I did some math a while ago on this topic:

40 million Americans live below the poverty line of $15,000 per year. [1]

Total U.S. household net worth (excluding real estate) is around $54 trillion. [2]

If every household above the poverty line donated 2.5% of their net worth annually to people living below the poverty line, we could erase poverty instantly.

Here’s the math:

2.5% of $54 trillion = $1.35 trillion

$1.35 trillion ÷ 40 million Americans = $33,750 per person

That’s more than double the poverty threshold.

Sources: [1] https://www.census.gov/newsroom/stories/poverty-awareness-mo... [2] https://fred.stlouisfed.org/series/BOGZ1FL152090045Q

If you put a 2.5% annual tax on net worth, that net worth would very rapidly find its way to other countries.

Wealthy people would learn to structure their earnings to flow into businesses in other countries to avoid this wealth tax. This would reduce income tax in the United States. I would guess the overall effect would trend toward a net tax loss.

If you gave 40 million people an extra $15K per year to spend, the prices of the things those 40 million people buy would go up. The poverty threshold would rise.

There are many second order effects like this that are always ignored in simplistic analyses.

It’s never simple math like taking one number, moving it into another column, and problem is solved.

Wealth and income are stocks and flows, respectively.

We definitely have the means to make life less stressful for everyone without inconveniencing this with massive wealth seriously. But that would mean doing things like building apartments next to detached single family homes in wealthier neighborhoods, which those people think would be a serious inconvenience.

This assumes the wealth transfer doesn’t affect the price of assets and services which is of course bonkers.

More than likely the transfer will happen and affordability will not improve due to inflationary pressures.

I know you said net worth and not income, but honestly, that's what taxes should be at least partly doing.

> 40 million Americans live below the poverty line of $15,000 per year.

Not even close. Census income data is not an accurate measure of poverty, as it excludes all in-kind redistributions (food stamps, HUD, medicaid, head start, etc) AND excludes cash programs like the "refundable tax credits". A more accurate line would be "40 million people would be living in poverty if we weren't already spending >1 Trillion dollars per year on food stamps, HUD, medicaid, and other programs."

Throwing more dollars into a system with out of control costs will not resolve the fundamental cost issue. For the same reason that you can't out-exercise a terrible diet or out-earn a terrible business model, solving this problem will require addressing the cost component.

That's not how money works.

1) After how many years of 2.5% annual donation would their own wealth drop until they thenself become poor?

Donating 2.5% means that you get poorer and poorer over time unless you can make more than that per year back. 2.5% of wealth also means non-liquid assets such as house, how do you donate that? Get credit?

If you are middle class and your house etc is eg 1M$ net worth you are giving 25k$ per year. At 0.5M net worth its 12.5k$ per year.

2) You assume that those people would know how to handle that money well. We see what many poor people do with money: buy trash like soda with food stamps that makes them even more ill and causes them more financial burden due to poor health.

Are you sure that money would be well spent, or is it better to invest in better technology that will benefit everyone?

3) Why would hard working responsible middle class people give their money to those that buy cola with it? Mass revolt, people care about their families only.

That would simply make food and housing more expensive, as it would devalue money, as it increases circulation, because it wouldn't produce more housing and food - just increase demand - unless they "donated" (tax) that 2.5% to increase production, and not to subsidize poverty.

If you could subsidize your way out of poverty, Venezuela wouldn't be poor. They tried printing money and handing it out. It doesn't work. If you don't have enough housing and you take money from the rich and give it to the poor, you still don't have enough housing.

Anyone who thinks "as long as we have higher than 0% vacancy rates, and homeless-ness, we have enough housing," is a moron who has never been on the market to try and rent an apartment or buy a house.

We don't live in a perfect world. You need more than the perfect amount of housing.

The vast majority of home owners in this country are massively against increasing the supply of housing, so good luck 1) convincing them to pay more tax, and 2) spending those tax dollars on the exact opposite of what they want to spend them on.

Homeowners are almost 75% of voters most years. And in most counties (housing is largely a local issue, not a national one) can be >90% of voters.

Homeowner here, and I do agree, it would be a great investment.

But there are lots of great investments that will never happen, because many people would shoot their own head off before they did something that benefited everyone, but didn't benefit them the most.

There's literally a million things we could do to make healthcare more affordable. But we also won't do any of those because of entrenched interests in healthcare, admin, and insurance - and, perhaps especially, people's entrenched interests to continue living unhealthy lifestyles and exporting the cost onto others as negative externalities.

Yes I did some maths and we should be able to...

...reach highest phase of communist society, after the enslaving subordination of man to the division of labor has disappeared; when the antithesis between mental and physical labor has disappeared along with it; when labor has ceased to be merely a means of life, but has itself become the first need of life; when, together with the all-round development of individuals, the productive forces have also grown and all the sources of social wealth have flowed in full flow, only then will it be possible to completely overcome the narrow horizon of bourgeois law, and society will be able to inscribe on its banner: “From each according to his ability, to each according to his needs.”

You forgot the part where that causes massive inflation.

> If every household above the poverty line donated 2.5% of their net worth annually to people living below the poverty line, we could erase poverty instantly.

For a day.

A lot of people below the poverty line would spend all the money on trips and luxuiry goods. And would be right back where they've started.

Also, the question is why would anyone want to work, if you would be given money for free even if you don't work anywhere (I mean, you're below the poverty line)?