OK, Then, A Flat Tax on Wealth

Nobody’s talking about a flat tax much these days. I think it should be brought back into the discussion.

The reason it’s not on the table at the moment is that such a tax would fall disproportionately on the poor, just as sales tax does, and Congress is loathe to risk rioting in the streets if it were imposed. That may be wise, but they have no such compunctions about actually hurting the poor over the past four decades. However, I think we could make one minor adjustment that would solve the whole problem: tax wealth rather than income.

One minor adjustment would solve the whole problem:
tax wealth rather than income.

Here are a few numbers. The total wealth of individuals in the US is about $120-trillion. Present total federal tax revenue is about $3-trillion. Tax on wealth, therefore would be 2.5%.

Unlike a flat 10% income tax, which would come to $2,000 for an income of $20,000, a poor family has almost no actual wealth to tax. A used car, a TV, appliances, furniture. So their wealth tax would be close to zero.

The mega-rich would no doubt be especially unhappy
that their taxes would no longer be half of
what their employees pay.

But your one-billionaire, he would have to cough up $25,000,000 every year. Your one-millionaire: $25,000. Now that’s more reasonable.

Those in the ultra-high brackets would no doubt make major complaints. They would be especially unhappy that their taxes would no longer be half of what their employees pay. This wouldn’t surprise me, because they complain about paying any taxes at all—they being the “job creators”, after all, and they expect the rest of us to worship them for their selfless service. Never mind that they haven’t done much in the way of job creating for years, not to mention that their service is hardly what one could call selfless.

This is all more than a little tongue-in-cheek.

This is all more than a little tongue-in-cheek, because Congress, being the fully-owned property of the corporations and the mega-rich, could not conceive of changing the tax code in any way that required the rich to pay more and failed to penalize the poor for being the lazy moochers all Republicans know they are.

And it’s not what I think would solve so many of the fiscal problems of the country anyway.

The single most beneficial change
would be to implement Living Wage laws.

The single change that would be the most beneficial would be to implement Living Wage laws, in which the lowest full-time incomes would be possible to live on, albeit simply, something we don’t even come close to now. Minimum wage is Poverty Wage. In fact, the restaurant minimum of $2.13 per hour hasn’t changed in 22 years, and you can’t live on it even with generous tip income. Living Wage would by itself simply evaporate the bulk of poverty in the country, leaving only those truly unable to earn their living. Inequality would be greatly eased, which by itself has numerous positive side effects. And federal tax revenue would be increased at the same time welfare needs would fall.

Not a bad deal for something so simple.

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6 CommentsLeave a comment

  1. Income is a flow whilst wealth is stock. How often is this same wealth taxed? Annually for as long as I still possess wealth, so I get taxed doubly, triply, and onward? I’m confused.

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    • I would draw your attention to the phrase “tongue in cheek”, found toward the end.

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  2. Hi John,

    I saw the “tongue in cheek” comment, but that was marginalising the point based on the fact that congress is in bed with the wealthy rather than a nod to the merits in their own rights.

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  3. There are questions over implementing it, but it is a good and novel idea.

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