Mike Kueber's Blog

November 19, 2012

A wealth tax

Filed under: Economics,Issues,Politics — Mike Kueber @ 7:05 am
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An op-ed piece by Daniel Altman in today’s NY Times describes an alternative for tax reform that I haven’t previously seen – a so-called wealth tax.  The piece persuasively recommends that the federal personal income tax and estate tax could and should be eliminated and replaced by a wealth tax.

According to the piece, the personal income tax and estate tax generate $833 billion a year in revenue.  Because Americans have assets amounting to $58 trillion, a tax of one and a half percent on those assets would generate the same amount of revenue.  Instead of a flat wealth tax, however, Altman recommends a progressive one, with no tax on assets less than $500,000, one percent on assets between $500,000 and a $1 million, and two percent on assets over $1 million.  Sounds simple and painless for most.

A major problem with this proposal is that it is too painless for too many.  The vast majority of Americans have assets less than $500,000 and would pay nothing.  This result would be anathema to many in the conservative community who believe that America needs for its voters people to have some “skin in the game.”  That militates in favor of a one percent tax on all assets up to $1 million and a two percent tax on assets over $1 million.

An advantage of this proposal, I believe, is that income is easier to hide than assets.  Further, it will discourage the wealthy from sitting on their assets.  And, despite the contention of some that business owners will be hard pressed to come up with the annual payment, wealth seems like a better reflection of “ability to pay” than does income.

This is an idea that deserves further analysis.

September 18, 2011

The Buffett rule

Filed under: Issues,Politics — Mike Kueber @ 9:29 pm
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According to an article in the Washington Post, President Obama is planning on Monday to propose a new minimum tax rate for millionaires – a so-called Buffett rule because Warren Buffet recently said that the American tax system should ask more from the mega-rich.   The Post reports that, based on appearances by Lindsey Graham and Paul Ryan on Sunday talk shows, Republicans are expected to be united against the proposal.  They will argue that this is more class warfare by President Obama and that Americans are Taxed Enough Already.

Although I didn’t see Graham or Ryan on the Sunday talk shows, I did see Senate Majority Leader Mitch McConnel on Face the Nation.  Ever since McConnel was a stick-in-the-mud obstructionist during the Bush administration, I have disliked this dour sourpuss, and my dislike grew today with his silly argument against the Buffett rule – i.e., if Buffett thinks the rich should pay more in taxes, there is nothing stopping them from sending personal checks to the federal government.  That is as nonsensical as a criticism I heard last week to the effect that Buffett’s company, Bershire Hathaway, shouldn’t be contesting an IRS tax ruling because Buffett thinks the rich should pay more in taxes.  What does one have to do with the other?

Remember that McConnell was the king of earmarks for years and was one of the last holdouts to capitulate to the TEA Party on this issue.  The next time he proposes spending money for some Kentucky boondoogle, we should ask him to fund it either with his millions or with the millions that his campaign has accepted from people and companies trying to bribe him.

Getting back to class warfare – last Tuesday, I blogged a suggestion to the Democrats about their continual class warfare – i.e., give it a rest.  In a response to a commentator, however, I agreed that higher rates for those who make $1 million or $10 million would be fair.  I also suggested that it was not fair that half of all Americans pay no income tax and that everyone who makes an income should pay some income tax.

Because of the partisanship in Washington, these changes can’t be implemented in a piecemeal fashion.  Fortunately, there is bipartisan agreement that comprehensive tax reform, which was last done in during the Reagan administration, is overdue and there appears to be reason for optimism that it can be accomplished before the 2012 election.  I’m keeping my fingers crossed.