Dalio made the comments in response to a question about Ocasio-Cortez’s proposal to roughly double the top tax rate, which she made during a recent interview on CBS’ “60 Minutes.” The idea appears to have bipartisan support: A recent poll found that 59 percent of voters were in favor of the idea, and even 45 percent of Republicans signaled approval.
The idea from Ocasio-Cortez, who identifies as a Democratic-Socialist, comes just a year after President Donald Trump’s overhaul of corporate and personal taxes, which has allowed U.S. companies to save billions of dollars in taxes.
While other members of the financial elite in attendance at Davos, the annual gathering of 3,000 of the world’s richest and most powerful people, called the idea “scary” or were dismissive of its chances, Dalio was more measured in his answer.
“We’re in agreement on the problem that’s behind that suggestion,” Dalio said. “We have to make capitalism work for the majority of Americans. I don’t know that we’re in agreement on the mechanics.”
In particular, Dalio is concerned about the unintended consequences of raising marginal taxes on the wealthy, and how the additional tax revenue will be used, which could impact U.S. productivity.
“If we’re to have a 70 percent marginal tax rate, most individuals affected by it will calculate whether they should instead operate as a corporation in order try to convert ordinary income to capital gains, so I wonder how that will be handled,” Dalio said. “And I wonder what will be done to influence whether capital will leave the country.”
Dalio is not alone in worrying about the proposed tax hike. Former Federal Reserve Chairman Alan Greenspan said it would be a “terrible mistake” that would harm the economy.