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Tiny fraction of NJ families hold a staggering amount of all the wealth

A tiny fraction of New Jersey families hold a staggering amount of the state’s wealth, according to a new 50-state report by the D.C.-based research organization the Institute on Taxation and Economic Policy (ITEP).

The wealth inequality highlighted by the holdings of these extremely wealthy families limits economic opportunities for everyday New Jerseyans, and both reflects and exacerbates racial inequality.

Related story: Wealth inequality in the United States is a clear sign of democracy’s decline

Tax policy is a critical way that policymakers could start addressing this inequality, but right now federal and state tax codes barely tax extreme wealth at all, and instead often favor sources of income that are derived from wealth.

“Runaway wealth inequality is an enormous problem for New Jersey, but the good news is that we have the tools to fight it,” said Sheila Reynertson, Senior Policy Analyst at New Jersey Policy Perspective (NJPP). “Closing the tax loopholes that have helped build so much of this nation’s extreme wealth is a commonsense way that lawmakers in Trenton and D.C. can combat inequality and promote opportunity.”

The report defines extreme wealth as the wealth held by households with net worth over $30 million. This tiny fraction of families holds more than one in four dollars of wealth in the U.S. ITEP estimates that total extreme wealth will reach $371 billion this year in New Jersey and $26 trillion nationally.

Other key findings:

In addition to a wealth tax or a tax on unrealized capital gains as outlined above, the report identifies other ways to strengthen the federal taxation of extremely wealthy people, including:

All of these are viable policy options for lawmakers looking to curb wealth inequality.

At the state level, tax codes are already overwhelmingly regressive when it comes to income – and are even more lopsided when it comes to wealth. State lawmakers seeking to fix this imbalance in New Jersey’s tax code also have several readily available options as identified in the report, such as:

“A very small number of households hold a staggering share of nationwide wealth, and they’ve been able to grow their fortunes in part because our tax system asks very little of them,” said Carl Davis, ITEP’s research director and an author of the report. “New and strengthened taxes on extreme levels of wealth could dramatically reduce the runaway inequality we face today.”

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