Comment by Kimberly Clausing

Labor income is subject to both payroll and income taxes and has high tax compliance rates due to third-party reporting. Capital income, including income from excess profits, is often lightly taxed in the United States and has lower compliance. [...] While labor income is already taxed in a highly progressive manner in the U.S. tax system, capital income is often untaxed or lightly taxed at the individual level. [...] A more robust system of capital income taxation is also key to meeting coming technological disruptions. The widely discussed AI revolution may shrink labor income in the economy relative to capital income [...] Still, having tools in place to properly tax capital income is a key part of ensuring that the benefits of such innovations are broadly shared.