Jamie Dimon says the ‘Buffett Rule’ approach to taxing the rich could solve America’s debt problem

• On PBS, Jamie Dimon described the Buffett Rule as a good idea to reduce US debt.

• It says that wealthier households should not pay taxes on a smaller share of their income than those in the middle class.

• He argued that if the US followed suit, it could continue to spend while reducing debt.

JPMorgan CEO Jamie Dimon proposed a solution to the unlimited US debt: tax the rich at the same rate as middle class people or at a higher rate.

The bank’s chief executive told the “PBS News Hour” in August that the country could rein in bad loans without eliminating spending. Dimon said he expects debt reduction, by continuing to invest in the right initiatives, is “achievable.”

“I would spend the money that helps make it a better country, so some of that is infrastructure, earned income tax credits, the military,” he said. “I would have a competitive national tax system, and then maximize growth.”

Dimon added: “And then you’re going to run a little deficit and maybe raise taxes a little bit — as I would rule the Warren Buffett guy.

This rule assumes that no household earning more than $1 million a year should pay taxes on a lower share of their income than those in the middle class. It got its name from billionaire investor Warren Buffett, who famously criticized the fact that his secretary paid a higher rate of tax than he did.

Calls for wealthier Americans to pay higher taxes have grown over the past year as economists have sought answers to the federal government’s growing debt.

Anxiety grew as the pile of government debt rose to a record $35 trillion. The Congressional Budget Office estimated it could account for 6 percent of U.S. GDP by the end of this year, well above the 50-year average of 3.7 percent.

If debt remains unchecked amid high interest rates, the government will face higher borrowing costs. Some say this could worsen the debt levels and that the US could eventually default.

Otherwise, higher borrowing costs mean Washington will have less to spend on social initiatives. A recent report by the Peter G. Peterson Foundation pointed out that the Congressional Budget Office 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 the most consistent voices on Wall Street sounding the alarm, frequently saying that windfall borrowing will amplify inflation and interest rate pressures over the next decade.

The story continues

Not everyone shares Dimon’s optimism that raising taxes alone can solve the problem. While some commentators supported proposals to raise taxes across all income levels, others urged both Democrats and Republicans to consider spending cuts as well.

However, speaking to PBS, Dimon argued that the US should continue to spend money that helps it maintain its economic strength and create a more equitable income environment.

This article was originally published in August 2024.

Read the original article on Business Insider