Updates: Billionaire Wealth, U.S. Job Losses and Pandemic Profiteers - Inequality.org states that billionaires have a total of about $5 trillion in wealth. The vast majority of this wealth comes from the stock market; which grows at 10% per year. A 10% wealth tax on the billionaires raises about $500 Billion every single year. The reason why I don't support a wealth tax right now is because if a wealth tax was implemented right now, then we aren't able to generate more money per year in the long term. Wait a year to implement the 10% wealth tax, and we are able to generate 10% more income the next year and every subsequent year. Wait another year, and we are able to generate 21% more revenue with the wealth tax per year. But this only happens if the wealth tax implementation is delayed by enough time. Also, tax the billionaires at a rate that is more than 10%, and it's unsustainable because their wealth would decrease in the long term which means the wealth tax can't be a permanent source of consistent revenue and will eventually lead to a worsened economy in the long term. I will only support a wealth tax when less than 10% of the wealth from billionaires would be enough to fund everything the government needs to function.
Our government spends about $5 trillion a year when the economy is in the shape it's in right now (about average; not as good as it was in 2016, but better than it was a year ago) (Current US Federal Government Spending (thebalance.com))
Assuming the government decides not to spend any more on any future social programs adjusted for inflation and assuming the wealth in the stock market increases 10% per year, a 10% wealth tax on billionaires would only fund the government's expenditures by the year 2046. Even implementing a 10% wealth tax in 2046 is dangerous because of 2 reasons:
1) No room for income growth. If the federal income is tied solely to the wealth tax and the stock market, then we aren't able to have the federal revenue base grow without an income tax, something that not even democrats want to pay, but they merely tolerate it more than republicans generally.
2) If the economy ever goes into a recession, the government will have to go into debt to pay it off, and there is no money for emergencies.
Because of these reasons, I wouldn't support a wealth tax in 2046 at 10% because it doesn't allow for economic growth and is dangerous if this country goes into a recession.
However, a 7% wealth tax implemented by the year 2055 (assuming things expand at their current rates) would give the US government the ability to do the following:
1) Reduce wealth inequality (something the left wants to do) since this idea targets the billionaires.
2) Eliminate the need for an income tax (something the right wants to do) since the government is funded by taxes paid for by virtually no Americans.
So there is a left wing and right-wing reason to support this idea.
There are some cons to a wealth tax that I don't think stand up to scrutiny. The Wealth Tax: Pros & Cons | taxlinked.net states some. They are:
1) Double taxation: I don't care. If I own stock in McDonalds, eat a burger there, pay a sales tax, and sell the McDonalds stock only to pay a capitol gains tax, that's double taxation. But nobody cares then.
2) Causes Capital Flight: The solution to this; tell every country in the world that by 2055 to implement a 7% wealth tax on all billionaires in their country and get every country to agree. The billionaires have nowhere to go to, as their wealth is in the form of electronic stock, and you can change citizenships of countries, but every country would tax your wealth.
3) It’s Tough to Calculate: No it's not. Whatever the value of their stock and cash assets are; tax them at 7% by 2055. They will probably make it back since the stock market rises at 10% a year, so they will be fine.
Thoughts DARTers?
