Just Eliminate the Income Tax. Instead, Tax Wealth

This was written as a response to the tax "plans" that stupidly - or deliberately - conflate Social Security and the deficit. But now, it strikes me as the perfect "compromise" between the rethuglicans demanding tax cuts for the obscenely rich and liberals refusing to let the working and middle class bear all the tax burden:

Tax Wealth.

Leon Friedman at The Nation:

Is it really necessary that the poorest among us give up benefits or pay more sales taxes to reduce the deficit, rather than have the richest make a fair contribution? How can we significantly reduce the current deficit of more than $1.3 trillion and similar deficits in the future without cannibalizing Social Security, Medicare and other mandates? One obvious place to look is at the wealth of the top 1 to 5 percent of the population. Every study of inequality in this country has noted the growing wealth of those at the top, largely the result of the Reagan tax cuts of the 1980s and the Bush tax cuts of 2001 and '03. The top 1 percent of the population now own 35 percent of the total wealth of the nation (they owned 20.5 percent in 1979). The next 4 percent own 27 percent of the total wealth. So together, the top 5 percent own 62 percent of the total wealth of the country.

What does this mean in actual numbers? As of March 31, the total net worth of all American households was $54.6 trillion, according to studies made by the Federal Reserve Board. The top 1 percent consists of about 3 million households, each with a net worth of at least $8.3 million. The total net worth of that group is 35 percent of $54.6 trillion, or $19.1 trillion.

Wouldn't that amount be an appropriate target for a federal tax? Imposing a tax based on wealth rather than income is not a new idea. The federal government and most state governments impose an estate tax based on the total net worth of the individual at the time of death (the federal estate tax, which lapsed in 2010, may be reimposed in some form next year). And most local government units have a tax that measures the value of each person's real property, which is levied on an annual basis, but such taxes do not touch personal property.

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There are many good reasons for imposing such a tax. First, the rich can afford it.

Second, there are a lot of rich people whose wealth is partly the result of government largesse, like the Bush tax cuts, 30 percent of which went to the top 1 percent. Third, taxing the wealth of the very rich will reduce the massive deficits and thus obviate the need to cut vital government services, as well as Social Security and Medicare.

Suppose such a wealth tax were imposed on the top 1 percent of households. It would raise $191.1 billion each year (1 percent of $19.1 trillion), a significant attack on the deficit. If we extended the tax to the top 5 percent, we could raise $338.5 billion a year (1 percent of 62 percent of $54.6 trillion).

Many years ago, Donald Trump suggested a one-time wealth tax of 14.25 percent on all Americans worth more than $10 million to wipe out the entire federal debt at the time, amounting to $5.7 trillion. Today we would need $13.5 trillion—about 40 percent of the wealth of the top 5 percent—to do it, which is highly unlikely to happen. But if we had the courage to take such a step, we would eliminate $414 billion in annual interest payments on the national debt.

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So what would a wealth tax mean? Because of the openness of our stock markets and the filings of the Securities and Exchange Commission, it's easy for Forbes to determine the wealth of the 400 richest Americans. Thus, we have no trouble determining who would be subject to the tax. If a very rich person had a net worth of $10 billion, he or she would have to pay 1 percent, or $100 million, each year to the government. In the face of the nation's stark financial problems, our richest Americans can afford this modest diminution of their wealth. And they certainly would have no right to complain, since it was previous government actions that enabled them to accumulate it.

Read the whole thing.

Think outside the box. Change the game. Throw the class warmongers for a loop.

Tax Wealth.