Taxing the rich can benefit the middle class by funding social programs, infrastructure, and education, potentially reducing income inequality. Conversely, it may negatively impact the middle class if it triggers reduced corporate investment, lower wage growth, or if tax avoidance by the wealthy leads to higher taxes on others.
Under Harris's proposal, taxpayers who don't have cash to pay taxes may have to borrow money or sell. That dampening of economic efficiency could have other economic effects. For example, the wealth tax could discourage risky investments, such as angel investing and entrepreneurship.
Taxing the rich is essential to generating the revenue needed to fund public services, education, healthcare, and housing—critical elements that can lift people out of poverty. Tax the rich. End poverty. The wealth of the few should serve the many, not the other way around.
Cristobal Young and Charles Varner's work using New Jersey and California tax data finds near-zero long-run migration elasticities among millionaires. Even after sizable tax increases, the number who leave is small, and the revenue gained from those who stay exceeds the revenue lost from movers.
Because high-income households pay a larger share of their income in total federal taxes than low-income households, federal taxes reduce income inequality.
Their income consists mostly of wealth growth, not active income such as salary. This wealth growth is also a form of income, economically seen, but it's not treated as such by income tax laws.” In short, the ultrarich don't derive their income from sources we can easily tax.
When that happens, prices go up…and inflation isn't far behind. So one could argue that raising taxes on the rich actually helps create the environment for inflation.
Taking Advantage of Capital Gains, Not Salary
One of the biggest reasons Bezos pays little in personal income tax is that he doesn't rely on a traditional salary. Instead, he holds most of his wealth in Amazon stock. Here's why this matters: Capital gains taxes are much lower than income taxes in most cases.
Tariffs are a regressive way to raise revenue. If low-income households consume more of their income and spend more on goods (affected by tariffs) than services (less so), tariffs are regressive because they force those with lower incomes to pay out a higher share of their income than higher-income households.
The top 10 percent of income earners pay more than 60 percent of all federal taxes and 72 percent of income taxes, shares that have been increasing over time.
Taxing the rich could be part of a broader deficit "grand deal" where all taxes and spending are up for debate. But it could only ever be a modest part of such a deal, because the potential revenue available from taxing the rich can close only a small portion of our nearly unfathomable deficits.
Republican budget plans make clear that their main priority is giving away tax breaks to the wealthiest Americans while cutting government supports that are vital for the rest of the country.
“Tesla: The company has used mechanisms like deferred tax assets, research and development credits, and massive deductions from Elon Musk's stock-based compensation to reduce its U.S. federal income tax to near zero in profitable years.”
Yes, Jeff Bezos famously kept his Amazon base salary at around $80,000 per year for decades, choosing to take most of his compensation through stock options, which grew immensely as the company succeeded, making him one of the world's wealthiest individuals without a high executive paycheck. He felt he had enough incentive as a major owner and preferred building wealth by increasing the value of his existing equity rather than taking more salary or bonuses.
Housing, which includes shelter, utilities, and household operations, holds the largest share of the CPI. Food and beverages have the second-highest weight, while medical care is third. Food and beverages had a 0.44 percentage point contribution to the annual inflation rate in December 2025.
In 2022, 87 percent of pass-through deduction benefits went to the top 10 percent of Americans by income, and half of the benefits went to millionaires.
Would the government collect more revenue if it increased taxes on the rich? If you increase taxes on the rich — like the surcharge on income over $5 million that's being proposed — it will raise more revenue, for sure.