My Outline for a Federal Wealth Tax

08/01/2018 | Brian Griffin

[Brian Griffin]

To pay off the ~$21 trillion dollar federal debt, which amounts to about $60,000 per American, it is probably necessary to have annual federal wealth taxation.

It is best to introduce the federal wealth tax when asset values are high, so a smaller percentage of rich people's assets have to get taxed to pay off the national debt.

The tax might be levied upon the total of net personal property financial holdings and the equity in real property.

The rates might be:
1% on the equity in real property habitually resided in by the filer(s),
2% on the equity in agricultural land, less .05% for each year owned & habitually worked personally, up to 20,
2% on the equity in other real property not habitually resided in by the filer(s),
2% on the net worth in personal property financial holdings, other than common stock, and
4% on the net worth in common stock.

The rate is higher on common stock because most of modern great wealth is in the form of common stock.

Joint returns might be permitted that include children, parents, and the spouse/domestic partner of one specified filer. Joint returns would reduce the artificial shuffling of assets between related persons to reduce taxation.

There might be exemptions, from the tax due, of $100 for each year of a filer's age up to age 65, less $100 for each year of a filer's age above age 65, as of January 1 of the tax year. Age-based exemption amounts adjust moderately well for adult wealth accumulation and old age spending.

Example 1:

Mary, age 62, and Bob, age 63, own a $700,000 personal residence outright and $100,000 in common stock.

The tax on the residence would be $7,000 and the tax on their common stock $4,000,
with an exemption of $6,200 for Mary and $6,300 for Bob,
so they would not owe any federal wealth tax.

Example 2:

Jean, age 56, and Jim, age 58, own a $450,000 personal residence and a $150,000 rental apartment outright.

The tax on the residence would be $4,500 and the tax on the rental apartment $3,000,
with an exemption of $5,600 for Jean and $5,800 for Jim,
so they would not owe any federal wealth tax.

Example 3:

Anne, age 42, and Peter, age 45, own a $1,000,000 personal residence outright and $200,000 in common stock.

They had no children and Peter's parents are dead.

Anne's mother, age 63, and father, age 69, own a $300,000 house outright and $150,000 in common stock.

Anne and Peter would file a joint return with her parents.

The tax on the residences would be $13,000 and the tax on the common stock $14,000,
and after their exemptions of $4,200, $4,500, $6,300, and $6,100 for a total exemption of $20,100,
they would owe a federal wealth tax of $6,900.

Example 4:

Terry, age 50, and Paul, age 49, own $300,000 personal residence together with a $100,000 mortgage.

Terry has a teacher pension right worth $700,000.

Paul has a city police pension right worth $800,000.

Terry and Paul would file separate returns, with their respective parents.

Terry's mother, age 73, and father, age 75, own their $200,000 house outright and $20,000 in Treasury bonds.

Paul's mother, age 70, and father, age 71, own their $250,000 house outright and $50,000 in common stock.

Terry and Paul have two children, Patty, aged 26, and Debbie, age 28, each with $2,000 saving accounts.

Paul's return would take the children since his side is better off financially.

Terry's and her parents' return would have a tax on her housing equity of $1,000, on her pension right of $14,000, on her parent's house of $2,000, on her parents' Treasury bonds of $400, for a total of $17,400,
with exemptions for Terry and her parents of $5,000, $5,700 and $5,500 for a total exemption of $16,200,
so Terry and her parents would owe a federal wealth tax of $1,200.

Paul's and his parents' and children's return would have a tax on his housing equity of $1,000, on his pension right of $16,000, on his parent's house of $2,500, on his parents' common stock of $400, on his children’s saving accounts of $80, for a total of $19,980,
with exemptions for Paul and his parents and his children of $4,900, $6,000, $5,900, $2,600 and $2,800 for a total exemption of $21,200,
so Paul and his parents and children would not owe a federal wealth tax.

Example 5:

Mark Sugarhill, age 38, owns $10 billion in common stock and a $16 million mansion outright. He bought and gave multi-million mansions to all his direct relatives years ago.

The tax on Mark's stock would be $400,000,000 and the tax on his mansion would be $160,000,
and after his exemption of $3,800, Mark would owe a federal wealth tax of $400,156,200.

[The Pack Knight]

What part of 16th Amendment nullifies the Direct Tax Clause with regard to a wealth tax?”

In my opinion, The “16th Amendment nullifies the Direct Tax Clause”, period.

The Supreme Court may disagree.

Your opinion is baseless. It is contrary to the plain language of the 16th amendment, which authorizes only an income tax.

The Supreme Court has disagreed with you since the earliest days of the 16th Amendment. In Eisner v. Macomber in 1920, and in Helvering v. independent Life Ins. Co. in 1934, the Supreme Court held portions of the federal income tax unconstitutional as unapportioned direct taxes because they did not actually tax income.

[Brian Griffin]

“Net worth narrows your target for this supplemental tax to those around age 55 who will have paid off their 30-yr mortgages - those past their peak earning years, least able to absorb a thousand dollar hit... “

The exemption goes up by age.

Two 55-year olds get an $11,000 tax exemption together, $5,500 each.

People with a paid up $500,000 house and $150,000 in common stock can pay a $1,000 tax.

[Brian Griffin]

“In Eisner v. Macomber in 1920, and in Helvering v. independent Life Ins. Co. in 1934, the Supreme Court held portions of the federal income tax unconstitutional as unapportioned direct taxes because they did not actually tax income.”

1920, 1934, really?

[Brian Griffin]

“It is contrary to the plain language of the 16th amendment”

The 16th Amendment is “contrary to the plain language of the” direct tax clause.

Your 1934 case is older than Plessy v. Ferguson(1896) was in 1950.

[Brian Griffin]

“Your opinion is baseless.”

Amendment XVI and the direct tax clause can not both be valid, logically.

[Brian Griffin]

“And if chattel property (paintings, rare coins, etc.) truly is exempt from a holding tax, then lots of folks would would be investing in those, and avoiding stocks.”

Chattels often are bad investments.

Many auction houses also charge a 10% buyers premium.

States charge sales tax (~5% - 9%) on every sale.

[Brian Griffin]

“Heavy taxed states a la New York and California are losing populations to red states like Texas, Tennessee and Florida.”

We have lots of taxation in Florida, you just don’t see it, your house builder does.

[The Pack Knight]

Cases don’t become bad law just because they are old. The Court cites cases older than that all the time. The Supreme Court has never ruled otherwise.

But, if that’s your hangup, the Supreme Court applied the Direct Tax Clause as recently as 2012 in National Federation of Independent Business v. Sebelius, the Obamacare case. “Even if the taxing power enables Congress to impose a tax on not obtaining health insurance, any tax must still comply with other requirements in the Constitution.” The Court held that the individual mandate tax was not a direct tax, unlike “taxes on personal property,” and cited Eisner v. Macomber.

Your proposed tax is unconstitutional.

[The Pack Knight]

“Your opinion is baseless.”

Amendment XVI and the direct tax clause can not both be valid, logically.

Sure they can. The 16th Amendment supersedes the Direct Tax Clause as to income taxes, not to any other type of tax, such as your proposed property tax. If the 16th Amendment was supposed to repeal the Direct Tax Clause entirely, Congress would have simply put that in the amendment when they proposed it.

It was enacted in response to the Pollock case, in which the Supreme Court held that taxes on income realized from property were direct taxes which had to be apportioned under the Direct Tax Clause.

Taxes on other forms of income, such as wages, have always been held to be indirect taxes not subject to the Direct Tax Clause.

[The Pack Knight]

And lest you respond to NFIB v. Sebelius by pointing out that I was quoting Roberts’ opinion, see Scalia’s dissent: “ Finally, we must observe that rewriting § 5000A as a tax in order to sustain its constitutionality would force us to confront a difficult constitutional question: whether this is a direct tax that must be apportioned among the States according to their population. Art. I, § 9, cl. 4. “

[Ohioan]

Nothing is more idiotic than to punish multi-generational achievement, which seems to be what you propose. The Sixteenth Amendment has created immense problems, because of its authorization of a graduated impact in that direction. A tax to further attack the accumulation of wealth--the life-blood of American success--will appeal only to Socialists bent upon a war on what once made us the envy of the world.

Lies Of Socialism

[blueplum]

How about we fine lobster-eating foodstamps slacker dudes and basement dwellers $1000 annually for being worthless to society, instead of going after workers who have supported the system their entire lives and managed to achieve some personal gain?

You know what will ‘cure’ the natl debt? - return of industry to the US and 200+ million people working and paying income taxes (about half of the actual population) as opposed to what we had pre-Trump: one-third of the population trying to support two-thirds of the population with the two-thirds demanding more and more money from the one-third.

[rxh4n1]

You post this on Free Republic? Is this your idea? If it is get out of here. This belongs on DU.