Private US wealth is in the range of 200-400 trillion. A blanket 1% annual wealth tax would wipe out the debt in 10-20 years.

75% of US debt is held domestically. So most of that money will go back into the country.

It's highly unlikely a lucrative revenue stream like this would ever go to paying off the debt. But theoretically the money exists.

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carefree-bob 3 days ago | parent [-]

The problem is that the constitution doesn't allow for a wealth tax. If you remember, we had to pass an amendment to be able to levy a tax on income, and that amendment is clear in that it only applies to income.

Interestingly, it was also promised to be only 1% or so on the richest households, and it has become, er, different.

But more important to the point, as the government already taxes about 20% of income, that is equivalent to holding about 20% of the wealth, as the wealth is just an income generating device and the value of the wealth is the flow of income it generates, of which 20% is already taxed.

What I'd like to know is why people are obsessed about stocks and flows in completely different ways. For example, not caring about the deficit but worrying about the debt, or vice versa, or focusing on taxing wealth but not really caring about taxing income.

I think the idea of taxing income makes a lot of sense, and don't want the government to try to value assets, particularly illiquid assets. And if it was up to me, I would dramatically simplify the tax code to eliminate all deductions and tax all income at the same rate, regardless of source. No reason to have one tax rate for carried interest, another tax rate for dividend payments, a third tax rate for wage income. Treat all income the same, and apply a progressive rate to the total income. Your tax form should not be more than a page long.

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yabutlivnWoods 3 days ago | parent | next [-]

Contemporary interpretation of the Constitution does not allow a wealth tax.

From Section 8: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States...

A future Congress could interpret this to mean paying off the debt is in the general welfare of the country. And if SCOTUS wants to beef, Congress could craft "exceptions" and "regulations" to their appellate power which is power explicitly granted to Congress.

"3 equal branches" is modern propaganda. Congress is the more powerful branch given its explicit power to control Executive function through budgets and strip SCOTUS justices of all but a few ceremonial powers to do with ambassadors and other foreign states. Then we might actually have a Judiciary again instead of Executive, Legislative, and SCOTUS.

But Congress is full of rich people who intentionally avoid flexing the full power against the other two branches.

	▲	triceratops 36 minutes ago \| parent [-]
		I don't understand how anyone reads "The Congress shall have Power To lay and collect Taxes...to pay the Debts... of the United States" and says it doesn't allow a wealth tax. I guess that's why I'm not a lawyer.

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triceratops 3 days ago | parent | prev [-]

> What I'd like to know is why people are obsessed about stocks and flows in completely different ways...focusing on taxing wealth but not really caring about taxing income.

Because wealth grows faster than income.

r > g

It's easy, especially for rich people with lots of wealth, to have low taxable income.

https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

> not caring about the deficit but worrying about the debt

Are there people like that? The debt is the sum of all deficits.

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carefree-bob 3 days ago | parent [-]

I disagree that r > g over long periods, rather there are some periods where it is less and others where it is more and it basically averages out to r = g. If you do not believe that, then you have to think that capital income will be larger than GDP, which is mathematically impossible, as capital income is one component of GDP and the ratio is relatively stable over time.

More importantly, it does not matter at all whether r > g, because both capital income and wage income are taxed. If you don't believe that, try not reporting your capital income and see how that works out.

However, you will say, long term dividend income is taxed at a lower rate, whereas wage income is taxed at a higher rate. Correct! That is why I said that the solution to that is not to impose a wealth tax, but to tax them at the same rate. All market income should be taxed at the same rate, and that solves your r > g non-problem.

	▲	triceratops 3 days ago \| parent [-]
		You can choose not to realize capital income. Borrow against assets. If we're treating that as income too, then this is a different conversation.