Why A 2% Wealth Tax Is Really A 10% Wealth Tax
January 02, 2020
What’s fair? Under what circumstances is it fair to take money by force from those who have earned it through their work and their creativity? What if you give the money to those who refuse to work? Can you lift up one group by tearing another down? Liz Warren, Bernie Sanders, and a whole lot of other Democrats say you can and you should.
The Democrats say it’s only fair the wealthy pay their fair share. But what’s fair? And what do they consider wealthy?
Today, they’ve planned their biggest tax hikes for those making $250,000 or more. For those families, they propose huge income tax increases; doubling the marginal tax rate from 37% to 70% or more.
For millionaires and billionaires, they not only want higher income taxes, but an annual wealth tax on everything they own as well (which is against the U.S. Constitution, but then when you appoint the judges that’s only a minor detail).
Their proposed wealth tax ranges between 2% and 6% on every dollar of net worth, payable each and every year. But, of course, the 2% to 6% is just part of what the wealthy will pay. If they own a business, or stock, or a home, or whatever; they’ll have to sell part of their assets each year to come up with that 2 to 6 cents. And not just 2% to 6%, but enough to pay the extra income taxes, capital gains taxes, sales taxes, accounting fees, and everything else on the amount they raise to pay the wealth tax. Easy to see how that 2% wealth tax will really cost closer to 10%. And that’s 10% each and every year.
They’ve also proposed higher capital gains taxes. Right now the long term capital gains tax ranges up to 20% on investments held for over a year. Short term capital gains are taxed the same as your marginal tax bracket on earnings.
So if you already pay 37% on your earning, plus what you pay in state taxes (if you live in California, for example, it’s another 13.5%), then you only have about 49% of what you actually earned. If, after caring for yourself and your family, there’s anything left, you might invest in a company that pays taxes to state and federal governments, hires employees who also pay taxes, and buys products and services from vendors who pay taxes as well.
But if Democrats get their way and raise federal tax rates to 70% or more (83.5% when you add California’s state tax), you’ll be left with less than 17% of what you’ve earned.
And that’s before you figure in the new Democrat wealth tax.
Yes, most of the really wealthy will be able to survive on what Liz and Bernie and all the other Democrats leave them.
What they won’t be able to do though is invest much in new businesses. Those businesses either won’t grow, or they won’t even exist. They won’t pay taxes, they won’t create jobs, they won’t buy services and products from other businesses.
It’s not just the millionaires and billionaires who will suffer. It’s every single person in America who depends in any way on a strong and growing economy.
Democrats say it’s fair because of what they’ll do with the money they take.
They want free health care for illegal immigrants, to pay off student loans, provide reparations for those whose ancestors suffered slavery, and for gays and transgenders who they claim have been persecuted.
They want to control our health care, ban fossil fuels, control what we eat, what we drive, how long we can light our homes, how often we can wash our clothes. Some Democrats even declare they’re better able than we are to decide where the rest of us live, where we work (assuming there is work left to do), and how many kids we should be allowed.
Democrats are right when they say doing all of that will require more money. But do the ends justify the means? Are those ends anything anyone really wants? And is any of it fair?
Of course not. But then, raising taxes isn’t really about fairness. It’s about financing a Democrat takeover of every aspect of our lives. Taking our freedom and our ability to decide for ourselves, to work, to create, to live.
Liz warren stands before crowds, and says it’s only 2 cents. But it’s all a lie. She won’t admit that her 2 cents each year, every year, on top of all the other taxes she’s proposing, will destroy not just the wealth of the richest Americans, but eventually the wealth of every American.
To my way of thinking, a better description than fair would be that it’s insane.
John Philip Sousa IV is an entrepreneur, political activist, author and accomplished business person. John has worked in the financial services industry for over 40 years, built a highly successful marketing company, ran for congress at age 24, and in 2016 created and led the successful movement to draft Dr Ben Carson into his candidacy for President of the United States. John is author of John Philip Sousa, A Patriot’s Life in Words and Pictures and Ben Carson, RX for America.