Skip to comments.David Stockman: Soak the Rich (with a 30% wealth tax)
Posted on 10/14/2013 5:45:35 AM PDT by reaganaut1
David Stockman is at it again. The Reagan-era budget director caused an uproar in 1981 by publicly decrying the moves of his boss to spur the economy with tax cuts. Now a private investor and author, hes pushing for a huge new tax on big earners. Stockman would subject the nations top 10% of households to a levy equal to 30% of their wealth, payable over a decade. Without it, he maintains, the U.S. will wind up in a horrific, Greece-style debt wreck.
Stockman, 66 years old, recently talked up his plan at an unlikely forum: New York City Junto, a monthly soirée of libertarians organized by hedge-fund manager Victor Niederhoffer. The tax-averse crowd listened politely as Stockman laid out his case. For starters, he said, the long-term budget outlook is much bleaker than the rosy, Keynesian nonsense put out by the Congressional Budget Office. Stockman reckons U.S. debt, now $17 trillion, is headed to $30 trillion, or 150% to 200% of gross domestic product. That is a nonstarter, and that takes the system down, Stockman said. The CBOs baseline projection puts debt at 130% of GDP by 2050.
The wealth tax, Stockman said, could go a long way toward stabilizing things. It would be part of a broad package of measures he has in mind to bring the deficit down and keep it low. The tax wouldnt be permanentit could be lifted in 10 years or so, when debt has dropped to a more manageable 30% of GDP. Interestingly, Stockman, a multimillionaire, would be subject to his own tax.
But Stockman is the first to admit that the proposal may never fly in Washington.
(Excerpt) Read more at blogs.barrons.com ...
It wouldn't stabilize anything. It would just give them license to spend more.
Actually, YES! They’re rich. Dems are all about “pain for thee, luxury for me.” They’ll never go for it unless it only affects the conservative wealthy.
It would be hysterical to watch Soros and Theresa Heitz Kerry if something like that passed. Also all the Hollywood types LOL. It would be worth it just for the entertainment factor.
MSM commentators and Democrat politicians alike are going to have a hard time selling the public on a wealth tax being a bad idea, while more income taxes are somehow just fine.
Didn’t David Stockman become a Democrat twenty years ago?
Don't kid yourself. There would be tailored exemptions for people like these. It's the people who worked and saved their whole lives who would get hit.
I would consent to a one-time wealth levy. It must be tied to the ratification of essentially all of Mark Levin’s Liberty Amendments.
And once all that wealth has been confiscated will the government promise to stop spending money it doesn’t have?
So Zuckerberg and those left-wing nuts from Google who put their money in the Grand Caymans to avoid US taxation will LOVE this, right?
How about all those left-wing Wall Street types who fork over millions to their Democrat political patrons? They’ll love it too, right?
How about all those Hollywood types? They’ll be making YouTube videos supporting this, right?
He needs a liberal application of superglue and shredded foam...
Everything will then belong to the US feral government.
Isn't that nice?
When all you have is a hammer, every problem looks like a nail.
The problem is increasing concentration of wealth. David Stockman’s solution is a 30% direct tax on that wealth. But does anybody think that current trends will not far outstrip that 30% over the next ten years?
The problem is the ossification of the economy. Winners become winners, and the guy starting out from the bottom never stands a chance. This sad state of affairs is the direct result of government policy. Government intervenes in the market, time and time again, in favor of the wealthy. They are picking winners and bailing out the losers, but these recipients of government largesse are always, always, always, wealthy and well-heeled.
The way to correct this problem is not to increase taxes and increase government intervention. The way to do it is to let the rough and tumble of the market operate. If the big fish can hold onto what they have on their own, fine. But if a thousand little fish can pull one down, that’s fine, too.
The bankruptcy of GM, as painful as it would have been in the short term, would have been a great tonic for our economy. Those productive assets would have been redirected into profitable endeavors and people who invested stupidly would have taken it in the neck. That is just as it should be.
Instead, we have a zombie company, taking up space in the market, sucking up capital, and producing nothing useful whatsoever. But the rich stayed rich, and that is what matters to Washington in the end.
Soros' wealth is already offshore. Kerry's would soon follow. As would mine... and me.
He's proposing 30% over 10 years... which is more like 2.5 to 3% per year. But I agree, this sucks!
This is not crazy.
Trump and his Wharton buddies came up with a similar plan to prepay estate taxes early at a discount.
Most of his rich friends thought it was a brilliant idea.
One variant to Trump’s plan calls for a certain amount of the estate tax to be paid over three years by buying US Treasury bonds and bills on the open market and then turning them in to the Treasury for cancellation.
If I remember correctly, the Trump tax would bring in about $5 trillion and would lower the interest expenditure about $350 billion per year. This would put a balanced budget within reach.
The guy is an idiot. No matter how much money the government gets it will never be enough. Put on your jackboots and take 100%. Still wont be enough, next year they’ll need more. The only way to get things under control is to cut back on, even wholesale eliminate, many if not all entitlement programs. Without significant reform (ie elimination) these programs’ insatiable thirst for resources will destroy us. Not may, not could. They will destroy us. The takers class will grow without bound while the percentage of makers will atrophy and die.
If you think Obama gave out a lot of exemptions for Obamacare, wait til you see how long the exemption list would be for this tax.
Twelve days ago, the luxury tax on expensive cars expired. It was the last of the luxury taxes that the first President Bush signed in 1990 as part of the budget agreement in which he broke his “read my lips, no new taxes” pledge.
The agreement was brokered Sen. George Mitchell , D-Maine , then majority leader. And the luxury tax was supported by Sen. Ted Kennedy, D-Mass.
The luxury tax applied not just to cars, but to jewelry, furs and private planes, and to expensive boats yachts.
Not So Lucrative
Congress estimated that in 1991 these luxury taxes would rake in $31 million. But the actual sum was just $16.6 million.
Why? Because, to the surprise of no one except tax-raising politicians the luxury taxes caused people to buy less jewelry and fewer expensive cars, planes, and, especially, yachts.
The tax destroyed jobs an estimated 25,000 of them in the boat-building industry, much of which is in New England in Sen. Mitchell’s Maine and Sen. Kennedy’s Massachusetts.
Job losses cost the government more than $24 million in unemployment benefits and lost income tax revenue. So the luxury tax actually cost the government money.
New England’s boat-building industry was still so devastated by 1999 that another Kennedy Ted’s son Patrick, a Rhode island congressman actually proposed a federal subsidy to help rich people buy yachts. He called it, “exactly the opposite of a luxury tax.”
Remember this costly farce when you hear talk about helping the common folks by taxing the rich.
David’s 15 minutes were up two decades ago...
I’m guessing this article was posted due to the hype in the title. But if you read the entire thing, I basically agree with everything Stockman says in it, save for the concept of the wealth tax. The Fed has created bubble upon bubble the last 15 years and it is what has driven the “economy”
In the meantime big government and big business have become somewhat indistinguishable from each other, which in the long run is going to completely stifle economic growth and trample on US economic freedoms.
Anyone who says that this idea is "crazy" is both directly and indirectly supporting socialism and progressivism.
Any solution to our economic problems, and they are many, cannot be tied to one part of the public. All must feel the pain equally or as equal as one can make it. Anyone receiving Federal money, must consider a forty percent cut from the get go as a minimum. Once the forty cents on the dollar debt the government is acquiring every year is under control, by shutting off the debt ceiling increase. then the remaining overspending on entitlements must be brought under control.
Government hiring must cease immediately, as there is no rhyme or reason to increase the size of government already at a minimum fifty percent larger than need be. That is an arbitrary number as a starting point to bring things under control. Retirees, and those who leave government may be replaced on a one for three basis. The bottom line remains everyone must feel the pain. Pain now will be far easier to tolerate than pain expected the longer it takes to reach the total tipping point.
I am not a math guy, but if the government cut 10% across the board with a 5 year no growth policy, got rid of redundant departments and sent home every illegal alien currently incarcerated and their families, would that make a dent?
If the government instead says, sign over 3% of your assets, the same problem exists, only it is the government that has to find, or print, the ready cash. I don't see how this turns into spendable money.
I am now taking the Hillsdale economics 101 class, so go easy on me if this is a stupid question.
Just who do you think there rich folks vote for and support? It ain’t us. Think Warren Buffett/Soros.
Wouldn’t your solution be better? Of course. But no one will ever propose it.
Oh PS I forgot a couple of items. The Fed must allow interest rates to rise normally, that should really scare the hell out of anyone with a rudimentary understanding of economics, and finally good luck getting any of this by the Senate, much less the occupant of the white house.
Oh I already know that, I also know it will never EVER happen. I am just sickened by the people who push the “Tax the Rich” stuff are the mega-rich who know darned well it will never apply to them.
I don’t think they have a disagreement with it.
A 30% wealth tax means people end up transferring assets to the government. You could live on your farm, but it is now restricted as a future national park. You run your business, but must give jobs to government cronies or sell it to the state and become an employee.
>> It would just give them license to spend more.
I’ve got to say I have mixed feelings about the idea. It would be horrible for economy and I think is is morally equivalent to armed robbery but....
Most of the dem elite have already made theirs, income tax does not affect them, if you are ever going to get their skin in the game, it will be in the form of a wealth tax. The IRS taking 30% of the Kenendy clan’s money gives me a little tingle running up my leg.
That being said, I am still against it because it runs contrary to my values.
The interviewer then said, Do you know how much in France you would have to pay on earnings above 1 million euros [French President Francois Hollande's proposal]? Not 30 percent 75 percent.
At that point, Smith said, 75? Yeah, that's different, that's different. Yeah, 75. Well, you know, God bless America.
When governments move beyond taxing incomes to confiscation, you know the end of that government is near. It is the fiscal equivalent to a malignant tumor which will soon kill its host; in this case the productive working public.
This will end the way it always has ended throughout history with the eventual collapse of the government. It’s inevitable. The cancer does not want to be told that it is the problem.
Okay....pulling the Marines out of Lebanon after the bomb, nominating Sandy Day O’Connor and hiring THIS guy....the Gipper made THREE bad moves.
A wealth "tax" (confiscation, actually) would never apply to the ruling elites any more than Obamacare.
I love Ronald Reagan, the best president of my lifetime, but he made some additional bad moves.
His 1986 Amnesty, which he later regretted......supporting the Brady Bill......picking George H. Bush as his VP.
Overall, though, he’s the only president I’ve actually missed when he was no longer in office.
Or is it 30% each year for 10 years? I think it is this.
The income tax is not a tax on the rich. It’s a tax on people trying to get rich. Is it any surprise that people who are already rich support heavy taxes that prevent others from joining their ranks?
The real rich in this country support democrats because they know the Constitution frowns on wealth taxes, and so the Democrats can tax all the income they want but they’ll never take the principal that wealthy people have already stored up.
Just when I was starting to like Stockman again.
One of Ronald Reagan’s biggest mistakes was in not firing this idiot at his first public insubordination.
A BUDGET DIRECTOR WHO QUESTIONS THE PRESIDENT’S PRIORITIES????? Stockman is garbage—recycled garbage.
Agreed. More scenes we’d like to see. Of course Democrats will never go along with it. They have an uncanny willingness to spend other people’s money. But when it comes to their own, not so much.
And I'd consent to a leprechaun leaving his gold on my door step, a unicorn for my grand-daughter to play with, and mermaids in the local lake to talk to while fishing.
There's no way such a powerful tool would ever be given up by the powers that be.