I’m not even going to bother to link to an article I read claiming that the U. S. is “a very wealthy country” because I think it’s grossly misleading and undoubtedly a pitch for the ill-conceived tax on wealth.
Instead I will just point out that there is a higher percentage of poor people in the United States by the most common international definitions (incomes < $1.90/day, incomes > $3.20/day, incomes < $5.50/day) than in any Western European country, Canada, Australia, or New Zealand and a higher percentage by the first two of those definitions than in any European country including Moldova, by most reckonings the poorest country in Europe. Whether we were ever the richest country in the world is open to debate but I think a better characterization now would be that we are a middle income country with some extremely wealthy people in it. I don’t believe that the effect of a wealth tax would be to alleviate poverty in the U. S. but to change the U. S. to a middle income country in which fewer extremely wealthy people lived.
As I’ve been maintaining for decades I think it’s even better to think of the U. S. as three countries sharing the same borders: the richest country in the world, a middle income country, and a poor country. Contrary to most Democrats I think our attentions should be focused on the rural poor and people living on Indian reservations. That’s where the genuine, grinding poverty in the U. S. is. But it’s the urban “poor” who are only relatively poor and don’t meet the definitions above who get the most attention because that’s where the votes are.
And just for the record I think that rather than monkeying with deductions or increasing the marginal rates or imposing a tax on wealth we should abolish the personal and corporate income taxes, replacing them with a VAT, prebated based on income. Unlike our present system that would be an efficient tax and would not be regressive.
Please explain how you can design a VAT based on income. Unless you mean poor people carry around a VAT exemption card. Or do you exempt whole categories of goods from the tax?
Otherwise, a VAT seems to be as regressive a tax as you can design.
Here’s an explanation of one such proposal.
I don’t believe that the effect of a wealth tax would be to alleviate poverty in the U. S. …
I agree.
… but to change the U. S. to a middle income country in which fewer extremely wealthy people lived.
I disagree. I think the effect would change the U. S. to a lower income country in which even more extremely wealthy people lived.
The wealth tax will be written by the wealthy for the wealthy, and make no mistake, the middle income people will have their wealth taxed the highest.
RE: VAT Tax
This is the most insidious tax possible. Since the tax is applied each time value is added, small increases have a substantial impact. Furthermore, the best way to get less of something is to tax it, and thus, adding value is discouraged.
Does the tax apply to imports? If not, it would incentivise more manufacturing offshoring. If so, is it the comprimable domestic value added? If that were the case, there would be no added value to foreign production, and if transportation costs are value added, it would incentivise more manufacturing onshoring.
I read Dave’s article. It was called the Fair Tax Plan. Before I read I bet the wife that with the word “fair” in it we could guarantee that it would entail a tax cut for the wealthy. Bingo!
We all know this but it should have been stated. We look like one of the wealthiest because we use the mean as our average. We have a small percentage of extremely wealthy people and it pushed that average way up.
Steve
Steve
I would say second hand items and foods would be except, electricity? Natural gas? Healrh care items?
Oxygen concentrators?
Insulin? Education supplies?
The list could get long quickly couldn’t it?
Thanks for the link. However, I’m not impressed. Europe has a 20% VAT, but they also have every other kind of tax, so a VAT does not replace income taxes, business taxes, sales taxes, etc.
Rigging federal taxes to favor political supporters is basically all Congress does. It’s how they get reelected, and also, most importantly, how they get rich. So, while Congress might actually agree to a VAT, and actually the Democrats might want one, it will not eliminate any of the others.
A flat income tax between 15% and 20% of gross income would be better. Almost half US workers do not pay federal income tax; most of them should.
However, tax policy is kind of irrelevant. For the last two fiscal years, because of covid (?), half of all federal expenditures have been financed by borrowing: ca. $3 trillion borrowed, $3 trillion from taxes. The recent $1.9 trillion covid bill contained only about 9% covid spending and 91% other spending.
The real problem is that Congress has learned they can borrow as much as they want, and the Federal Reserve will provide the funds. This is a set up for runaway Weimar-like inflation. On the other hand, our policies of free trade and open borders are highly deflationary. So far deflation has checked inflation. We’ll learn someday whether that always holds true.
Visit yesterday with my nephew, Tribal Council Chairman of the Omaha tribe.
He said police there actually get called to break up disturbances at house parties and find no alcohol.
Apparently for much of the young today it’s methamphetamines.
It’s a plague of broken family and early death.
This on top of alcoholism and widespread juvenile diabetes leaves many children being cared for by any surviving relatives who can. They can’t have a room of their own so schooling suffers.
Grandparents can’t have one either and medications get lost.
It hurts to see that and then the small town I went to school in many have five bedrooms and live alone.
Just ruminating, there’s no easy fix. No hard one either.