Wealth Tax is Road to Venezuelan Socialism

Howard Schultz[STARBUCKS]rips Warren's 'ridiculous' plan to tax the super wealthy                                        Politico 30 Jan 2019

"taxing wealthy people a surtax of 2 percent because it makes a good headline ... You cannot just attack these things in a punitive way by punishing people.”

He also attacked the tax  proposal of AOC and for Universal Health Care by Sen.Kemala Harris as "un American". 

Cyclops believes that Howie[$3billion] is peeked and has peaked.

In NH, Bloomberg compares Warren's 'ultra millionaire tax' with chaos in Venezuela...

                                                                                                       The Boston Globe-Jan 29, 2019

If you think Schultz was a little over the top,it was nothing compared to the even richer Mayor Bloomberg.

In his New Hampshire speech "he blasted the Massachusetts Democrat’s “ultra-millionaire tax” as “probably unconstitutional.”  and compared it to socialism. "It's called Venezuela,".

Well,well,well 😈    Sure does not sound like the Marxist classes of Cyclop's youth.

According to NBC News :Recent polling showed 61% support for Warren proposal                                      

•   Sixty-one percent of respondents said they supported the proposal, 
•   with 46 percent “strongly” supporting it. 
•   Twenty-one percent opposed the idea, with 15 percent doing so “strongly.” 
•    The rest were unsure or neutral.
•    Notably, a plurality of Republicans supported Warren’s wealth tax by a 44-37 margin   
•   Independents supported it by a 61-23 margin while Democrats went for it 76-6.most Americans favor raising taxes on the rich.                                                                       Cyclops faith in humanity is restored.                                                                            It seems it is always popular to tax other people

HRH had intended an extensive  nerdy review of the various proposals on taxes and health care but we have been distracted by the over the top reaction from right and left.

                                     Still some more analysis on wealth tax is below 

Instead we must share some pearls we came across as we began our work

1.  In 1999,one Donald Trump,developer of New York City  proposed a one off 14.25% wealth tax on the net worth of individuals and trusts worth $10 million or more. Trump claimed that this  could be used to eliminate the national debt. Makes Warren look like a piker.It was 20 years ago and of course before,as President,his tax cuts were estimated to increased that debt by its original amount within five years.

      2.Contrary to Bloomberg's apparent belief,Venezuela does not have,

              never has had, a wealth tax.
              Chavez managed to destroy the economy without one,

        Neither do the other two socialist paradises in Latin America--Bolivia or Cuba.
        The only country in the Western Hemisphere with a wealth tax  is..........

                        YOU GUESSED IT                     THE US of A

      3. It's called "property tax" .It is levied at the local level on real               property-residences and vehicles etc -but NOT on stocks and bonds.

 It is levied on 84 million home owners.

 This locally levied tax was at least deductible as an expense on federal tax returns.

 That "tax break" has been deleted under Trumpfski's tax "reforms/cuts" for the rich   and large corporations.

  That it is It is no longer deductible will be discovered by about 20 million filers in the course of the next two months.

 It's very substantial on the middle class and almost meaningless for the very wealthy.

That is VERY regressive.

There is no similar tax elsewhere in the Western Hemisphere

and in the few cases where it is levied in Asia and Europe it is much less than in the US of A.

The country with the highest proportion of taxes collected this way is the USA. 

In other words.The US already has a wealth tax.

It just does not affect the wealthy nearly as much as the middle class.

A summary of Cyclops simple analysis is below.The detail can be found under 

Warren Wealth Tax below.

                                                      Warren Proposal                   Currently

 Multi Millionaire Wealth Tax           = 0.1  %                                0.1  %          

 Middle Class Couple Wealth Tax     = 4.54%                                4.54 %

 Billionaire Wealth Tax                     = 1.92%                                0.02 %

                                           As proportion of  Wealth

MCC currently pays almost 250 times that of a Billionaire and 45 times that of a MM

                           This is crazy you say.

                           It cannot be true you say. 

                           Cyclops has gone bonkers you say.

                           Cyclops cannot do arithmetic you say.

                            He cheated you yell--moi? never.

                            He has invented skewed and artificial comparators.

      Please review the calculations under Warren Wealth Tax   below and let me know😃

       4.    ONE LAST FUN FACT FOR NOW

  A half dozen European countries have property or wealth taxes.

 These are typically lower than the rates in the USA,are limited to a proportion of current income or   levied on overseas assets,

One though has a progressive tax which begins at asset value of about $150,000 and is levied on all assets  including stocks and bonds etc.Including overseas assets.

It is more substantial than anything being proposed by Senator Warren.

Which European country is this bastion of confiscatory socialism heading for the Bloomberg Venezuelan fate ?

You got it in ONE 

                                    Yodel aye ee oh

                                               Wicked Swiss Commies

The proposals to date:

• Alexandria Ocasio-Cortez [AOC]proposes top  marginal income tax rate of 70 percent on income over $10 million. 
• Affecting less than 1% of taxpayers
• Senator Elizabeth proposes annual wealth tax: 
• 2 per cent on wealth above $50 million 
• Rising to 3 percent on fortunes over $1 billion.
• This proposal would affect about 75,000 of the country’s wealthiest people.
• About the crowd at a Wembley football match.
• Senator Kamala Harris makes Universal Health Care pledge but unfortuneatly implies all would lose their current employer provided health care.The only political misstep of a very impressive campaign launch                                                                                                                                                                                                                                                                      Then that old "Independent" spoiler Sanders tries to Trump his rivals with  a plan to reduce the threshold for estate tax from $12 to $3 million.

• $3.5 million to $10 million: 45 percent ta
• $10 million to $50 million: 50 percent tax
• $50 million to $1 billion: 55 percent tax
• More than $1 billion: 77 percent tax
• This proposal would affect far more household than those of his rivals 

As with many Sanders' proposals it appears attractively radical but is politically harmful.

• It gives back to the Publicans the issue of "the government punishing small business owners and the family farm" BS.
• The Democrats managed to blunt that rhetoric by agreeing a threshold above  the estate of the affluent upper middle class.A status to which most Democratic voters aspire.               
•  The Publicans have not run on the issue since.                                                                                                       Chaver Bernie:Your time has Passed.                                                                                                        Do not be spoiler.                                                                                                             Join the Democratic Party already

Warren Wealth Tax

•  Revenue raised from the Warren tax could be substantial —$275 billion a year.
•  An 8.1 percent increase in federal revenues.  
•  Not enough to pay for universal health care, but more than enough she claims to pay for programs like universal child care, a Green New Deal and student-debt forgiveness
• The revenue estimate is four times as much as the most optimistic estimates for Ocasio- Cortez’s income tax.          
• Lowering the starting threshold to $20 million would increase revenues to over a $trillion.
• A third of current federal tax revenues.
• That's more than enough to wipe out the deficit created by the Trumpfski tax cuts for the rich and corporations

 Politically Wealth Taxes ["taxes on other people"] may seem fairer and more palatable than increased income taxes. 

• They tax the accumulated income of the past — the existing rich.  
• A substantial fraction of the wealthiest  Americans inherited their money                      
• Not by creating a business or                                                                                 
• Continuously making a  high salary

Voters are unlikely to shed a tear for heirs and heiresses forced to give up a larger slice of their unearned fortunes. 

•  Most voters already pay wealth taxes, in the form of property taxes on their homes. 
• This form of wealth tax is extremely regressive [see below]
•  The very rich hold most of their wealth in stocks and bonds rather than in real estate,
•  Taxing those assets seems fair. 
• Wealth taxes are likely to be a political hit. 

                                              CALCULATIONS

1. Multi Millionaire[MM]: $50 mm      Annual income $2 million

             Main  residence $5 million. No mortgage.  Bond Portfolio, $45 million.

            \ Net Worth $50 million

            Assume: 2% marginal wealth tax for net worth ≥ $50 million.  Tax= 0  

                           1% property tax=$50,000 \ Total Wealth Tax =$50,000 or 0.01% of wealth  

                                             [n.b.avg ntl property tax rate is 1.15%]   

                           

2. Middle class Couple[MMC], Teacher and Office Worker:  Annual Joint Income $100,000

Main residence $500,000 less Mortgage $400,000 plus Saving of $10,000                                  \Net worth=$110, 00

             Property tax on main residence @ 1% =$5,000 or 4.6% of Net Worth aka Wealth

      3. Billionaire:    Annual income   $80 million.

          Main residence $20 million. No mortgage .Investments $980 million

                      \ Net Worth $1 billion

                       Assume: 2% Marginal Wealth Tax for net worth ≥ $50 million. Tax= $19 million  

                                        1% Property Tax on $20 mm=$200,000 \ Total Wealth Tax =$19,20

                                        or 1.92% of Wealth  

Summary :      Warren Proposal                                                 Currently

 Multi Millionaire Wealth Tax           = 0.1  %                                0.1  %          

 Middle Class Couple Wealth Tax    = 4.54%                                4.54 %

 Billionaire Wealth Tax                     = 1.92%                                 0.02 %

As proportion of  Wealth

MCC currently pays almost 250 times that of a Billionaire and 45 times that of a MM

FOOTNOTE

Major tax rates in Fairfax County include:

Corporate Income	6 percent
Personal Property	$4.57 per $100 of assessed value
Real Property (commercial)	$1.275 per $100 of assessed value
Real Property (residential)	$1.150 per $100 of assessed value
Sales and Use	6 percent (5 percent state + 1 percent local)
Sales and Use (food for home consumption)	2.5 percent (1.5 percent state + 1 percent local)
Personal Income	5.75 percent (top rate)