Who Will Pay for Free Money Handouts?
Please note Yellen Says Biden Administration Undecided on Wealth Tax
Treasury Secretary Janet Yellen said Sunday that the Biden administration hasn’t decided whether to pursue a wealth tax, but will likely issue proposals to address the swelling federal budget deficit.
A group of progressive lawmakers including Sen. Elizabeth Warren (D., Mass.) proposed March 1 a so-called ultra-millionaire tax. The legislation would create a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion and an additional 1% surtax on those above $1 billion.
Asked about the idea on ABC’s “This Week with George Stephanopoulos,” Ms. Yellen said it isn’t something President Biden himself has proposed, but that the administration might consider it.
“That’s something that we haven’t decided yet and can look at,” Ms. Yellen said. She noted that Mr. Biden proposed higher taxes on corporations, on some individuals and on capital gains or dividend payments during his 2020 presidential campaign. “Those are alternatives that address—that are similar in their impact to a wealth tax.”
Ms. Yellen said the U.S. government needs to rein in the deficit “in the longer run” and that she expects the Biden administration to take steps to do so.
Biden Will Consider Anything
Biden may have not decided yet but let’s be clear about this. Biden will consider anything that is on of off the table at the moment.
Here’s the deal.
If Democrats can pass it, Biden will sign it.
Pretty much it’s that simple. I suspect a wealth tax will not pass. A wealth tax is may not be constitutional depending on how it’s structured, but that won’t stop them.
However, one or two Democratic Senators would not sign it and that would be the end of it. That is the main reason Biden is officially “undecided”.
He intends to decide nothing but will rally around any and every tax hike he can get.
Rein in the Deficit
Yellen’s phrase “rein in the deficit” has zero to do with cutting spending and 100% to do with raising taxes.
Democrats are after your pocket book and the more they succeed, the more likely they lose the House and Senate in the midterms.
Mish
Myself, I do not favor additional general wealth taxes. We already have a wealth tax, actually, in the form of property tax, by the way. My view is that there is nothing inherently wrong with wealth in and of itself. A pool of money is just that, a pool of money for investment, and you need those for the economy to grow. Instead, I favor a luxury tax. If the wealthy person wants to leave his/her money invested in the economy, great. If he/she wants to enjoy opulent consumption, tax it. Have a tax that is graduated, where items the essential, like basic food have no tax. Items that are deemed to be a minor luxury have a tax, and the more “luxurious” it is, the higher the say. So, say you have a 20% tax on lobsters and on bottles of wine in the $30-100 range and jewelry in the $500-$1000 range. Then a 30% tax on wines from $100-250/bottle, and on jewelry from $1-2000. You can go up from there, with taxes of 100% or more on yachts and private planes.
Thus, if Bezos has billions, but leaves it invested in the economy, great, but if he buys a yacht the size of Rhode Island, let him pay a stiff tax on it.
No chance to PAY with income taxes because:
1. The income tax bracket for the rich us too low
2. Unless wealth tax is used with very high tax, the deficits due to spending are too big !
3. The number of the poor increased a lot due to pandemic, hence, earned income tax credit is a big burden with open border.
4. The new illegal immigrants will increase left and bound after the first million cross the border, there will be another ten millions children to cross the border with the mission to bring their parents into US to live. All will look for US taxpayers to feed, house, take care of them for years, ACLU will provide free legal services to help them to destroy US.
So, you should know what is coming soon !
And if you are well enough off and get no money you get to break one law of your choice. And no you can’t directly hurt or harm someone or their property. But it would be a gift to all those that pay in!
Talk about a boondogle. And a mismanaged one at that. That’s 15 billion of wasted money that accomplished nothing .
For crying-out-loud who would put a fence up to protect themselves is a pure idiot!
“matter of principal” principle
Clearly the Rich are better placed to pay a tax. Throughout history the Rich are portrayed by the many as the mean, unscrupulous Scrooge like Barons. Take from the rich, give to the poor, the motto of the fictional Robin Hood. Most of the rich are rich because they’ve pursued “The American Dream”. In doing so they’ve taken risks, probably been a bit lucky, employed many people and paid their taxes. In general, they’ve just tried to make the most of their lives, and been successful at it. In my opinion, talk of “punishing them” is misplaced.
They’ve paid their taxes, their accrued wealth is net of their taxes. As a matter of principal I don’t agree they should be taxed twice on the same money. It could be argued they didn’t pay enough tax in the first place, but that’s a different matter. If that’s the case it should be addressed separately. Income from their wealth should be taxed, but not the actual asset. Introducing wealth taxes, taxing the same money twice, is a road down a slippery slope that will ultimately lead to a poorer nation. A more balanced fiscal policy in which the rich pay a larger share in the first place is a better route in my opinion.
Do you know what communism means?
You know America has been fighting a war in the Gulf for 20 years using its “credit card” also a voluntary army…again Americans while hardly know where the middle east is located (maybe near Toronto).
Somehow America will have to find a way to pay some of its bills. They cannot tax the poor, they can tax the riches since they have seen the greatest accumulation of wealth in 40 years.
I too like lower taxes, but someone has to pay for the stuff
historically, the rich have paid the lions share of taxes and have benefited the most. there was a time where there were no federal taxes on individuals who made less than 3000. at that time, 70% or more came nowhere near that level, and taxes were 100% during war time.
I believe this is a head fake. Even if Democrats truly cared to offset the deficit, it would be via taxing the middle class as usual. And given that the typical middle class family only has a salary and real estate, expect that to be what is taxed.
You are damned right, the middle-class ends up paying for everything!
The money would have to come from the selling of assets or taken out of a bank. To sell, someone has to be willing to buy. To find enough buyers, prices might plummet which would hurt 401k/pension plans. If bank reserves go down, they can’t lend out as much which hurts their profits. There’s always a downside that folks don’t consider, the rich don’t carry all that wealth around in their pocket or keep it under a mattress, it’s typically at work in an investment.
tax rates are very low historically
Biden has proposed increasing the corporate tax rate from 21 percent to 28 percent; taxing investors’ capital gains at normal income rates for those earning more than $1 million; raising the top rate from 37 percent to 39.6 percent; and lifting the cap on Social Security payroll taxes, among other changes his campaign says are designed to insulate Americans earning less than $400,000 a year from new tax hikes.
I doubt this impacts consumption among the wealthy. It probably changes their saving rate or shift the investment to tax sheltered ones. As far as the corporate rate. Republicans should never have lowered it. At least if they did they needed to remove deduction and credits.
corporate tax rate would still be lower than where it was under Obama
https://tradingeconomics.com/united-states/corporate-tax-rate#:~:text=Corporate%20Tax%20Rate%20in%20the%20United%20States%20averaged%2032.37%20percent,of%201%20percent%20in%201910.
What is wealthy ? 400k is not wealthy in California, New York or even other places now. You are down to about 220k after federal state and local taxes in places with high real estate costs. Then if you have kids going to or in college it goes to zero very quickly from there. There will be consumptive impacts the closer to you get to 400k.
“Free” money doesn’t exist.
Someone, somewhere, pays.
Sometimes it’s all of us.
the master plan is 2% inflation while not giving real cost of living raises. it is the ultimate plan to keep the poor poor. when the national average wage was 10,000 a new car could be purchased for under 3,000. why is the national average wage less than 100,000? why hasn’t automation driven down the cost of everything?
The wealthy already pay a hugely disproportionate amount of taxes.
https://taxfoundation.org/summary-of-the-latest-federal-income-tax-data-2020-update/#:~:text=In%202017%2C%20the%20top%2050,percent%20combined%20(29.9%20percent).
History shows, if you tax them too much, they’ll relocated to a place with lower tax rates and you end up losing all tax revenue from them.
Are you really taken in by this? Don’t be silly.
There are two problems here. One is that “the top 1 percent” stretches all the way from people like me…..to people like Jeff Bezos….and the problem is that yes…..on EARNED INCOME we pay higher taxes.
But the more you get towards the top….the less the income is earned income and the more wealth accrues from assets like stock ….which aren’t taxed at all until Jeff sells some…and then it’s at the lower capital gains rate.
Much of the wealth accumulated by rich people NEVER gets taxed.
For regular people who don’t get billions of bucks in stock options…..the same thing can be accomplished with real estate…I probably NEVER WILL pay capital gains tax on the equity in my investment properties….EVER. All I have to do to avoid it is to borrow against it instead of liquidating it.
High earners pay income tax through the nose…..but the “wealthy” can defer, avoid and finagle taxes forever and a day.
This is a very common error made by journalists, almost none of whom know the difference between a high income earner and a wealthy person. They are far from being synonymous.
“the same thing can be accomplished with real estate…I probably NEVER WILL pay capital gains tax on the equity in my investment properties….EVER. All I have to do to avoid it is to borrow against it instead of liquidating it.”
They used to have Window Taxes that would get around that. 🙂
That’s covered in depth in the Daylight Robbery book Mish reviewed. A very interesting historical artifact that explains why the interiors of so many historic buildings are very dark inside. Hehehe.
The wealthy still pay a hugely disproportionate amount of taxes. Whether from earned income or capital gains. Capitals gains taxes are higher for high income earners.
Any your logic about them not paying taxes until they sell is like complaining about not paying sales tax until something is purchased.
“Capitals gains taxes are higher for high income earners.”
You don’t say?
Being a very high earner, and having paid capital gains from time to time, I actually already know that. I know that very well.
You still aren’t getting it. If I don’t sell assets, I don’t pay ANY capital gains . Not a lot. Not a little.
NONE.
You can be EXTREMELY wealthy and NOT necessarily be a high earner….and pay NO INCOME TAX. Ask President Trump if you don’t believe me. He knows how.
I can defer capital gains on most of my assets forever…..or at least until I drop dead…and then the 1031 laws allow my kids to cash out with NO TAX.
My goal is to live on cash flow in my old age, sit on the rapidly multiplying wealth that comes from my equity, and pay little in tax, because even though I’m “wealthy” I won’t be a really big earner the way I am now.
High earners are the ones who get screwed….not billionaires. Billionaires don’t pay much tax in proportion to their overall compensation.
“High earner” is synonymous with what we used to call “upper middle class”….doctors and lawyers and successful small business owners.
Hence my term that I call the High Earners Dilemma.
High earners have a choice. Learn how to play the rich mans’s game and shift to strategies that allow you to defer and/or avoid most taxes…..or learn to feel good about providing the socialists with more “other people’s money”.
I got tired of getting screwed when my taxes hit a quarter million a year…and I started being proactive. Now I pay half as I once did…..even thought I am worth a great deal more in terms of net worth than I was then.
“And your logic about them not paying taxes until they sell is like complaining about not paying sales tax until something is purchased.”
No it isn’t. You’re quite wrong about that, and it’s not a small error on your part. It’s a big one.
You simply don’t understand that we ONLY tax income, and income is NOT wealth. And we tax EARNED INCOME way higher than other income…and we don’t tax equity at all.
I can live off borrowed equity from now on……and never pay a dime of tax. That’s how some of my mentors do it. Robert Kiyosaki has written about this extensively. I’m not making it up.
I suggest that instead of trying to school me, you school yourself first . You have a lot to learn. Most people never get this stuff, and you probably won’t either, especially if you don’t listen to people who know more than you do.
Only long term capital gains are taxed at a different rate. Not all other forms of income. Dividends are taxed as ordinary income.
And the reason capital gains are taxed when you sell is because that’s when the profit is determined and that’s when you get the money.
And none of this changes the fact that the wealthy pay a hugely disproportionate amount of taxes. You wealth doesn’t further your argument. it just makes you look like a showoff.
No, you are just fucking flat wrong, buddy. And I’ve explained to you why and how your’e wrong, with full details….and you haven’t shown me I’m wrong in any way. You just keep repeating your mantra.
Jeff Bezos and all the accidental billionaires……their wealth is in company stock. Most modern companies don’t EVEN PAY dividends. Dividends are a quaint throwback to an earlier time, for the most part.
No smart rich people pay much in terms of short term gains….if they take gains, they take long term capital gains. In my adult life the rate on that has gone up and down, but now is three tiered, with only HIGH EARNERS paying the top rate of 20%, which is STILL 17% percent lower than the highest marginal rate on EARNED Income….also only paid by HIGH EARNERS.
So, if a CEO keeps this actual EARNED salary below $441,450, he could collect a billion dollars worth of LTCG’s and still pay only 15% in tax. That’s a lot of tax alright, but NOT in proportion to what most people pay on EARNED INCOME.
Many .01 percenters have their money in bonds that are exempt from state income tax. So they get. break on that.
But the Trumps of the world are mostly living on equity they borrow out of their real estate…..which is NOT taxed AT ALL.
Are you some kind of merchant of doubt sent to let us little people know the richest people in the world already pay too much tax, poor things, so lay off the rich? news flash. You’re going to have to actually show your work.
Because the billionaires buy the tax code they prefer from the government of, by, and for “all” the people. It’s time to change that, whatever it takes …
Yes. We are near the endgame imo. Because when the smallest percentage of people owns 90% of assets, the game is nearing the end. This is actually a good thing. One reason I believe many of these billionaires have pledged their wealth to donations is because they know what’s coming. They would rather be remembered as having done good for the world and not be seen as wealth hoarders.
Not really, look at California, you have to pay taxes even after you move for 10 years on wealth taxes.
They can make laws to prevent tax avoidance except a few loop holes fir the very rich like Bill Gate. Check to see whether Bill Gates paid a lot of taxes or not.
There’s another aspect to this which I rarely see considered: If someone has a fortune of $100 million dollars, then a 2% tax still leaves them with a balance of $98 million. What injury has this person actually suffered? I mean actual concrete harm to their circumstance, not abstract questions of fairness. How will this 2% tax change their life? How will they suffer? Will they have to cancel or put off buying something they wanted or needed? I don’t see how this person’s life would be affected in any way. On the other hand, the money could make a huge positive difference for a lot of people, for society as a whole. So to me it looks like all positive, no negative.
Anyone with net worth over $100 million already has enough money to buy anything they want to buy, for the rest of their life. With few exceptions, the main thing people with more money than that spend it on is increasing their power over other humans. Personally I can’t really comprehend why people with that much money are even trying to get more. It’s a sickness. How much is enough?
One common objection is: But government wastes money, therefore this is a bad idea. To me these are separate issues. I think a wealth tax is a good idea, long overdue; and I strongly agree that we need to reform/improve the way the government spends money.
And the other objection inevitably raised is “Rich people will hide their money to avoid this, so it’s pointless”; to which the obvious answer is simply: Enforce the law. Make cheating this tax the highest crime, and enforce it with gruesome penalties. Is that so hard?
You are thinking of 100 million as a big pile of cash like Scrooge McDuck.
Virtually always, 100 million is not a big pile of cash but rather multiple assets. So 100 million might be a 5 million dollar home (with a 3 million mortgage) and a business that’s worth 95 million (again with some amount of debt attached to it). So they may well not have 2 million in cash to pay this tax (which is meant to be yearly and not 1 time) and so 2 million might cause them the loss of their home or business (whole or part).
There is some truth in what you say, I am oversimplifying. Still, I doubt that this tax would cause people to lose their home and/or business, or at least I believe such cases would be rare. Perhaps at worst they might have to downsize from a $5 million home to a $2.5 million home; sorry for that person but I don’t consider that suffering. And it has to be weighed against the overall good the revenue from this tax could create.
can’t seriously be worried about increased taxation on folk who have more money than they will ever need. but tax reform should lower tax on earned income and increase tax on unearned income and lazy capital gain on property. the way to rich now is via asset inflation not added value or effort.
….A wealth tax on net worths of 50 million and more ? ….Those are the very rich, not exactly middle class ,are they ? VERY reasonable I d say ! In Europe we won t be that lucky, ALL money deposits are already being plundered by the ECB, most banks haven t passed it on to their clients yet, at one point they will though, from 500K onward that would be depending which bank…and Christine(our ECB president), under the pretext of the C19 pandemic, must be pondering a wealth or socialist solidarity tax, even on moderate net worths, it is only a matter of time, of that I am sure …..Like I said, you americans ARE lucky, even under your new, politically correct regime, stop whining !
50 million is just the starting point. As soon as they realize they didn’t get enough money or they have a need for more money the amount will lower to 10 million and then 1 million and so on.
“Because that’s where the money is.”
The rich have stolen everything that isn’t nailed down in this country. These obscene
levels of wealth disparity are historically unheard of. What are the rest of us supposed to do- live in a cardboard box next to the highway, and count the new Lexus and BMWs as they go by?
I learned how to invest and make money. I was born poor as a churchmouse.
It seemed to be the best revenge I could come up with, given the circumstances. I did manage to leverage myself with a good education first.
If interest rates were permitted to find a market rate without manipulation we wouldn’t have a wealth gap like this.
At some point, bitcoin needs to be taxed or seized by the federal government.
It’s already taxed, fairly onerously. It’s supposed to be anyway. Every transaction.
It will be made illegal or irrelevant somehow when sovereign currencies go crypto. At that point it’s a real problem for the government. Right now it’s being promoted by some in positions of financial power, because there is so much potential to make money off it with derivatives…it’s the first new asset class in 100 years.
How can it be an asset class if its valued in U$D ?
All assets are valued in dollars at at the moment……even gold, although some might argue about that one.
Bitcoin is valued in every currency.
And as Eddie_T mentioned, it’s most definitely taxable and you are supposed to report it on your tax form. This years form specifically calls it out just in case there was any doubt (in prior years it was lumped into the collectibles category like gold is).
There is this story, probably apocryphal, about a reporter once asking the famous stick-up artist Willie Sutton why he robbed banks.
He is said to have replied, “Because that’s where the money is.”
So wherever the money is, that’s where our political class can raise more tax money to pour into their pet pork projects that make them and and their donors rich, while the rest of us pick up the bill.
There might be some tiny wealth tax…it has good optics in a day and time when everybody knows that .1% of the population owns more assets than the bottom 90%….. They also make 5% of the total income….
But as long as we have a system where money can buy legislation, I’d look for billionaires to still get off fairly light.
What I see is a system that is making people feel like it isn’t worth it to play a rigged game where you can’t end up better off no matter how hard you try. I don’t think that’s true…..it isn’t that bad….but their is a widely held perception that it is.
Was there ever a people whose leaders were as truly their enemies as
this one?”
― Ernest Hemingway, For Whom the Bell Tolls
“it isn’t that bad.”
Yes it is
Well, it is still possible to save and invest and end up better off….it just takes some particular knowledge coupled with some discipline and patience…and perseverance. Most people are lacking in all of those.
My belief is that it has been getting harder and harder, for a couple of generations now. And it isn’t easy….no it is not.
Whatever.
Of course, I would repeal Donnie and Mitch’s tax cut first.
There already is a wealth tax. We usually call it “printing money”. Printing money has advantages and disadvantages.
One advantage is that it taxes anyone and anything valued in dollars. Very, very broad-based. Thereby, hard to avoid. In that sense, much like a VAT/sales-tax, but cheaper and easier to implement.
A built-in aspect of a printing-money tax is that it off-shores the US tax base. Consider the amount of people and things outside the US which have value tied to the US dollar.
One disadvantage is that most of the dollar-taxable “wealth” in this world is not what you’d expect. It’s people. Consider a 15 year old in the US who is likely to work in a job that’s geographically (and thereby dollar) based. That person is very “wealthy”.
You helped them get elected.
Good. But I don’t think the DONORcrat Party will do it. They are as beholden to the rich donors as the Republicans are. So, it could either be a third party in the coming years that will do it.
… i.e. it could either be a third party by itself or as a deciding partner in a coalition government.
I think you mean a second party for America . Other than the one War Party Of The Rich-
(composed of the Demopublicans and Republicrats )
No matter how much ‘income’ is generated by taxes (any form of confiscation) today’s politicians will spend it, and much more. This will continue until the US dollar collapses. It will then end with a guillotine.
You can tax wealth (property tax), income, or consumption. PecuniaNonOlet talks about a consumption tax. Consumption taxes make a lot of sense and are used in less developed countries without the administration to do an income tax or wealth tax. Billionaires could lessen their taxes by consuming less, more like us thousandaires. What do we care if they are rich but don’t live like they are rich. Don’t worry, theirs heirs will spend, spend, and pay the tax.
I would think that an “all of the above” imposition of taxes would best fit this legislature. A one time “Covid tax” placed upon the publicly traded companies benefiting the most from the lockdowns. A wealth tax coupled with a 27% corporate tax and a general income tax on anyone earning more that $75,000 annually. Everyone must feel the pain as the US transitions to socialism.
You argue against deficits and then you do not want to raise taxes to pay them off. I say cancel the Trump tax cuts and will raise at least $ 150 Billion a year and then increase income taxes for the 01 % to Clinton -era rates.
There is a bunch of handouts that I don’t agree with in this bill (like the $86 billion to prop up mismanaged union pension funds that have gotten themselves into trouble) but all the Dems are doing here is catering to their base. Same as the Pubs did with their 2017 tax cut mainly for the wealthy. It’s tit for tat.
the ARP will help everyone. it includes money for all states ; vaccinations and other items. Once vaccinated, the nation can go back to normal. You are upset the Biden/Harris administration will end the plague.
Paying for programs seems like an antiquated concept. Why search under the couch cushions for change when the printer already goes brrr?
We’re at $28T in debt already, soon to push through 30, 40, and beyond.
A much more aggressive estate tax would work wonders. St Peter won’t accept money from arrivals at the Pearly Gates. Preventing families from concentrating wealth also prevents them from concentrating power, which is what the framers of the US Constitution wanted by the numerous checks and balances.
Trust funds would no longer be legal. Non-profits could exist; however, no one employed or contracted by a trust could receive more compensation and perks that a congressman, and donations to charity would no longer be deductible from taxes.
Make all unrealized capital gains taxable every year. Keep the 401K system as funded with pre-tax dollars, but employers would be required to make an annual 20% contribution, up to $20K, regardless of contributions made by the employee. Eliminate the social security tax for both the employer and employee. Existing social security beneficiaries would be paid from the estate tax.
No more stock options as compensation for anyone. They are too difficult to value, which makes them ripe for corruption.
These are all feedback paths that have hollowed out the middle class, and polarized the nation.
Um, what happens with capital losses, unrealized or otherwise? BTW, the middle class was hollowed out by technology and global competition.
Here’s a cool idea. All 401K plans must be 1/3 invested in government bonds. Better still, lets consolidate all 401K plans into social security…
There is presently a limit of deductions from annual capital losses. The limit has not kept up with inflation, so this limit needs to be increased. To answer your next question, this asymmetry of taxing realized gains, but carrying excessive losses forward has also existed. The capital loss limit prevents the government from losing as much tax revenue compared to allowing all capital losses be claimed and offsetting earned income.
“Here’s a cool idea. All 401K plans must be 1/3 invested in government bonds. Better still, lets consolidate all 401K plans into social security…”
All that is coming, sooner or later. I’d bet on it.
At what point do you measure ‘unrealized capital gains’? The end of the year? The maximum or minimum throughout the year? Stocks, bonds etc, go up and down. An unrealized capital gain is merely a number, meaningless until the gain is converted to a spendable form. An actual capital gain/loss is an entirely different beast–it GOT CONVERTED, usually to cash.
What you propose is nothing short of theft.
Republicans should welcome a wealth tax or other revenue measure. Isn’t the historic critique that spending must be paid for?
One more thing Dems really need to push is breaking up the big tech companies who double deal like Google, Facebook, Apple, Amazon and a host of others. These companies all sell products in one form or another and spy on the products that sell on their platforms. Warren’s idea to breakup Amazon was actually a good one but it should be extended to any company that has a platform and also sells their own products on that platform. Can’t do both if you really enforce antitrust law.
We need to update the anti-trust laws and enforce them. We see eye-to-eye on some things.
Exactly. Clowns to the left of me …jokers to the right..
You do realize you can trade derivatives world wide right? So those banks and hedge funds would just trade them elsewhere (along with the profits/taxes). It’s similar to the losing struggle that states that don’t allow gambling fight against online gambling.
As for breaking up the oligopolies, how long to you expect it to take? It took more than a decade to break up just AT&T into smaller pieces (many of which later re-merged over time). Splitting up so many more companies in so many more industries would take decades to accomplish (there are a lot of stock holders in pensions and 401Ks in addition to those CEOs at the top who would be filing law suits).
Republicans like to cut taxes on the wealthy and corporation. Democrats favor social programs and a safety net. It’s an old argument. Wish we could meet in the middle on this. What Biden is doing is a bit more than I think necessary or wise but Republicans refused to even seriously negotiate.
“What Biden is doing”. What is Biden doing that you like so much?
I could go on, but you get the idea. The Dems and their radical bunch are out to destroy the very fiber of this country, even though hundreds of millions oppose it.
If you are a White, Male, Conservative who voted for a White, Male, Conservative you are in their crosshairs and you will have to explain yourself in the public square.
Your fragile white privilege is showing.
and both add to the debt.
I favor a flat tax excluding food, medicine and possibly shelter
Would also consider a cutoff above which it applied. In conjunction, I would allow food stamps to be used for soap and cleaning products but not pop, snacks, candy, frozen pizza etc.
In effect this would create a double incentive to work.
I also favor doing away with debt as a form of payment for anything including housing and cars. That would create affordable homes everywhere almost overnight. Of course other markets might crater but they would mostly affect hedge funds who need to be bankrupted because they are responsible for the derivatives market on which the phantom economy is choking off the real economy.
Doing away with debt as a way to buy homes and cars would certainly make changes. It might well mean lower costs for houses, and no doubt houses would be much smaller. Since people would have to save their whole life to have enough to buy a house, they would rent for most of their life, and not buy a home until late in life.
I would favor a flatter tax too but it seems this is Republican rhetoric until game time. The Corporate tax cuts under Trump were supposed to be accomplished in concert with a removal of deductions and credits. Whoops! Didn’t happen
A flat tax might be more fair to people like me, so I could support that…..
But there is still a problem with the people who make most of the money managing to not pay much tax at all. As long as we have that, then somebody lower down has to pick up the tab for the .01%.
Right now what’s left of the middle class takes it in the shorts on taxes. Your plan, a flat tax, puts it more on the poor. The real rich would still pay little in proportion to what they make. The billionaire class still makes out better than the rest of us.
Lobbying has created a class of corporate royalty who can afford to pay for the tax legislation they want….and they have gotten it. They are insulated from tax reform.
I don’t look for big changes…..just more repression and high taxes on regular people….until someday the little fires we see now around the periphery of society will catch the center on fire and it all burns down pretty fast.
One thing Martin Armstrong said that I agree with…is that onerous taxes are what take down empires……not inequality, not debauching the currency…..but taxes.
The act of valuing every LLC and closely held business in the country would create a staggering administrative burden. Add to that the dead weight loss from people trying to shield assets from taxation. I can envision the costs of enforcement/avoidance of such a tax exceeding the revenue raised. On the other hand, the average member of congress can perform basic cost-benefit analysis about as well as they can decipher the text on the Rosetta Stone.
Who would be in charge of validating and determining what someones net-worth is? How would an individual with a combination of public equity and private equity value theirs? how about private debt? How about valuing alternative asset investments? I think this is too difficult to do, even if its admissible
I agree with@MishTalk “Democrats are after your pocket book and the more they succeed, the more likely they lose the House and Senate in the midterms.”
Double edged sword
The IRS will need legions of “assessors” to value every single piece of it. Then the protests at tax court. How long will it take to value every asset of a person with $1 billion? Trump has holdings in more than 300 LLC’s. Try that one.
They would be better off proposing a 2-level flat tax with no exceptions. This would amount to AMT for everyone. Say 20% for anyone making less than a million. and 30% for anyone making more than a million. The same needs to happen for corporate taxes and should be based on whether you do business in the United States. Right now the problem is too many tax loopholes. An AMT would close the loopholes both on businesses and individuals.
As most don’t store their wealth in cash, I presume they’d be expected to sell some assets to pay their tax liability?
That’s one option. There is also a presumption that most hyper rich people are earning more than 2% plus current tax rate on their holdings.
They and their $1,000 per hour lawyers will figure it out, I can assure you. The bill will be full of so many loopholes you could drive a 747 through it.
Yeah, I remember when the republicans reached out across the isle when they were passing 1.9 trillion dollar tax cut for the rich. No way that that would ram that through without democratic support. The thing is the relief is broadly supported ~70% and since the treasury had built up a trillion dollar buffer though the last quarter of last year there is no reason to float a bunch of bonds to pay for it.
Most long-term readers will recall I was against that tax cut as it was structured although I was a big beneficiary.
I did not believe it was fair. Most of the middle class benefited little. It was a big break for businesses and those with capital gains.
The MSM keeps touting that 70% public support issue, as if this is some point of importance.
I’m actually surprised the number is as low as 70%. You rarely hear of anyone who will walk away from free money. [lol]
So, 28% or 29% of the people are idiots who think free money should go only to the rich and to the corporations?! 😉
The wealth taxes may or may not be unconstitutional but honestly, the wealth tax already exists in one form: Property taxes.
For those who hold their assets in real estate, they are taxed yearly on their wealth.
And this is why the wealth tax can’t be ruled unconstitutional. It already exists.
Lots of things are unconstitutional but already exist.
Gold and silver only used as money? Nope, not anymore, yet the Constitution is pretty clear about that.
So what you have is 2 people living next door to each other and one pays maybe 2-5x as much property tax for the exact same house which can easily be 10s of thousands of dollars difference a year when basic homes are 1+ million. In a society that prides itself on equality, this is one of the worst inequalities there is and there is no justification for this inequality. Homes of the same value should pay the same tax.
It also insidiously ruins areas for families because older neighborhoods with long term residents pay way less tax so their schools are underfunded compared to schools in newly built areas that are paying the going rate.