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Taxes
General
We must tax the rich.
We cannot allow an individual to be wealthy enough to bribe all of Congress.
Money is power. We cannot allow an individual to accumulate obscene levels of wealth and therefore power.
The billion dollar question is: how? A reasonable fear is that a poorly designed wealth tax could have very bad undesirable consequences.
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The wealth tax does not fund the government.
The wealth tax does make it impossible to be rich. The opposite is actually more likely to be true. Millionaires are rich. When we trade one billionaire for a thousand millionaires, we have more rich people.
The wealth tax does not punish job creators. In fact, it rewards them.
The wealth tax punishes those whose wealth does not come from employees creating value for the economy. It punishes people who provide little value to society. For examples, hedge fund managers gamble with other people's money. They produce nothing of value but take a cut from those who do. It closes the loophole where a con artist can appraise their properties at low valuation for tax purposes while simultaneously appraising them at high value for obtaining loans.
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Alternative Minimum Progressive Wealth Tax
This wealth tax is an alternative minimum tax. Like the alternative minimum tax on income, a wealthy person would pay either the minimum wealth tax or all of the other taxes they have paid - whichever is greater.
This wealth tax is progressive. There are a number of tiers. Each tier has its own tax rate. Higher wealth tiers have higher rates.
This wealth tax is based on an individual's total net worth.
The top tier is where the cost of bribing all of Congress is a fraction of their annual gains. This is an estimated net worth of $30 billion.
The bottom tier is the amount of money that could be saved by a person earning a modest wage and saving modestly for 45 years. This is an estimated net worth of $3 million.
For the purposes of illustration, let's assume the rates and tiers are:
1% of net worth between $3 million and $30 million,
3% of net worth between $30 million and $300 million,
10% of net worth between $300 million and $3 billion.
30% of net worth between $3 billion and $30 billion.
90% of net worth over $30 billion.
Let's suppose my net worth is $13 billion. My minimum tax would be $3.3 billion. Let's suppose I own 100% of a private company that employs 10,000 people with an average salary of $100,000. In any scenario where we have a this wealth tax, the payroll tax is 20%. I pay $2 billion in payroll taxes. I would owe an additional $1.3 billion for the wealth tax.
The gains on net worth at this level are $1.3 billion if i simply invest in the stock market. I would not be a billionaire if I did that. Typical returns for billionaires are closer to 20%. My wealth gains are $2.6 billion. I am still accumulating wealth far beyond inflation even with this wealth tax. On the other hand, if I didn't employ so many people, I would have a much higher tax burden.
Credits
Individuals get full credit for donations to charities and funding for organizations that do work of benefit to society or work that the government would otherwise be doing. In other words, since the government is going to seize their wealth anyway, wealthy individuals can, in most cases, spend their tax money as they deem appropriate instead of letting the government waste it.
Some examples of philanthropy: research cures for cancer, fund hospitals in poor and/or rural areas, fund schools in poor neighborhoods, build minimally adequate housing for the homeless, drug intervention programs. The list here is limited only by imagination.
Obviously, activities that primarily or mostly benefit the wealthy individual would not qualify for this credit. For example: Space X could not claim for credit a school that teaches people to assemble rockets.
Income Tax
It is anticipated that income tax will be phased out. Billionaires don't get credit for income taxes paid by their employees. This is strong motivation to fund the government through payroll taxes.
In this future, your salary would be listed as $120,000 before taxes and/or $100,000 after taxes. Your paycheck would list how much you paid in taxes, probably the full 20% of the payroll taxes.
Payroll taxes are collected by your employer. This greatly simplifies filing taxes. Most people won't ever have to file taxes.
Dividend
Flat payroll taxes are disproportionately unfair to lower incomes. Therefore, every taxpayer gets a dividend. This is your share of America's economic pie. Spend it however you wish.
You may collect either Social Security or this dividend whichever is higher. It is anticipated that Social Security as we know it will be phased out entirely in favor of this dividend and the other benefits of this platform.
This dividend by design must be small to discourage free-loading. It must also be high enough that a person can survive when jobs are either not available or the offered salaries are too small.
When one factors in the other features offered by this platform - universal healthcare, minimally adequate housing, food safety - the dividend does not need to be very large.
Wages
So how does an obscenely wealthy person avoid paying this wealth tax? They have a number of options. Philanthropy has already been mentioned. Another option is to hire more people and/or raise their wages. This directly benefits the wealthy individual through greater productivity and loyalty of their employees. More people working for higher wages is good for the economy. If we allow ourselves to put on our rose colored glasses for a moment, minimum wage laws could be consigned to history.
Enforcement
How on God's green Earth do you expect to be able to enforce this wealth tax and make people pay it?
I am smiling right now because I believe the next part is brilliant.
Portfolios are pretty easy. They have a known value that is reported by the bank or investment firm.
Every property with a value above or close to the bottom tier is listed in a public database with a value assigned by the owner. This applies to real properties like buildings and intellectual properties like copyrights. [At this time I am undecided about patents.]
This is a binding offer to sell the property at the listed price.
If you undervalue your property, I can post a bond and force your property into auction. 60 days later, you may match the highest bid and keep your property with the updated taxed value post-dated to the date of the bond - or you can sell it.
This has a number of benefits. The most important is that stops cold the con artist who plays games with his property valuations.
The second is eminent domain. At first look, this might sound like a way for an evil developer to steal poor grandma's ancestral home. And it does - with a critical difference. First, this only applies to properties of great value. In other words, grandma isn't poor. She's rich enough to play a rich person's game. Second since grandma's house has value, she can use the equity to pay the wealth tax. Third, under the current laws, an evil developer can take grandma's house through eminent domain where grandma is forced to accept the price offered by the evil developer. Under this wealth tax, grandma still loses her ancestral home - but the evil developer has to pay the price set by grandma. This is a huge difference that benefits the small property owners against the big boys.
A third benefit is that it resolves some issues with out current copyright situation. For example, Disney could own Mickey Mouse for as long as they are willing to pay the wealth tax. Google has a huge collection of orphaned works. This books and art have no known copyright owner. Google cannot afford to make them available to the general public because that would give them value and expose Google to lawsuits by heretofore unknown (and unknowable) copyright holders. Google would list the collection with a value. Anyone with a submarine claim must make it before a period of time (one year?). In which case, the claimant owns the property and the tax liability. Google owes them nothing. Otherwise, Google owns the property.
Properties may be listed anonymously. After all, wealthy person does not want thieves to know the value of the paintings hanging on their walls.
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