On July 20, 2021, the world’s richest man: Jeff Bezos flew to space alongside his brother Mark Bezos. The suborbital flight lasted over 10 minutes, reaching a peak altitude of 66.5 miles (107.0 km). The flight qualified him as an FAA commercial astronaut. It is estimated that this short flight cost Bezos $10-20 million, a mere drop in the bucket for the Amazon CEO who is reported to have a net worth of $177 billion. This minimal cost which only lifted a short flight could have lifted the burden of those struggling in the world. This brings up the question: Should the rich be taxed more?

But first what do we mean when we talk about “the rich”?

These are:

• The well-off: About 9% of the households in the U.S. have income greater than $200,000, and they get almost 45% of all pre-tax income, according to the Tax Policy Centre.
• The really rich: the top 0.4% of households—have incomes above $1 million a year and get 13% of all pre-tax income. Since the 1980s, those at the very top have enjoyed faster growing incomes than the rest of America. The Congressional Budget Office estimates that the best-off 1% of American households (average annual income $1.8 million in 2016) saw their inflation-adjust incomes before taxes nearly triple between 1979 and 2016; the next best-off 9% saw theirs grow by 75% while everyone else saw their pre-tax incomes rise by 33%.

The talk of tax rises is common — and there is a growing appetite for taxing the wealthy, which has been out of favour since the 1970s. In the US, the Democrats control all three branches of the federal government for the first time since the early Obama years. The Biden administration is planning the first major tax hike since 1993, which will include higher taxes on higher earners. The COVID-19 pandemic has ravaged the economy, and the high unemployment and extremely low interest rates provide ample justification for budget deficits. Still, in the years ahead, many feels that the U.S. government needs more revenue, in order to fund urgent fiscal priorities such as infrastructure, healthcare and education. As policy-makers search for new revenues, those at the top of the income distribution are natural targets for tax increases, since their incomes have grown the most rapidly in recent decades.

Several Democratic presidential candidates propose to raise taxes on the rich to raise money both to pay for their spending agenda and to reduce income inequality. They argue that the people who have benefited the most should bear the burden of the cost of programs that help the rest of the population. In light of the widening gap between economic winners and losers, they would use the tax code to reduce inequality more aggressively than today’s tax code does, and they devote some of the revenues to fund programs that benefit those less well-off. They also point out that the average tax rate paid by people at the top has fallen.

The arguments against progressive taxes on wealthier people are well-known: tax people less and you incentivise wealth creation. You prevent wealthy people from becoming tax exiles and stop money fleeing offshore; if you give the rich more, they spend more and everyone is richer. A related issue is the idea, that philanthropy from the rich can replace some of the work of taxation. An example is the Gates Foundation, which has given away more than $50bn since its inception. Yet, philanthropy as a substitute for government spending brings its own problems. One is that billionaires can choose their causes in a way that governments cannot. Philanthropy tends to benefit causes such as the arts and the environment over ones such as alleviating poverty and poor health. A further problem here is that allowing philanthropy to take over from taxation is another way of ceding power from the state to the wealthy whose influence is already cause for concern.

Senator Bernie Sanders described it as: “What kind of nation are we when we give tax breaks to billionaires, but we can’t take care of the elderly and the children.” Will the rich be taxed or will they continue basking in their well of wealth without a care in the world?