'Why Can't You Just Answer Me?': John Kennedy Grills Dem Witness

thank you Mr chairman um Dr yeagen yeah am I saying your name right tell me if you were King for a Day and you could rewrite America's tax code tell me the three changes you would make um number one I would equalize uh labor and Capital Tax burdens at the top there are a couple ways of doing that the billionaire minimum income tax is one that would move in that direction I won't rehash those details Senator Johnson actually talked about a corporate tax integration type what's number two sure um uh number two part of closing the labor and capital um uh uh disparity is closing the Gingrich Edwards loophole number three is ending um abuse of trusts so the estate tax has been eviscerated many of those you take assets that you know are worth a lot right now they're purportedly worth a little because you haven't taken your company public you put them into a trust it explodes do you support a wealth tax do you know what I mean by wealth tax I do know what you mean by wealth tax the billionaire minimum income tax taxes uh income and that I think is the way forward in that space well let me let me be a little more precise do you do you think appreciation of assets that are not sold unrealized gain should be taxed I think you should have to prepay tax on it that will eventually be due at sale gift or big question what do you mean prepaid the tax sure so um if I have uh five billion dollars of unrealized capital gains I have five billion dollars of taxable income and I'm currently paying one and a half billion on that so that's a 15 overall tax rate let's make an almost no complicate this I want to understand what you're saying let's suppose um an American owns a piece of real estate they inherited from their father uh or their mother and it was when they inherited it they got to step up in basis it's worth the hundred thousand dollars and all of a sudden the interstate came through and the property is now worth a million dollars if they sell it but they don't plan to sell it they're going to leave it to the kids do you think that that that that that Americans should have to pay tax on the unrealized gain the increase in value in general no at that at that level of wealth for example housing you'd think only wealthy people should at the very top it's hard to tax you know but let me be sure we'll understand what you're saying all right let's suppose that's not just an average American let's suppose that's on America what do you define as rich in the minimum income tax it's a hundred million dollars of wealth or more okay so you you think if you're really wealthy you should have to pay a tax on your unrealized gain I think you should have to partially prepay if you're liquid if you have if you have liquidity to pay and then you think do you think somebody why can't you economists answer questions should someone should any American have to pay tax on unrealized gain why can't you just answer me yes there are some who should the ultra wealthy who have liquidity should prepay some taxes what if they don't have liquidity they should not have to pay and they will owe at sale bequest or um gift so if you have cash you ought to have to pay but if you don't you don't have to pay it's a prepay I have a in my testimony there are examples of how this works so that you can preserve incentives to build a new company take it public okay what do you think Dr McBride do you think we should start taxing unrealized again and what do you think that'll do to the economy well I I have several concerns about the approach the first of which is it's completely untested uh it's never been tried in this country we have a hundred more than 100 years in history with the income tax and Europe's tried it haven't they no they've tried wealth taxes yeah they're expenses 12 taxes how does that turn out uh bad um resulted in a lot of taxpayers exiting the country for for one thing in France for instance other countries that have tried it um and you suddenly lose a big chunk of your tax base that you're trying to tax there um we have that option in this country as well um the the result has been that most of those countries in Europe that have tried a wealth tax have rolled them back yeah including France um because they were administratively challenging uh the the basic challenge is trying is what you're describing trying to uh value um um assets without real Market Trend transactions uh so this is a evaluation dispute um it means the we get the IRS uh engaged in yet another challenge they're currently doing this with the estate tax those States um um that are that that are um subject to the estate tax those valuations can I have 30 more seconds proceed um doctor said clausing why do you why do you and Dr yagan why do y'all want to punish wealthy people I I think I stood in punishing anyone we're interested in taxing the hell out of it more than anybody else I think wow what makes you think that making tax policy on the basis of of class or status makes sense I think it's a very American phenomena that throughout the history of the income tax we have valued progressivity and our current income tax does that um we used to rely on things like tariffs to raise revenue tariffs to regressive consumption taxes that disproportionately hurt the poor like we believe in this country that those with the greater ability to pay should pay more of the burden and that's part of what a healthy capitalism does that it enables uh people to gain from things like trade and technological change and business Innovation and to contribute a little more to the fiscal system when they're very successful in doing so and I think that that's a very legitimate way to structure the tax system can I ask you a question yes why do you think so many wealthy people are leaving New York City New York City is you know an incredible city of innovation immigration yeah but why so many wealthy people leaving I I think there are big advantages to living near centers of entrepreneurial activity and we see that on the web you think they're leaving to be nearer centers of entrepreneurial activity do you well I don't think there are a lot of people you know fleeing uh New York City that New York City has sure they are thousands I mean they've been study after study after study why are so many wealthy people leaving New York City I think there's an enormous number of wealthy people who are in New York City and continue but why are so many leaving I I can't speak to why particular people I can tell you why are the Traxxas you know that as much as I do I asked if you look at the economics some of it's crime but most of it is taxes well you know they vote with their feet the same reason that people are leaving California and moving to Austin if you look at California it's one of the most successful economies in the world and it continues to be so it attracts people but they're losing people I don't think it's in any danger of of decline in nor is New York City um and these are very vibrant places I don't think we're going to ever agree yeah I don't think we're going to ever agree um but I appreciate the time of all three of you thank you to be fair there are also are people moving the other way there are people who move to New York they just don't all leave from New York it's a two-way street in and out of New York and it's a two-way street between Austin and California people leave Texas and go to California and some of them do very well well that's true Sheldon but I can show you study after study after study as you well know and as the professor knows it shows that people are leaving High tax states and moving to low-tech States all you have to do is well they also leave and all you have to do is look at the demographics take pick the nine states that have say a state income tax and compare that are that don't have a state income tax and compare that to that to the states that do it's called tax avoidance and there's nothing wrong with it it's perfectly legal people have different preferences you know if you look at where immigrants choose to live in the United States they often go to those same places that you were talking about you know so I I do think that you know there's movement in both directions yeah but but here's what here's my point here's what I think rational people do and here's what I bet all three of you would do and I bet Sheriff would do I mean uh Sheldon would do it because he's a smart guy okay if he if if he won the lottery tomorrow and won 10 million dollars and paid his taxes and has six million dollars left he's going to at least consider you are too moving to Florida because they don't have a state income tax for the record no I wouldn't never crossed my mind well most rational well I don't mean you're a rational you know that but it can be quite rational tonight but when you're liquid when you're liquid and you don't have to pay a a six percent off the top versus zero percent it's a rational economic move is it not um yeah I agree it's rational I mean um I mean the thing about taxes that we're we're talking about is there a cost or a price and so claiming that the this cost or Price doesn't matter is essentially throwing out the very basic law of demand Basics the basic uh fundamental uh idea and economics the prices matter the costs matter see this one this is what this always boils down to and there's no there's no way we'll ever agree okay but at least two of you believe that government all things being equal can spend a dollar better than people can and and I that's that's your your this is America you can believe that for the record that's not in their testimony I just I just don't agree with you I think people can spend the dollar better all things being equal and and all you have to do if you if you know the history of government you know that that I'm right but I don't expect you to agree with me because you're professors okay thanks Sean always entertaining Senator Kennedy thank you so much for being here

Channel: Forbes Breaking News

Views: 3,338,540

Keywords: Sen. John Kennedy, tax code, Senate

Id: YNlffZb1pLU

Length: 11min 44sec (704 seconds)

Published: Thu Apr 20 2023