From Business Insider– By Filip De Mott –
JPMorgan CEO Jamie Dimon has put forth a solution to unrestrained US debt: Tax the rich at the same rate as middle-class people, or at a higher rate.
The bank executive told “PBS News Hour” in August that the country could clamp down on runaway borrowing without eliminating spending. Dimon said he expects that reducing the debt while still investing in the right initiatives is “doable.”
“I would spend the money that helps make it a better country, so some of this is infrastructure, earned-income tax credits, military,” he said. “I would have a competitive national tax system, and then I would maximize growth.”
Dimon added, “And then you’ll have a little bit of a deficit, and you would maybe just raise taxes a little bit — like the Warren Buffett type of rule, I would do that.”
This rule posits that no household making above $1 million a year should pay taxes on a lower share of their income than middle-class earners. It earned its name from the billionaire investor Warren Buffett, who famously criticized the fact that his secretary paid a higher tax rate than he did.
Calls for wealthier Americans to pay higher taxes have grown louder in the past year as economists have searched for answers to the federal government’s skyrocketing debt.
On PBS, Jamie Dimon described the Buffett Rule as a good idea for clamping down on US debt.
It says richer households shouldn’t pay taxes on a smaller share of income than middle-class ones.
He argued that if the US followed this, it could continue spending while still reducing debt.
Anxiety has grown as the government’s debt pile has ballooned to a record $35 trillion. The Congressional Budget Office has projected that it could make up 6% of US GDP by the end of this year, which would far outpace the 50-year average of 3.7%.
If debt remains unchecked amid high interest rates, the government will face higher borrowing costs. Some say that this might compound debt levels and that the US could eventually spiral into a default.
Otherwise, higher borrowing costs mean Washington will have less to spend on social initiatives. A recent report from the Peter G. Peterson Foundation pointed out that the Congressional Budget Office has estimated that by 2054, interest payments on the debt will triple Washington’s historical spending on research and development, infrastructure, and education.
Dimon has been among Wall Street’s most consistent voices to raise the alarm, frequently saying runaway borrowing will amplify inflation and interest-rate pressures through the coming decade.
Not everyone shares Dimon’s optimism that tax hikes alone can solve this problem. Though some commentators have pushed for tax-hike proposals that embrace all income levels, others have urged both Democrats and Republicans to consider spending cuts as well.
However, speaking with PBS, Dimon argued that the US should continue to spend money that helps maintain its economic strength and creates a more equitable income environment.
Photo caption (above): Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase. (JPMorgan Chase photo)
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