According to Saez and Zucman, the U.S. tax system is creating an "inequality spiral." That means that as the rich get richer, they are able to shape public policies to extract further tax breaks and other benefits, boosting their wealth and political clout. Saez and Zucman propose a new national income tax that would tax all income—whether from labor, capital or other sources—as a supplement to the existing income tax. Along with Democratic presidential candidates Elizabeth Warren and Bernie Sanders—and 18 billionaires—they also favor a wealth tax.

 

Another recent study suggests that a wealth tax theoretically could be better for the economy than the current tax on capital income. That study, published by the National Bureau of Economic Research, reasoned that under capital income taxation, "entrepreneurs who are more productive, and therefore generate more income, pay higher taxes" while, under a wealth tax, productivity is taken out of the equation entirely, which shifts the burden toward unproductive entrepreneurs and raises the savings rate for the productive ones.