A New Push to Tax the Rich; Top Regulator Wants to Break Up the Banks
Author: Greg Valliere
January 18, 2023
THE WASHINGTON POST REPORTS THIS MORNING that bills will be introduced tomorrow in in California, Connecticut, Hawaii, Illinois, Maryland, New York and Washington state.
IN ADDITION TO HIGHER TAXES on income and capital gains, the activists are determined to enact a “wealth” tax that would force rich taxpayers to pay taxes annually on assets that they own, rather than just their income that year. This idea, pushed by Sen. Elizabeth Warren (D-Mass.), has gone nowhere in Congress.
HERE COME THE MOVING VANS: If the states consider a wealth tax, the obvious response from “the rich” will be to continue moving to low-tax states like Florida and Texas, The exodus could continue in California, where activists want to impose a 1.5% percent tax on assets of $1 billion or more.
OTHER STATES, SUCH AS NEW YORK, would impose an extra 7.5% tax on capital gains for married couples with income above $550,000, and 15% for couples with income above $1.1 million. One can only imagine the reaction from people in New York City who would be classified as “rich” with annual income of $550,000, over half of which is gobbled up by taxes already.
BOTTOM LINE: Congress won’t raise taxes in the next two years — simply continuing the Trump tax cuts that expire in two years will be tough enough. But if the states, now flush with money, begin to falter in a recession, tax hikes might be on the table.
FOR NOW, THE ACTIVISTS are simply putting their ideas on the table, but they know that polls overwhelmingly show that the public thinks “the rich” don’t pay enough in taxes. Austin and Orlando will continue to grow.
* * * * *
JOE BIDEN’S TOP FINANCIAL REGULATOR sent a chilling message to big banks yesterday, warning that they are becoming so huge and unwieldy that they may have to be broken up.
WE DON’T ANTICIPATE AN IMMINENT THREAT to the industry, but “headline risk” is likely after comments from acting Comptroller of the Currency Michael Hsu, who said yesterday at the Brookings Institution that big banks are becoming “unmanageable.”
HSU DIDN’T CITE ANY PARTICULAR FIRM, but the Wall Street Journal speculates this morning that he had Wells Fargo in mind because the giant bank is an example of what he said are huge banks that have “become so big and complex that control failures, risk management breakdowns and negative surprises occur too frequently.”
THERE’S LITTLE DOUBT THAT HSU WAS REFEERRING TO Wells when he targeted banks’ failure “to resolve longstanding deficiencies despite reprimands from its regulators and onerous restrictions such as caps on its growth.” This is evidence, he said, that some firms are unmanageable and need to be broken up” because of their “sheer size and complexity.”
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
Headquartered in Toronto, Canada, AGF has investment operations and client servicing teams on the ground in North America and Europe. AGF serves more than 800,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
For further information, please visit AGF.com.
©2025 AGF Management Limited. All rights reserved.
