Crooks and Liars is parading around a twelve year old article wherein Trump proposed a one time 14.25% tax on the top 1% of Americans (then defined as households with a net worth of greater than $10 million) to pay off the national debt then $5.7 trillion.
The rest of Trump's politics aside, this doesn't sound like such a horrible idea, if the math works out. In 1999, if a 14.25% tax on the net worth of the top one percent would have paid off the $5.7 trillion national debt at the time, that assumes that the top one percent had a combined net worth of 5.7 trillion / 0.1425 or $40 trillion. For the same 14.25% tax to pay off the national debt today, the top one percent would have to have a combined net worth of 14.2 trillion / 0.1425 or almost $99.7 trillion.
According to the Federal Reserve the total net worth of all households and non-profit organizations in the US is $56.8 trillion as of Q4 in 2010. Right away, there's a problem. Clearly a 14.25% tax on the net worth everyone would not be enough to pay off the national debt.
Now the paper that has caused all the latest hand-wringing about wealth inequality in America is this one by economist Edward Wolff. According to this paper, the top 1% control 34.6% of the net worth (including home values, which the Federal Reserve seems to include). So, that puts them with about $19.7 trillion. A tax on the top 1% that paid off the entire national debt would have to be a 72 percent tax of their net worth. That seems a little steep, even for a one time payment. Would the benefit they get from having the country out of debt be worth it? Probably not. If we all chip in, a one time tax of 25% of everyone's net worth would be enough to pay off the debt. I guess if you have a negative net worth, you wouldn't have to pay though. Imagine the rush to take out loans if that were announced.
There's also practical problems that would arise from a tax on net-worth. As mentioned, this includes home values, so a big chunk of most people's net worth is not very liquid. Getting the money to actually pay the tax would likely be a big problem.
Crooks and Liars is trying to paint this as an issue that Trump has flip-flopped on. Looking at the numbers, he'd have to be an idiot not to have changed his mind about it. Revising one's stance in the face of new evidence is a quality we should encourage in our leaders. I don't really have an opinion about Trump as a presidential candidate either way, but it would be nice if the pundits providing political commentary could spend some time doing a little fact checking and presenting a rational argument, rather than vapid "he said that, but now he says this!" commentary that is ultimately of no value.
Originally published 2011-03-29 11:03:17