Here’s How Trump Should Tax The Rich

Pop culture references have invaded the modern political discourse due to the emergence of millennials. It might also be due to the general decline of the American public sphere. Whatever the reason, Harry Potter, Voldemort, Darth Vader, the Rebellion, the Hunger Games, etc., have all become touchstones for expressing both thoughts and emotions for the early Trump era.

Infantilization expresses itself in odd ways.

One pop culture reference conveniently dodged but absolutely perfect is when a pundit mentions that a particular event could be a politician’s “Only Nixon could go to China” moment. The line is from one of the many Star Trek films, but perfectly encapsulates a politician reaching across the aisle or ocean and doing something unexpected and unusual. The additional key, lost on many 21st century Americans, is that Nixon had been so fiercely anti-communist and so quick to label anyone soft on communism that only Nixon himself could reach out to China and sell it to America.

Observers may point to Bill Clinton’s success at this, but he in fact did not execute on that strategy. Clinton’s plan as a president economically was written and executed by his advisers from Wall Street, which would become Democrat dogma. America just did not know it yet, as it was being birthed in the early ’90s. Clinton did sign an expansion of tough crime laws. This was not new with Clinton; he had been a pro-death penalty Democrat as governor of Arkansas.

After the Gingrich 1994 congressional sweep, Clinton employed the triangulation strategy well. It was not just that sweep, but the passage of Prop 187 in California, which expressed the native unrest with the flood of Mexican immigration. In the ’94 California elections, Prop 187 cruised to victory. Not just that win, but the 15-point victory for Republican Gov. Pete Wilson in California, who linked his campaign to Prop 187, was enough to scare Clinton, since California was in the middle of its elect a new people program. In the fall of 1996, Clinton signed the Illegal Immigration Reform Act of 1996, which accomplished nothing, but neutered accusations of Clinton signing the Defense of Marriage Act in 1996, which defanged Republican campaign attempts to paint Clinton as a social liberal. These were moves with the campaign in mind and not so much the long-term voter coalition game.

President Donald Trump does have before him an opportunity to both have a “Nixon goes to China moment,” neuter the opposition’s narrative, and strike at the Left’s high-low coalition. Currently, Trump and the GOP are drawing up their tax cuts, which will throw America further into debt and possibly test the world’s tolerance (better put central banker tolerance) for American debt. President Reagan pushed through a massive tax reorganization early in his presidency to face multiple challenges over the issue of deficits. Reagan did raise taxes in different ways, working with Rep. Tip O’Neill. After the 1981 tax reform bill, Reagan took back half of the taxes he had cut!

Trump may face a similar situation, either through external pressure, opposition wins in Congress, or simply as the narrative for the 2020 presidential election approaches. Trump could attack the high-low coalition by offering a suite of tax reforms that attack different areas than income to not suck money out of the economy. Attacking the high, which donates and votes disproportionately for the Left, Trump could propose a wealth tax on the 1%.

This would really be an echo of Huey Long’s idea from the ’30s. The media and banks even see this coming. The mechanics of this could be played with to target as fine a group as possible. Anyone who has a net worth over $5m (or $20m) has to pay 1-2% of that amount each year. It would be like the estate tax, except you paid it while living. Warren Buffett complains he does not pay enough in taxes. This would quiet his moaning; it would also solve some of our fiscal problems.

The Left’s own memes can be turned on themselves. Trump could say, “Wealth? I hear people say it’s concentrated, too concentrated. The 1% this, the 1% that. My plan asks the 1% for just 1%. They can pay this. I know this because I’m a member, in fact, one of the richest members who can pay my share.” In the realm of public discourse, this would neuter the Left’s faux cries about wealth inequality. It would help break up some of the concentration on the high end.

The press for such a tax would be too rich to ignore and neuter outrage, if any, from the Left’s normal priest class. It’s repeatedly pointed out how thirty, a dozen, or even just eight men, hold as much wealth as the bottom half of humanity. Bill Gates would be forced to come up with a billion. The Waltons would pay $1.6B. And the Koch brothers would pay $1b.

If a 2% wealth tax was applied to everyone who had a net worth over 5 million, the revenues would be roughly $700 billion a year. That’s just about the right amount to get the budget to where it starts to make sense. This tax increase would not come out of current income, and therefore the economy would not be whacked.

If this were a bridge too far for Congress and its donor puppet masters, Trump could alter the capital gains tax rate, so that it goes back to being taxed as regular income. Now a narrative thrown at this is how it would hurt small investors, which is comical considering how the average American only owns stocks via mutual and retirement funds. To deflect that argument, the tax code could allow for the lower, old capital tax gains rate on capital gains under $100,000 over one’s lifetime and then capital gains above $100,000 would be taxed as regular income. Once again, Trump would be hitting the high, neutering opposition narratives, and as a billionaire investor, playing Nixon going to China.

These are suggestions that hit the high in the Left’s high-low coalition. There must be a way to hit the low, which is currently paying nothing at all in taxes. To freeze the Left, Trump could approach the idea of a national sales tax or value added tax. In a progressive manner, he could make it two tiered, with a low 2% for purchases under $100,000 (example) and then 5% for purchases over that amount. Invoking his name again, Warren Buffet supported this idea in the past. By making it tiered, it becomes more of a luxury tax than anything else. Subsidization of the underclass does go on, but with this, America could collect 2% from them for when they buy $150 Nikes.

Red states have been moving towards reducing income taxes while raising property and sales taxes to diversify revenue streams, which encourages people to make more money and also rewards middle class voters.

Applying a similar system at the national level would work to Trump’s advantage as he tackles the current high-low structure of the Left. Resistance to such taxes would work against the Left’s ancient economic memes, and continue Trump’s outside and change themes. Only Nixon could go to China, and only a braggadocious billionaire could propose a wealth tax.

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27 Comments

  1. Alistair Hermann January 29, 2017 at 2:28 pm

    Interesting. The immediate problem with the notion is the assessment of wealth, which seems to be a challenge at any scale, but especially as scale increases. Increased wealth leads to increased sovereignty.

    Also, where is such wealth domiciled for tax purposes? Surely it would be ‘elsewhere’ quick smart under such a law?

    It is much easier and more logical for a government to tax place than to tax people. This has the same effect of taxing wealth directly, but avoids the complexity.

    As an aside : I wonder how the notion of taxing wealth would work for companies?

  2. Thorgeir Lawspeaker January 29, 2017 at 4:15 pm

    In addition to Alistair’s concerns, that’s an awfully low threshold. Just like the estate tax, it’s going to drag in a lot of people who work hard at high value jobs and save rather than spend, and also hit landowners (farmers, natural resource extraction folk) harder than the FIRE types, due to mobility for avoidance and liquidity. It’s satisfying to smack Warren Buffett, but I wonder if this really hits Trump’s supporters more than his opponents.

    1. Maybe exempt land under a certain number of acres, raise the threshold, and index it to inflation?

  3. Pathetic. Reagan hated O’Neill and never embraced him. If you can spout such nonsense you know what follows.

    Want to gore the “rich.” Start with all the tax exemptions of Hollywood. Then tax all those non-profits and finally hit all the “charities” and universities who pay no taxes.

    Once we are done with that lets tax lawyers-put a 20% on their gross. Finally for all the tree huggers out there, make all the Soros charities pay a special 20% tax for being funded by foreign sources.

    In the meantime, lets tax all the poor an addeitional 20% as an incentive for them to start working instead of being such leeches.

  4. I agree with the sentiment from the commenters here that Trump needs to find a way to target FIRE incomes and avoid taxing agriculture, small businesses, and red-state extraction economies. The Democrats have spent 8 years systematically targeting the oil and coal industries and other red-state interests. Refusing to target their base with punitive taxation is preemptive surrender.

    He could start with a series of excise taxes on blue-state goods, high-end consumer goods, personal electronics. Sales tax on digital audio and video content. Bezos needs a kick in the teeth, so a tax on interstate retailers. He could set up a 20% iTax. Obama taught the country that taxes were a bludgeon to use against those who voted against the President. Trump should learn from his predecessor.

  5. I like the idea of a progressive sales tax instead of an income tax. Rate should be continuous though. Something like log(Price)^2 or something, with 0 for anything less than a dollar.

  6. You could kill two birds with one stone by just instituting a federal property tax. Easy to calculate, impossible to evade, and increases with the lavishness of a person’s lifestyle. While an overall wealth tax would be more “fair”, accurately calculating a fair value for a person’s wealth can be extremely difficult.

  7. A sales tax as its done in many european countries is a desaster and drives much of the economy off the books. Greece did as much as increased its already high sales tax to 21% and even in the EU-Workhorse Germany its around 19%. A fith of the value of things is just taxes. I see why a sales tax is an attractive alternative to an income tax, which takes from income rather then from an optional spending, but overall it will narrow the spending and therefor living standards. The US has to cut spending, not find new ways to take in more money. New taxes will always create more appetite for more taxes.

  8. But I don’t want to tax “wealth”. I want to tax progressives and progressivism.

  9. A wealth tax already exists and drives the behavior of the rich – inflation.

    It also transfers money from the real economy rich to the connected in finance rich. If we’re talking pie in the sky, get rid of that – yeah, that one is even bigger and harder to get passed than a wealth tax but tons of our problems are the direct result of accepting every bit of past progressivism and making some change to mitigate the harm.

  10. “Currently, Trump and the GOP are drawing up their tax cuts, which will throw America further into debt and possibly test the world’s tolerance (better put central banker tolerance) for American debt.”

    This sounds like the better option to me. The reason that the US government is able to engage in so much nonsense is that it has the world’s reserve currency. If that breaks, then the government’s growth and the march leftward that accompanies it gets restrained by rising interest rates and an unwillingness of foreigners to lend money to it. The American standard of living will noticeably drop, but the American people have been living ahead of their means due to central bank policies, and a correction is coming sooner or later. Best to do this now before the situation festers and gets worse.

  11. I know Social Matter is not a libertarian website but there is a a lot wrong with this approach. It’s tantamount to saying that the US government is better at creating/managing wealth than the individuals who themselves created it

    1. Not really. It’s more like saying “The US government wants to figure out a way to punish its enemies and reward its friends.”

    2. Or even, the US government should pay its debts.

  12. I know Henry George isn’t much quoted nowadays but how about a federal land value tax? And financial transaction taxes for stock markets, bond trading etc.?

    1. A federal land value tax is probably a good idea. Financial transaction taxes are probably bad ideas.

  13. Taxes to billionaires, where ever they are directed, dont solve the basic problem connected with them; from the point of view of billionaires, the best use of their money is mostly to turn it into political power in one way or another, and slight increases in taxes doesnt reduce their power in significant way. I wonder how much Trump could act like Putin and order the billionaires to stay away from politics or reduce their effect in politics in major way. And throw people like Soros to jail straight away because they have financed political violence and harassment in the United States. Like always, this political solution too replaces one set of problems with another set of problems, but the new set of problems would likely be smaller and milder than the present day problems.

    Here is Putin giving public punishment to the richest man in Russia, Deripaska, and his cronies. Among other things they had fired thousands of workers without giving them their salaries. Everyone was paid immediately and fully after Putins visit. Putins measures have not removed corruption though, there is as much corruption as before, it is just travels more to Putins administration. Perhaps in Russia this is one of the ways in which power is concentrated and centralized. Russia is very large and sparsely populated country, and it is threatened militarily, demografically, economically, religiously, etc. from all directions, including from inside of Russia, and these forces may tear Russia to pieces. Thus Russia has always needed more centralized and relatively stronger power than Western Europe.

    1. “Here is Putin giving public punishment to the richest man in Russia, ”

      Oh boy, you realy swallowed the bait hook, line and sinker and even a bit of the rod.
      Putin has the biggest most pimped out Villa you can imagine complete with golden sinks. He made his first Fortune embezzeling money selling Timber assets to the West that were ment to feed the starving people of St.Petersburg. This Bastard is the most crooked Oligarch of all of em. This Topic is about Taxation and yet you see it as opportunity to cuck for russia, and you cuck hard.

      Can’t wait for the Day when Mr. Putin is so broke that he makes Pizza Hut Adds like Gorbatschow.

      [Ed. This is a fallacious line of argument. First and last warning.]

      1. Karl,

        I live in Finland, and Russia has always been, is and will be a potential military threat to Finland. So keep your cuck, it belongs to you.

        I used Russia as an example of power, not as an example of Russia. I wrote: “Putins measures have not removed corruption though, there is as much corruption as before, it is just travels more to Putins administration. … Like always, this political solution too replaces one set of problems with another set of problems, but the new set of problems would likely be smaller and milder than the present day problems.” Do you understand?

        NRx is largely about centralizing power to the king. Although I advocate a bit less centralized king than an average NRx supporter, I outlined some avenues how it can be done in real life. US have less corruption than Russia, but still a lot. It has to be taken into account when assessing power and planning strategies. Power is not a clean business.

        1. You used Russia as an Example of Russia or otherwise you would just use any other Example that actualy would hold some water from the FBI cracking up FIFA and Volkswagen even to China where people get Shot for Corruption. You made a comparission with a lower standard cause its suits your emotional bias of a Strongman using his Iron Fist in a Showtrail, while in doing so you stay worlds below that what Western Civilization is all about. Russia cucking lowers white cultures standards to the lowest and we end up like this asian Nation that has more in common with sub sahara Africa.

          They just named a public square in Moscow after departed Fidel Castro. Realy going in the right direction there.

          “I live in Finland …. So keep your cuck, it belongs to you. ”
          By the way it was the Vikings who sailed down the Volga to sell white women to the Arabs.

          1. Karl,

            in the US the one of important telltale signs of cuckservatives is that they lose their wits (whatever there was to begin with) whenever Russia is mentioned, and start rambling about muh enemy, no matter what Russia does or doesnt do, and no matter in what way and in what context Russia is mentioned, if it is not an absolute condemnation and vilification of Russia from a liberal viewpoint.

            In addition to your cuckservative views, if the possibility of a strong leader bothers you, you are obviously in the wrong place, because king is a strong leader, and king is one of the goals of NRx. NRx has many rational theories about a king, but obviously you are not aware of any of them.

  14. Mr. Landry, thank you.
    2% would solve many problems. This coincides with your earlier commentary back in Oct.
    No land taxes however. That doesn’t make sense because many own land, but not “property”. Meaning income producing property.

    1. Absolutely agree here. Land taxes harm Trump’s red-state base. Apartment/Condo taxes on units with rent higher than 1 or 2 standard deviations over the mean would be a far better tax if you need to tax real estate.

  15. Karl,

    in general it can be said that man can learn from almost all sources at least something, mostly more, whether one regards the source lower or higher than ones own side.

  16. Daedalus Mugged February 1, 2017 at 5:37 am

    I generally agree with the objectives, but not the methods and means. There are better ways; the first would be to eliminate the federal deductibility of state, local and property taxes for federal income tax purposes. There is no reason residents of lower tax jurisdictions should have to pay more fed taxes than high tax jurisdictions. If the NY, CT and CA want high taxes, they can pay them without subsidy from AL and MS.

    The next would be to eliminate the mortgage deductions for amounts over ~2x median house, or something like $10k, perhaps higher and declining with time. The rich can have their multi million beach front property on the coast, but they don’t get to reduce their tax bill and force the working men and women of the heartland to subsidize it. This would also have the benefit of reducing the debt and increasing the equity proportion of our national capital structure, and dramatically reduce the finance wall street impact on the real economy.

    The next would be to go after the incomes of the ‘charitable’ foundations and endowments like the Ford and Rockefeller Foundations and the Harvard and Yale endowments. There is absolutely no reason you and I have to pay taxes on our investment income, and they don’t. I would furthermore require any large (>$100mm?) trust be self liquidating, in that it has to distribute more than 10% of its assets every year, or face the equivalent of IRA non withdrawal penalties over a certain age. Eliminate these huge pools of money and influence behind much political shenanigans. Eliminating the tax deductibility of donations above a certain threshold ($10mm lifetime?) would also monkey wrench the ultra rich. I would love to see Bill Gates and Warren Buffet try to undo these mega donations they have pledged if they needed the money to pay their suddenly much higher tax bill.

    And just to appeal to instapundit, repeal the Hollywood tax cuts. Perhaps also a surtax on any employment contract for individual services for greater the $1mm notional or per year. Wack the star athletes, actors and CEOs.

    But skip the wealth taxes, because that is yet another arbitrary state power evaluation, and skip the nation sales tax/vat unless it comes with the complete repeal of income taxes (including the amendment) so we don’t end up with both strangling us, as our enemies intend.

  17. Tax. tax tax.

    Stop taxing people’s labour, investment and accomplishments.

    Stop stealing from one group of people to redistribute to another.

    Let people pay for what they want, and not pay for what they don’t want

    Everyone always wants to tax someone ELSE, and get the state to do the violence necessary to extract the wealth. Stop the hypocrisy: when you consent to the violent extraction of other people’s wealth implicitly makes you no less guilty than those at the tip of the spear..

  18. What cecilhenry said.

    Besides, a 1% wealth tax, applied annually, would quickly devolve to 2%, 3%, 5%, 10%, etc. The politicians will not be able to restrain themselves, and they will demagogue like never before to shift more and more and more of the tax burden to high net worth individuals, all in the name of them “paying their fair share”.

    A more effective way of encouraging capital flight from the USA could hardly be imagined.

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