They’re doing it again: Some wealthy people are asking governments to tax them more.

In an open letter titled “Proud to Pay More” addressed to “global leaders gathering at Davos” for the World Economic Forum, over 250 wealthy people asked, “When will you tax extreme wealth?” They insist, “Not only do we want to be taxed more but we believe we must be taxed more.”

“This will not fundamentally alter our standard of living, nor deprive our children, nor harm our nations’ economic growth,” the letter says. “But it will turn extreme and unproductive private wealth into an investment for our common democratic future.”

Good news for them: The United States already taxes the wealthy. The top 1 percent of taxpayers in the U.S. paid 42 percent of all federal individual-income taxes in 2020. The top 5 percent of income-earners paid 63 percent. The top 25 percent of income-earners paid 86 percent. The entire bottom half of the income distribution paid 2 percent of federal individual-income taxes.

If you factor in all federal taxes and look at total tax rates, someone in the top 0.01 percent of the income distribution faced an average tax rate of 32.9 percent in 2018. Someone in the bottom half faced an average tax rate of 6.3 percent.

Since the letter was directed to global leaders, not just U.S. leaders, maybe the signatories are aware of this fact and are more concerned with what other countries do. But 101 of the signatories are American. The only country with more signatories is the U.K.

Perhaps the signatories want a wealth tax in addition to the existing progressive income tax. But the experience of other countries is precisely why such an approach is undesirable. Several OECD countries adopted wealth taxes only to repeal them later when they didn’t raise revenue as expected. Twelve of the 38 OECD countries had wealth taxes in 1996, but only five do today.

As Chris Edwards wrote for NR in 2019, wealth taxes don’t raise much money and are very difficult to administer. Their average revenue was only 0.2 percent of GDP, and they chased wealthy residents who don’t sign letters asking to be taxed more out of countries that adopt them. Sweden repealed its wealth tax in 2007 after outflows of capital. Many wealthy French people moved to Belgium, and France repealed its wealth tax in 2017.

If the American signatories to this letter really believe they aren’t paying enough, there is nothing stopping them from making a gift to the U.S. government over and above their tax liability. According to the Bureau of the Fiscal Service, there has been an account at the Treasury since 1843 “to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States.” The money can be used for anything in the budget and is “considered an unconditional gift to the government.”

The Treasury accepts electronic or paper payments. Online payments can be made through pay.gov. Mail checks or money orders to:

Gifts to the United States
U.S. Department of the Treasury
Reporting and Analysis Branch 2
P.O. Box 1328
Parkersburg, WV 26106-1328