10 or 15 years ago I remember when I was Secretary of Labor the idea of taxing the wealth or increasing taxes on the wealth wealthy was anathema most people didn't like it because they said to themselves well someday I may be wealthy as well and someday my children may be wealthy and I don't want to increase taxes on the people at the top that has changed since the financial crisis since the bailout of Wall Street since a lot of people began seeing that the economy was rigged in favor of big money because big money is finding its way into politics a lot of Americans have changed their minds and that's why the wealth tax proposal is so popular and again that's not on millionaires it's not on people of 10 million dollars it's two cents on the dollar over fifty million dollars and as more and more of the nation's wealth has been aggregated at the top right now we have something brand-new we haven't seen this since the 1890s the top one not one percent but the top one-tenth of one percent of Americans now has about 21 percent of the total nation's wealth which is not that much different from the bottom ninety percent put together but you know you just you just have to do something about this if you want to deal with all of the nation's problems from infrastructure - one out of five of our nation's kids being in poverty our schools I mean we have a nation if you have any sense of patriotism you've got to do something about the problems of this country part part of the issue is how the wealthy got there you argue in your recent video that 60% of wealth today is inherited you say many of today's wealthy have never done a day's work in their lives that number of 60% is different from every other number I've seen out there from Ed Wilf at NYU which puts it more at 23% of inherited wealth the the billionaires list on Forbes only about a third of them have inherited some or part of their wealth and to say that people like Mark Zuckerberg Warren Buffett Bill Gates Larry Ellison all the people at the top of the list have never done a day's work in their life reality or that culture that's absolutely ridiculous I mean I I will go back and check that 60% but you do have a lot of heirs now you have some very very wealthy baby boomers who are in the midst of transferring something in the order of 30 trillion dollars to their heirs now that's perfectly fine I'm not saying that's bad but you look at how billionaires and we're not talking about just the garden-variety billionaire we're talking about people of tens of billions there I mean Warren Buffett is a nice man he's a friend of mine he has what about 60 billion dollars each year Warren Buffett is earning off of that 60 billion that fortune is growing about three billion dollars a year he's not taxed on that because he doesn't realize those bumps this is Marcus I have two questions for you number one I know that you didn't literally mean that people that are successful didn't work for it so I'm gonna I want to clarify that for you and you can stop me if I'm wrong in that clear no no let me clarify it for myself as oh I did not literally mean that people that earn X amount of money did not work for it that's not the issue glad we're clear on that so the second issue that I have is we all agree that we need a better infrastructure for our country or we all agree that we want more into our educational system we want more for people with opportunity there's nobody even the wealthiest person in America doesn't think that that's a bad idea I think the bad idea really comes in when you start to create this line in the sand where you're going to decide who's going to get tax and who's not because at some point I think you're going to move the line today the lines at well if you have 50 billion dollars or five billion dollars and tomorrow it's going to be if it's a million and at the end of the day myself and other people that have had hard work in calais on hands don't want to be told how to reinvest into the marketplace and over the last five years I've put 75 million dollars of my own money into small business in this country to give people a chance but that's my choice not your choice and I don't want anybody making that decision for me well I I think the response to that that I would give you at a lot of other people whose support and wealth tax would give you is that we have had a progressive income - the whole idea of a progressive income tax is that the more money you make the larger percentage of your earnings should be taxed now you can debate that we can start over again that comes out of the that really starts out of 1901 right that was the first progressive income tax but if you believe in a progressive income tax then we are talking about matters of degree I am simply saying over fifty million dollars to cents on the dollar over fifty million dollars takes a year that seems reasonable given our huge needs as a country and given the huge accumulations of wealth at the very top now if you disagree with the progressive income tax we can have one discussion if you disagree with that particular proposal that's a slightly different discussion I think what I'd like to disagree with isn't the concept of the progressive income tax it's what problem you're trying to solve and how you're trying to solve it and ultimately we have an infrastructure problem and we have a deficit in this country that isn't driven by the wealthy it is true that all of us want to create some level of opportunity and equality through opportunity I want people to work for it like I work for it nobody handed me anything but it is true that progressive income tax does level the playing field to a degree the question is who determines it and what are you gonna do with my money because I also want to know that if you're gonna take my cash I want to see it at the table I want to know what we're gonna be spending money on and I want to know where the waste is and I don't think that offers I believe Marcus I I completely understand that point of view but I again are you arguing against a progressive income tax or you arguing about this particular wealth tax because I if we're talking if we were arguing about a progressive income tax we want to go back 180 years that's perfectly fine but this is a that's a different I'm gonna reverse it I want to reverse it the progressive income tax for me isn't a problem because I have no problem giving tax breaks to people that are less fortunate or less wealthy I have no problem with them keeping more money in their pocket the spin isn't that we're going to give people a break it's that we're going to penalize people who have had success and now what's being introduced is an ultra tax on top of the progressive tax that I already have because I've come up with a great product invented something to design some technology that's change humankind forever and now you want to punish me for being entrepreneurial for being capitalistic for taking a chance on myself and other people and I don't want to be penalized because the American Dream is about taking understand I understand but these were the same exact argument so you're giving me right now the American Dream penalizing success I want to see the table these are the same arguments that we heard in 1901 19 - 19 3 under Franklin D Roosevelt under Teddy Roosevelt's beef even before for FDR Teddy Roosevelt when the progressive income tax was introduced so what is it new that you were arguing that was not argued in nineteen a verification of wealthy people as well that's different I am NOT vilified I don't agree with that I don't say that I don't think there should be vocation to wealthy people I think that wealthy people have a you know they've worked hard I think that they are proud and should be proud American citizens there is no reason to vilify in 1901 they shouldn't have been vilified before we close every America every American in this country aspires to be successful and their definition of success would be determined differently we don't want to put a ceiling on what defines success or penalize people to get there I'll leave it at that but that's what they said in 1901 I want to new I want a new argument we have got to understand that wages have been flat for 40 years that a huge amount of wealth has now congregated at the top god when we had great we have huge we have huge problems and that when you got to go but I would love to invite you on another time we can have this debate with you in studio that I can hug you after you you

Channel: CNBC Television

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Id: EcI4L9mqy2U

Length: 8min 50sec (530 seconds)

Published: Tue Nov 05 2019