David Stockman: Soak the Rich (with a 30% wealth tax)

Barron's ^ | October 11, 2013 | Robert Milburn

[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, he’s pushing for a huge new tax on big earners. Stockman would subject the nation’s 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 CBO’s 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 wouldn’t be permanent—it 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.

[SgtHooper]

And the imprisonment of most Congress critters still alive, as well as confiscating any wealth they gained while in orifice. Oh, and toss 0dumbo out the door of the White House so he lands on his face.

[pluvmantelo]

China holds (roughly) 2 trillion U.S. dollars. They could snap up some bargains.