Even though the one-time wealth tax solution to the Federal Debt has recently been proposed by a minion of Satan, I’m beginning to be a fan. Maybe you can convince me not to be.
Here is the basic concept behind the thing, with some numbers.
The total wealth in the U.S is somewhere in the vicinity of 54,200 billion dollars. [ref]
The wealthiest 1% of Americans own about 42.7% of all of America’s wealth. [ref]
That calculates out to the total wealth of the top 1% being in the ballpark of 23,143 billion dollars.
Our current Federal debt (total debt, not annual deficit) is about 11,855 billion dollars. [ref]
If we simply took 52% of the wealth of the top 1% of wealthiest people in the U.S., as a one-time fee (not an annual tax), we could pay off the entire federal debt and have a little change left over to build some bridges or roads or something.
1) Many of the arguments against an increase in the annual tax on the wealthy would not apply to a one-time fee. Businesses base their books on annual revenue and costs, not the static wealth of the people behind the business. That wealth may be able to provide security as a “buffer” allowing business owners to take some risk, but they do not enter into the annual profit/loss computations for running the business.
2) Many of the arguments about why an income tax would be ineffective, e.g. because wealthy people often are able to shield their incomes through various manipulations, would not apply. This fee would not be based on income, it would be based on total wealth.
3) The argument that an increase in taxes would drive large corporations and wealthy people overseas would not apply here, because this is a one-time fee. If the law is put into effect in 2013, it will apply to all U.S. citizens in 2013. If a wealthy person freaks out and decides to renounce his citizenship, he will still have been a citizen in 2013 so we will still get his money (as he is on his way out the door).
So I’m really not seeing a down-side, other than perhaps hurting the feelings of the top 1% of wealthiest Americans.
They are good patriotic citizens who love America, though, I’m sure. They would understand.
Of course, I’m not the first person to suggest this.
Donald Trump famously proposed a variation on this idea in 1999.
I don’t really fancy the idea of agreeing with Donald Trump on anything. But as they say: judge an idea on its merits, not its messenger.
So what am I missing?
What is the argument against a one-time wealth tax to immediately fix the entire federal debt in one fell swoop?