|For Immediate Release: Oct. 13, 2022
Contact: Dustin Pugel, KyPolicy Policy Director, firstname.lastname@example.org, 859-230-0098
Tackling wealth inequality through fixing the tax code can boost economic opportunity for Kentuckians
A tiny fraction of Kentuckians hold a staggering amount of the state’s wealth, according to a new 50-state report by the D.C.-based research organization the Institute on Taxation and Economic Policy (ITEP). The report found that the richest 0.1% of Kentuckians, defined as those with a net worth over $30 million, hold a staggering $275 billion in wealth.
The wealth inequality highlighted by the holdings of these extremely wealthy families limits economic opportunities for everyday Kentuckians, and both reflects and exacerbates racial inequality. Tax policy is a critical way that policymakers could start addressing this inequality, but right now federal and state tax codes barely tax extreme wealth at all, and instead often favor sources of income that are derived from wealth.
“The powerful few are taking more and more of our nation’s wealth, but through the tax code we have tools to fight it,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy. “Ending tax loopholes and special breaks that have created fortunes for a handful of elites is a commonsense way that Frankfort and D.C. can reduce inequality and create shared prosperity.”
Nationally, the extremely wealthy hold more than one in four dollars of wealth. ITEP estimates that total extreme wealth will reach $26 trillion nationally this year.
Other key findings:
In addition to a wealth tax or a tax on unrealized capital gains as outlined above, the report identifies other ways to strengthen the federal taxation of extremely wealthy people, including:
All of these are viable policy options for lawmakers looking to curb wealth inequality.
Kentucky’s tax code is already overwhelmingly regressive when it comes to income–and is even more lopsided when it comes to wealth. That problem is being made worse by current efforts in the Kentucky General Assembly to reduce or even eliminate the state’s income tax, primarily benefiting the wealthiest 1%. State lawmakers seeking to reverse course and fix the imbalances in our tax code have several readily available options as identified in the report, such as:
“A very small number of households hold a staggering share of nationwide wealth, and they’ve been able to grow their fortunes in part because our tax system asks very little of them,” said Carl Davis, ITEP’s research director and an author of the report. “New and strengthened taxes on extreme levels of wealth could dramatically reduce the runaway inequality we face today.”