The call to increase taxes on the wealthy has been gaining steam — but that isn’t enough to stop to the growing wealth and income gap in America, Democratic former Sen. Heidi Heitkamp told CNBC on Monday.
“How do we close that gap and make America’s economy and capitalism work for everyone, including working people in this country? It’s not just through the tax code,” she said in an interview with “Power Lunch.”
Prominent Democrats have been floating different plans to make the super rich pay more.
Sen. Elizabeth Warren, who represents Massachusetts and launched her 2020 presidential campaign on Saturday, wants to impose a 2 percent tax every year on households with assets over $50 million and 3 percent on households with assets over $1 billion. Meanwhile, Rep. Alexandria Ocasio-Cortez, from New York, wants to slap a 70 percent marginal tax rate on income above $10 million. And independent Sen. Bernie Sanders, from Vermont, has proposed a big hike in the estate tax, including a 77 percent rate for over $1 billion.
It’s an issue that appears to be resonating with the American public. According to a recent Politico/Morning Consult poll, 76 percent of registered voters believe the wealthiest should pay more in taxes.
“My frustration always in Washington is the sound bite policy. It sounds good. It polls well. Everybody jumps on the bandwagon. But will it solve the problem?” said Heitkamp, who represented North Dakota from 2013 to 2019. She was also tax commissioner of the state from 1986 to 1992.
“I could show you numbers that would suggest it will not solve the problem with wealth disparity and income disparity. It might offer some alternatives,” she added. “I don’t think it can solve every problem that they’re trying to solve with it.”
For one, everybody can avoid the estate tax if they do some planning, and the rich targeted by the 70 percent tax can find ways to shelter their income, she said.
Heitkamp, a CNBC contributor, said she certainly wants to find a solution but “let’s not use simple ways of doing it.”
One thing that she advocates is changing the tax code so that unearned income is not taxed less than earned income. Plus, there are workforce issues and a skills gap that need to be addressed, she said.
Heitkamp is also warning of a looming retirement crisis. She is urging Americans to act now and start saving “before it is too late.”