I predict that in order to reduce the Federal deficit, pay for extraordinary government spending on defense and infrastructure, protect the viability of Social Security, fund a substantial tax cut for low and middle class citizens and diminish the growing wealth gap between the vast majority of Americans and the 1 percent, a one-time tax on estate values over 15 million dollars will be introduced by the Trump Administration the end of the year.
The wealth tax will be applied to personal assets, including owner-occupied housing; cash, bank deposits, money market funds, savings in insurance and pension plans, investment in real estate and unincorporated businesses and corporate stock, financial securities and personal trusts. However, liabilities (primarily mortgages and other loans) will be deducted from wealth accountability. For this reason, the one time levy might more accurately be termed a net wealth tax.
I hope Trump and his minions will expand the basic idea to a variable one-time wealth tax. While it should begin with a 15% tax on net wealth of 15 million dollars, it should increase as follows:
- 25% over 20 million.
- 30% over 30 “
- 35% over 40 “
- 40% over 50 “
- 45% over 60 “
- 50% over 70 “
- 60% over 80 “
- 70% over 90 “
- 75% over 100 “
- 80% over 500 “
- 50% over 1 billion dollars
I’m not sure it would be a good idea to go further than this. The super 1 percenters might Swift Boat me and the merits of the net wealth tax prognostication if extended beyond a billion dollars. Besides, I don’t want to be the Eugene Debs or Upton Sinclair of wellness, though of course I admire both immensely.
There are vastly more taxpayers whose net wealth is far below even the lowest net tax rate foreseen in the expected Trump proposal. Once this plan gains escape velocity, that is, gets the kind of attention a single Trump tweet attracts on Twitter, there will be no stopping it. Any legislator opposing it will be defeated; Fox News commentators and other critics will lose caste.
You may be surprised to learn that Donald Trump himself proposed a one-off 14.25% wealth tax on the net worth of individuals and trusts worth $10 million or more in 1999. Trump claimed that his proposal would generate $5.7 trillion in new taxes, which could be used to eliminate the national debt.
I’m told by Robert Miles, an expert on the sage of Omaha and one of the most respected investors ever, Warren Buffett, that Mr. Buffett is likely to favor the realization of the Ardell prognostication and the Ardell Rules re tax rates for the very wealthy. Warren Buffett put forward a not too dissimilar idea as part of a tax plan proposed by President Barack Obama in 2011. The plan would have applied a minimum tax rate of 30 percent on individuals making more than one million dollars a year.
According to a White House official, the new tax rate would have directly affected 0.3 percent of taxpayers.
Buffett Rule: Raise $20 billion from ultra rich (50,000 earning $1,000,000 +) by requiring 30% tax rate (same as middle class). Buffett Rule net effect: Lower 20 million struggling families tax burden by $1,000 each.
As an aside, Buffett solves the budget deficit in 5 minutes (actually in a 43 second video):
George Will recently lamented the kind of society being bandied about in current (and past) futuristic novels. He observed that they foresee a government system of transfer of income from those who do things to those who don’t. That, he says, suggests that one half of the country would support the other half.
An associate named Bruce Midgett thinks this is right in theory, wrong in the numbers. It’s more like ten percent of the country would support the other ninety percent – as they damn well should be expected to do. Their wealth was not accumulated in a vacuum. Bruce added this to the conversation”
However, others see little choice – it will follow logically. The late Harold Tascher as early as the mid-50’s suggested that, with continued rapid technology advances and business growth, the labor force needed to sustain a healthy and growing national economy cannot reach full employment. This will require some restructuring in ways wealth is acquired and disposed of to ensure dignity for all citizens. Tascher believed the combined wealth of the country could easily provide for this contingency without placing hardships on anyone.
Another, Warren Buffett, noted that we will need fewer and fewer people in our labor force to produce the products and services for our economic needs in the future. Buffett went on to suggest that the only solution to that situation was a progressive system of taxation that recognized the fact that some people will wish to be in the labor force and others will rather go fishing. He also concluded that the nation had more than enough combined wealth to undertake such a conversion to accommodate such an eventuality.
None of these propositions strips anyone of the possibility of earning obscene amounts of income or legacy wealth. We know the problem; we have the need. We have the wealth to solve the problem and address the need. And please, labels be damned. Call it what you will, but assess it for what it is – consideration for the value of every individual and an effort to up that value to its fullest potential for both that individuals and society.
It will be interesting to see how the conservatives respond to this concept, if Trump puts it forward as I predict he will. If he wants money to spend for needed programs, he has little choice.