The combo solves and encourages explosive growth

The rich may argue that the wealth tax is a form of double taxation, as they have already paid income taxes on the wealth they have accumulated. Table 1 suggests they may have already paid some taxes, but not nearly the appropriate taxes they should have relative to their fellow citizens. The wealthy may try to claim that the 3 percent wealth tax is discriminatory as it singles out only certain families for payment. There is another alternative. Get rid of all federal and local taxes, including payroll taxes, property taxes and the corporate income tax and replace it all with a flat 9 percent tax on the wealth of all American families. This would still allow for the $25,000 annual distribution to all American families so the less-advantaged and average Americans would be much better off. But I doubt the wealthy would prefer a flat 9 percent wealth tax over a “discriminatory” 3 percent wealth tax that hits only them. The wealthy will not like that the 3 percent wealth tax may eat into their real wealth over time. But the average age of the wealthiest 1 percent is 61 years old, and wealth is supposed to go down, not up, in retirement. According to Robert Merton’s theory of life cycle investing, and embraced by conservative economist Milton Friedman, people are supposed to save during their working years and then watch those savings slowly decline as they use the proceeds to fund a portion of living expenses in retirement. Theory never foresaw that the rich would grow even richer as their nest eggs continued to grow even after retirement. Finally, it might be argued that what we are trying to achieve here is an equality of outcomes, not an equality of opportunity. One need only look at the existing system to see that wealth inequality in the U.S. is causing an enormous disparity in opportunity across wealth classes. The rich and the poor in the U.S. have different neighborhoods, different protections against crime, different medical care, different schools, different universities, different job opportunities, different lawyers, different child care support, different diets, different exposure to alcohol and drug abuse, different levels of anxiety and stress, and differing rates of depression and suicide. Some will argue that collecting this tax on wealth is not practically feasible. Rich people will learn how to hide their wealth just as today they hide their incomes. To address this issue, as part of this plan we would create an organization of independent appraisers, completely separate from the IRS. One percent of the annual proceeds raised, or approximately $33 billion a year, would be sufficient to conduct thorough professional wealth audits. This is three times the budget of the entire IRS for 2018. And we would audit all 1.25 million families in the top 1 percent every year. This would not be as big a job as you think. A great proportion of the 1 percent’s wealth is in publicly traded stocks and bonds which have a stated market value. To the extent they also own private companies, these are easily valued as a multiple of pre-tax cash flows. And after the first year’s valuation work, updating the asset values to market prices in future years would be quite simple. Substantial penalties for underreporting assets, including possible jail time, would encourage the wealthy not to hide assets. For example, if anyone ever valued their net worth at less than half of its true market value and stuck by that appraisal after being challenged, the government would have the right to sell those assets in an auction and keep any proceeds beyond what the person claimed their net worth to be. Another argument against this plan might be that wealthy individuals will choose to give up their citizenship in the United States and move to foreign countries. To those wealthy individuals who would like to give up their citizenship and leave — good riddance. We don’t need their money. Capital today is fungible and moves instantaneously on the internet across national borders. To those corporations who are thinking about headquartering in a low-tax country to avoid the new tax, the solution is simple: Prohibit them from accessing the U.S. market with their products and services if they choose to try to avoid U.S. taxation. End of problem. There is no question that implementing this tax plan will cause explosive growth in the economy. When we give tax cuts to the rich, they just add the monies to their already over-stuffed bank accounts and investment portfolios. However, average Americans will make life-changing decisions with their $25,000 a year, bringing tens of millions of Americans back into a hugely dynamic and inclusive economy.