Radio Host Tim Danahey sent me a note that gave me pause. If we could make sure all Americans understand this, we could force the hands of politicians on the wealth tax.
Tim Danahey’s wealth tax calculation.
Here is the note I received from Tim.
I was playing with wealth tax numbers on the back of scrap paper and wanted to spark some thoughts for you. But, first, I want to make two statements:
- I am not a credible source or economist
- I presume to get rid of the current U.S. tax code in this little note
U.S. Household Wealth in 2019 was $96.1 trillion and in 2020 it was $130.2 trillion
Jeff Bezos net wealth was $177 billion in 2019 and $189 billion in 2020
The U.S. Federal Budget this year is $4.9 trillion
If we taxed the net increase in wealth at 10% and the ending net wealth at 2%, we would collect $6.2 trillion in taxes.
We would have a $1.3 trillion surplus
If a household income was $100,000 in 2020 and household wealth in 2020 was $200,000 ($100k for net equity, $50k for investments and/or retirement, $50k for anything else) and it was $170,000 in 2019, then:
This household’s total Federal wealth tax would be $7,000 (less than half of what an income tax would be)
Jeff Bezos would pay $5 billion in wealth tax and net $7 billion in increased wealth and be worth $182 billion instead of $189 billion.
He paid, effectively, no tax in 2020.
We have a $1 trillion deficit.
The concept needs work but it seems viable. The more you have, the more you need government to protect it.
I know the defenders of Bezos (today’s Washington Post’s op ed which is, not so coincidentally, owned by Bezos) say much of Bezos’ income was reduced by charitable giving. Well, if you want a country’s policies determined by fiat whereby a few wealthy people decide what institutions receive their alms, then go for it. It doesn’t work. Hong Kong citizens rebelled against that concept prior to its absorption into China. To illustrate, I’m sure the Sackler family’s donation of Chinese Art to their named museums was tax deductible, of interest to themselves, and of no direct benefit to overall society (although we should acknowledge a small indirect benefit to culture).
I wish someone beside Elizabeth Warren would begin a zero-based tax code. Carry nothing from the existing tax code and re-write from nothing.
Nuff said. Thanks for tolerating my rants.
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