Should We Actually Wealthtax Billionaires?
taxdude.substack.com
taxdude.substack.com
Tax is a divisive issue and it always has been. This is because many of us care deeply about the fundamental question of
Am I getting richer or poorer?
I only become poorer due to tax because I pay proportionally more than people earning more than me.
Short of an absolutely radical restructuring of the society we live in, taxes are a necessity, so why do they make the very rich so much richer (proportionally)?
US tax is highly progressive with high earners often losing over 50% of their income to taxes. Even though payroll taxes (which is what I suspect you are referring to) start from $0—they are only 7.65%.
How is that "proportionally more than people earning more than me"?
If your answer is capital gains and dividends—that is precisely what this post tries to address. There simply aren't enough people rich enough who pay less proportionally to make a big dent. If you want to spite them, then go after them. But it's not a way to actually make things more "fair".
To your point, though. If a big wealth tax on billionaires is barely a drop on the bucket, the payroll taxes on very low earners are barely an iota. This is probably a tax cut you can give that would seriously help people out without draining the federal bankroll. I wonder why this hasn't been done.
> I have created a list of the 61 richest Americans. Their combined net worth is $2.3T. Last year the feds spent $6.8T against revenue of $3.8T and a deficit of $3.0T. If the feds had successfully taken every penny from them they would still have run a deficit last year.
Why cut-off at the 61 richest, and not the 10,000 richest? It's also ridiculous to assume we either have to cover the entire deficit, or not tax them at all. This fallacy pops up throughout other parts as well, like here:
> These fortunes took decades to build and will take decades to replenish. So what happens if you tap it slowly with a 5% wealth tax? You raise 115B. This is not even 4% of the deficit.
115B is a ton of money. If directly distributed to the poorest 10 million Americans, that would more than double their income [1]. Comparing it to a huge figure like the deficit (which is artificially high due to war and COVID) is disingenious.
[1] https://dqydj.com/average-median-top-household-income-percen...
> Finally—I would like to point out that we already have a wealth tax. It is paid by most, not just the rich. And in many states and municipalities it does indeed approach Elizabeth Warren’s proposed 2%. It represents 12% of the taxes raised. We call it “property tax”.
This is precisely the problem. Property tax is not enough, and it is not progressive.
To be clear, taxing the rich is both an economic and a moral necessity. If we "deplete" the wealth of billionaires after a few years, then so be it. Only fools and billionaires should think this outcome is something to worry about.
Because I am unsure where to get data on the 10,000. If you find it, I will absolutely udpdate.
>If directly distributed to the poorest 10 million Americans, that would more than double their income
The poorest 10 million Americans likely pay a negative tax rate already (as they should). But you're right—it would. But only for one year—so that's not sustainable.
>Property tax is not enough
What is "enough"?
>If we "deplete" the wealth of billionaires after a few years, then so be it.
Then what do we do once it's been depleted and we've gotten used to it? That would be a big tax gap that would have to come from...you and me. Is that what you want?
I just sourced an income distribution based on percentiles, you can do the same with wealth.
> The poorest 10 million Americans likely pay a negative tax rate already (as they should). But you're right—it would. But only for one year—so that's not sustainable.
If in one year less than 100 people were mildly inconvenienced to generate a major windfall and make a significant difference for 10 million people, that's already a good outcome. We could do it every year for decades and the top 100 richest people would still have billions.
> Then what do we do once it's been depleted and we've gotten used to it? That would be a big tax gap that would have to come from...you and me. Is that what you want?
I have some news for you: it's already coming from you and me. I pay over 40% of my income in taxes that I cannot escape from. The system has no loopholes for people like me, and that's fine actually, I want to contribute to society. However, it boils my blood when people think that because taxing the rich is too complicated, too harsh or - seriously? - would get us addicted on easy money, that those are reasons not to do it.
> What is "enough"?
I think we should find every way we can to tax wealthy individuals in the same scale that high-income employees are taxed.
I'm not against taxing capital gains just not sure redistributing it directly to the average person actually gets you anywhere. To me you figure out a way to fund and/or start more smaller businesses so maybe you have a fighting chance at real competition which is probably how we got into the billionaire problem in the first place.
It's not that clear. For example, the vast majority of money supply during the COVID crisis went straight into the financial system. The relationship to inflation is diffuse, but it's still there, as now huge companies can borrow at close to zero interest and depending on supply, this will create inflation. Also, in Europe the progressive taxation basically does what I just told you, there is enormous support for the poorest and they have a functional society with manageable inflation.
Regardless, my main point was that 115B per year going to the poorest, be it directly or indirectly (healthcare, social services, etc.) is a significant amount of money.