What If the Greedy Rich Paid Their Share? 8 Things to Know About Wealth and Poverty in the US
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But averages are extremely misleading, because wealth is so highly concentrated at the top. Here are some eye-popping numbers.
1. The number of households with a million dollars or more of net worth grew by 202 percent between 1983 and 2007.
2. The number of households with a net worth of $5 million or more grew by 494 percent.
3. The number of $10 million or more households grew by a whopping 598 percent!
4. There are now more than 464,000 households worth $10 million or more. ( PDF)
5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).
6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1 percent – meaning they owe more than their assets are worth.
7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial assets (excluding homes).
8. That means that the top one percent has a positive net worth valued at approximately $5,700,000,000,000 (that’s $5.7 trillion).
Why We Need a Financial Transaction Tax
Most Americans live on earned income which is taxed instantly through substantial payroll taxes. You can’t collect a paycheck without paying taxes. The super-rich, however, receive most of their income through financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This is why the wealthiest Americans pay lower effective tax rates than their servants. It’s also why our government appears to be starved for income. If we want a vibrant economy and good investments in our public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-WWII period.
For starters we need a financial transaction tax which is a small sales tax on each and every financial trade – from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets, this kind of tax would directly target their excessive trading and enormous holdings. Not only would this sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.
A Wealth Tax to Improve our Commonwealth
Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes, and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with from $50 to $150 billion per year in income. Spare change for the super-rich.
The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and domestic) and your liabilities are easily calculated. It’s easier to spot the cheaters. It’s easier to press for information from other countries that may be tempted to launder money for our super-rich. There’s nowhere to run unless the super-rich want to give up their citizenship.
Even Ronald McKinnon, a conservative economist writing in the Wall Street Journal ( “The Conservative Case for a Wealth Tax”) is advocating a wealth tax on the super-rich:
In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.