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Commentary
The Moral Case For A Wealth Tax Has Never Been Clearer
Massachusetts is not OK.
While our hospitals and healthcare infrastructure have given us something of a buffer against the winter COVID-19 surge that’s depleted ICU capacity in states like Arizona and North Dakota, our system is still being tested by the staggering numbers of infections the state is now reporting every day. (Tuesday alone saw 3,627 new cases.)
As neighboring states like Vermont and Rhode Island tackle the surge by pausing their reopenings — shutting down certain businesses where transmission can occur, and placing new limits on gatherings — many are looking toward Gov. Charlie Baker and asking, “What are we doing? And why isn't it more?”
Dr. Ashish Jha, the dean of Brown University’s School of Public Health, put this rather urgently last weekend. “Over the past 6 weeks, I’ve gone from uncomfortable to aghast by the lack of action [in Massachusetts,]” Jha wrote in a viral Tweet, pointing out that “Massachusetts now has more new COVID cases per capita than Georgia, Florida, or Texas ... Our hospitalizations, deaths are up 100% in the last 3 weeks ... But our casinos and tanning salons are still open.”
Baker, whose initial COVID response was held up as a model for other governors to follow, has come under fire recently for refusing to meaningfully scale back the state’s reopening as the virus flares up again. On Tuesday, Baker announced a temporary rollback to Phase 3, Step 1 of the state reopening plan. These modest restrictions are aimed at businesses where transmission has been documented, such as indoor restaurants and gyms. Forcing businesses to reduce their capacity and requiring customers to spend less time inside these places doesn't really address the problem here, however. You have to take off your mask to eat, and you have to breathe harder when logging miles on an elliptical.
The virus has also taken advantage of the close quarters in workplaces like meatpacking plants, where people work huddled closely for hours. It has spread through poorly-ventilated offices and, during periods of high community transmission, it can infiltrate theoretically "safer" environments like daycare centers. All of this begs the question, why won't the governor temporarily close these businesses until we're through the worst of the winter surge?
For a Democratic stronghold, Massachusetts has a surprisingly regressive tax code.
While Baker hasn’t said this explicitly, the clear downside of forcing businesses to close is the risk that they might not open again. In spring, Congress provided business loans and limited cash stimulus to Americans to help them survive the pandemic's economic ravages. Massachusetts and many states also passed eviction moratoriums so that people could remain in their homes through the lockdown. As Shirley Leung and Tim Logan wrote for the Boston Globe in November, all of these supports were possible because Congress sent fiscal aid to states. Now, with no second stimulus forthcoming, states with budgets that have taken a beating are forced to come up with their own ways to provide support to businesses and residents.
This is the predicament that Baker and other governors now find themselves in. And yet, I wonder whether this really needs to be a predicament. If the principal thing stopping states from rolling back their reopenings is finding ways to fund temporary support for businesses and low-income residents who live paycheck-to-paycheck — whether it’s zero-interest, loans, more eviction protections or even direct payments for the most vulnerable — then there’s an obvious solution hidden in plain sight.
How about, finally, raising taxes on the wealthy?
For a Democratic stronghold, Massachusetts has a surprisingly regressive tax code. Here, thanks to prominent property and sales taxes, the wealthiest 1% of households pay only a fraction of what the bottom 20% forks over in state taxes each year. This is how it’s been for the last couple of decades, and legislative efforts to level the playing field via tax reform, like the “Fair Share Amendment” have failed to clear the state legislature or the Massachusetts Supreme Judicial Court (which stopped the Amendment from being posed as a ballot question in 2018).
Through the pandemic, the Massachusetts tax code has remained the same, and the wealthiest households here have gotten even wealthier, thanks to sky-high capital gains which the state only taxes at 5%. This feels outrageous, against a backdrop of long lines at food pantries, small business closures and crumbling eviction protections. But it’s also an opportunity for the state to reverse course and do something more proactive to help Massachusetts weather the cold, hard months ahead.
There has never been a more profound or immediate moral case for redistributing wealth like this.
Imagine if Baker and a coalition of state leaders announced an emergency tax code revision that would hike taxes on capital gains incurred during the pandemic — with the promise that the resulting revenue would go straight toward rolling back the reopening, as public health experts have urged? This would not erase the need for more support from Congress, but it would help Massachusetts take action that’s commensurate with the COVID surge we’re experiencing. It could enable us to properly shut down the riskiest venues for a time, without throwing small businesses or workers under the bus. Even a 4% capital gains tax hike could net the state upwards of $1 billion in revenue. So consider the windfall for Massachusetts if gains incurred during the pandemic were taxed like income, at an even higher rate of 20-30%.
There has never been a more profound or immediate moral case for redistributing wealth like this. Argentina recently recognized this by passing a "millionaire's tax" that will require its most affluent citizens to pay a 3 to 5% tax on their total wealth (the revenue will support the healthcare system and economic relief measures).
Meanwhile, in the U.S., as Congressional Republicans led by Mitch McConnell starve states of much-needed money, it falls upon states like Massachusetts to do just the opposite. Rather than shrugging and waiting for a federal cavalry that doesn't appear to be coming, the commonwealth should require the most fortunate to help their fellow residents get through this.
If we cannot ask the wealthiest among us to pony up, then we need to reconsider the premise of our democracy, who it's built to serve and whose lives really matter.
