This is going to cost me a lot of money. And I’m fine with it. President Joe Biden’s newly proposed tax rates would overwhelmingly increase taxes on someone like me—a venture capitalist for whom the capital gains rate is really, really important. Even though Biden’s plan will take a lot more of my income and offer little tangible benefit to me in return, I still think he’s right. To be clear, I’m not a progressive. I’m not even a Democrat. But it’s also clear that people in my tax bracket have more money than we reasonably need, and that life is just way too hard for far too many others. Something needs to change.
You can make valid arguments against the efficacy of the Biden plan itself. Appropriating money is very different from solving an actual problem. But it is, objectively, a major policy failure that a family living in the richest nation in history should be juggling multiple jobs while still struggling to pay for pre-school, for health insurance, for college, or for child care. Expanding programs that help to pay for these basic human needs makes perfect and unassailable sense.
Is it possible that the federal agencies administering these programs will do a bad job or waste money? Yes, that happens. I’m worried that Biden, a career legislator, will fall victim to the notion that his work is done if the American Families Plan is signed into law. To be a success—and to survive the next Republican administration—the agencies he controls need to administer the funds efficiently and effectively.
You could argue that it would be more effective to impose the same tax increases but simplify Biden’s ambitious spending plans by simply disbursing the money to people who need it as a form of universal basic income. Proponents of UBI point out that individual people are better equipped to decide the best way to spend their tax benefits than thousands of bureaucrats across multiple federal agencies. Doing so would save tens of billions of dollars that would otherwise be lost to the upkeep of our mammoth administrative state.
You might even argue that less after-tax income for people like me would mean less money for the charitable causes that my family foundation promotes, including advancing mobile voting and addressing childhood hunger (something Biden’s bill would help address by expanding school nutrition programs). Possibly some high-income people would put less money into the local economy. But the notion that I’ll just curtail my business activities—that I’ll stop investing and launching new companies and ventures because taxes went up—simply isn’t true. Anyone arguing otherwise is most likely bluffing.
What’s not arguable is the critical need to redistribute wealth in this country. According to the U.S. Census Bureau, 34 million people in the United States, or 10.5% of our population, live in poverty. This past summer, surveys showed 25% of Americans didn’t have any emergency savings and 38% couldn’t come up with $500 in cash without selling something or taking out a loan. In 2019, 26 million people did not have health insurance at any point during the year. While I don’t believe that the public sector can solve every problem, I know we can’t live like this.
I grew up either middle class or upper middle class, depending on how my dad’s business in the garment industry fared in any given year. My college tuition was a quarter of what it would be today. I then spent the first 10-plus years of my career working in and around government, where salaries are pretty low compared to the private sector. So I haven’t always had a lot of money.
When I started making good money (mainly by working with early-stage tech startups), I was amazed by all of the things my family could suddenly do: pay off our student loans, get a nice apartment, buy a car, get Mets season tickets. But as our net worth continues to rise, the relative benefit decreases proportionally. Sure, higher taxes may require me to make some choices—I’d be more discriminating about big-ticket items—but the sacrifice is minimal compared to the gains that tens of millions of people would receive by having access to school lunch, reduced tuition, more affordable health care, paid leave and basic child care. This is not some act of altruism—it’s just a basic acknowledgment of relative costs and benefits.
I don’t share the progressive view that the accumulation of wealth is inherently unjust. Getting to where I am now took a tremendous amount of hard work and a lot of risk. I made sacrifices along the way that many other people would not. Building a business and achieving financial security was hard. But a single mom holding down two jobs works a lot harder than I do. And even if I’m wrong about that, a single mom holding down two jobs certainly needs a lot more help than I do. Being able to feed your kids or afford a babysitter or get a basic education is unquestionably more important than whatever I’d buy with the incremental extra income.
Ultimately, what Biden proposed last week in his first address to Congress is not going to be the law that is passed by Congress. That’s politics. Biden opened negotiations with a sky-high bid (nearly doubling the top capital gains rate from 20% to 39.6%) knowing full well that the Senate will negotiate rates down and that the House will demand reinstating the SALT deduction, providing relief for people from high-tax states such as New York, New Jersey, and California. So the final product won’t impose as big of a hit as the wealthy are fearing right now.
But even if Biden pulls off a huge legislative win and gets exactly what he wants, it’s still for the best. At this point, I get more fulfillment knowing that my work is helping other people than I do from flying private or buying another vacation home. So while people like me lose from Biden’s plan, we also win. And that’s enough.
Bradley Tusk is a venture capitalist, writer, philanthropist, and political strategist.