White House economic advisor Larry Kudlow implied Friday that Democratic proposals to increase taxes on the wealthiest Americans could lead to economic troubles akin to those in Venezuela.
“Taxing rich people – that’s an old saw from the left. It never works,” Kudlow told Fox Business. “I don’t know how these elections and nominations and candidacies will play out. I mean, look at Venezuela – it’s an absolute catastrophe. They taxed rich people, they taxed everybody and they have equality of sorts – everybody’s poor.”
Kudlow, Director of President Donald Trump’s National Economic Council, was likely referring to freshman Rep. Alexandria Ocasio-Cortez’s proposal for a 70 percent marginal rate on those with incomes above $10 million. Ocasio-Cortez was joined in her call for higher taxes on the wealthy by Sen. Elizabeth Warren, D-Mass., who proposed a “wealth tax” on some of the richest Americans.
The Massachusetts senator’s wealth tax proposal is expected to apply to less than 0.1 percent of U.S. households, and would raise $2.75 trillion over 10 years, economist Emmanuel Saez told CNBC.
Kudlow added that such attempts to remedy economic inequality with higher taxes on society’s wealthiest individuals “never works” and would be a “non-starter.” The longtime conservative commentator said that he’d rather see broader prosperity by other means, but that aggressive tax plans proposed by Warren and Ocasio-Cortez would depress the nation’s gross domestic product, GDP.
“The top 1 percent of Americans pay 37 percent of all the income taxes, OK? And the top 1 percent basically pays more than the lowest 90 percent, so who’s carrying the freight here?” Kudlow added. “The most successful are not only paying their fair share, they’re paying the most. By far.”
A progressive tax system — like that used in the United States — is one that imposes a lower tax rate on households and individuals that earn less money compared to those with a higher income. Such systems take a larger percentage of total revenues from high-income earners than it does from low-income individuals.