Obama's wealth tax plan for the richest is a great idea

Michelle McGagh

The US isn't known for being a particularly friendly place if you don't have any money, but a new wealth tax could see the superpower setting a new agenda for taxing the richest in society.

President Obama has set out some pretty radical taxation plans and he has his eyes firmly fixed on the wealthiest stumping up some more cash.

He wants to tax the richest on their inherited wealth, not their income, principally so that the middle classes aren't disincentivised from building up their own incomes over the course of their life.

The key to Obama's plan is to close a loophole that is used by wealthy individuals, including Mitt Romney – whom Obama beat to take a second term in the White House – to pass on their wealth tax free to their heirs.

This involves raising capital gains tax for those with incomes over $500,000 from 23.8% to 28%.

As a report from the Institute of Fiscal Studies shows the UK coalition's tax changes and benefits cut have been hardest hit by low earning families with children (they're £1,223 worse off a year compared to the average UK household which is £489 worse off) it may be time for our politicians to follow Obama's lead.

Redistribute wealth

The US are about basic fairness, about redistributing wealth and closing the gap between the haves and the have-nots. Unless you are heartless and extremely rich, where's the problem?

The point is that wealth and assets, as opposed to income, is the thing that makes people richer – once someone owns property it will likely rise in value over the years, the same with investments. They go up if you hold them for long enough.

If you are too poor to own assets then those assets continue to be held by a few wealthy people so taxing them only seems fair.

There is a huge concern about inheritance tax (IHT) in this country which I can't understand for two reasons; the first is that most people don't have an estate worth enough to incur the tax, and secondly, if you do then why will you care what tax is levied – you won't be here.

IHT is a perfect example of our greed; we're so greedy we want the money to be there when we can't even spend it.

We have to take a leaf out of Obama's book and realise that passing on assets in the future, isn't as important as the inequality that we are faced with in the present.

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