A Better Wealth Tax

Reader comment on: Sumner's Wealth Tax

Submitted by Eugene Patrick Devany (United States), Mar 12, 2012 12:16

Bold tax reforms can increase economic mobility and jump-start the economy without class warfare. It may help to begin with a fair (non-partisan) evaluation of the best new and ancient ideas and some out-of-the-box thinking. For the first time in history, computers and internet databases have enabled the possibility of implementing a net wealth tax that would apply equally to rich and poor. Wealth taxes date back to biblical times and there have been many victims of self-destructive laws that tax only the super rich. In contrast to all prior wealth taxes, a uniform net wealth tax levied on all would help both the economy and the well-to-do.

In the extreme the entire $2.1 trillion in FY 2010 tax revenue could be replaced with a 5% tax on the $53 trillion in individual wealth. A more balanced approach might tax individual net wealth of at 2% (over a $15,000 exemption) and tax the $12.5 trillion individual income at 8% (with each tax producing a little more than $1 trillion and yielding enough to replace all current tax revenue). By eliminating payroll taxes (and paying social security and Medicare from general funds) earners would keep 92% of their income. Let me repeat: everyone takes home 92% of their income and can save or spend it as they see fit. Because the rich and poor would pay the same rates it would also be the fairest tax system on the planet … and it gets better.

Business tax reform is also needed to shift the economy into high gear and to raise some (presumably) needed additional revenue. Every developed country except the United States has a national sales tax (in the form of a Value Added Tax). A 4% tax on $10 trillion in sales would yield another $0.4 trillion in revenue. The taxable income from C corporations is about $1.1 trillion (FY 2010) and produces only $191 billion in government revenue. Loopholes and overseas tax deferrals have resulted in some very profitable international companies paying no taxes. A reduction of the corporate rate to 8% would be a fair (and politically cognizable) tradeoff for an elimination of business distorting features of the tax code. The 8% corporate rate would also match the 8% individual rate paid by flow-through business.

Low tax rates, economic mobility, more savings, consumer power, higher profits, international competition, investment freedom, and jobs will improve. The political icing on the 2-4-8 Tax Blend cake is that taxes on capital gains, estates and gifts would not be necessary - restoring economic freedom to the lifetime planning decisions of the investment class.

After several months of looking I have been unable to identify any person, family or business that could not quickly estimate the tax that would be owed or consider the amount to be unjust or disproportionate. Everyone who opens their mind to simplicity, efficiency and fairness knows the 2-4-8 Tax Blend would result in a far better tax code then any congress has previously considered.

Eugene Patrick Devany, JD, MPA

www.TaxNetWealth.com

Home of the 2-4-8 Tax Blend


Note: Comments are moderated by the editor and are subject to editing.

Other reader comments on this item

Title By Date
What is in essence suggested in the post is Luxury Taxes [77 words]LyleMar 12, 2012 21:36
⇒ A Better Wealth Tax [509 words]Eugene Patrick DevanyMar 12, 2012 12:16

Comment on this item

Mark my comment as a response to A Better Wealth Tax by Eugene Patrick Devany

Email me if someone replies to my comment

Note: Comments are moderated by the editor and are subject to editing.