Warren Buffett, the investor, recently stated he did not pay enough in taxes. He is correct.
- Taxes are the cost of society. Paying for the framework of laws and commerce.
- The build-up of wealth is the benefit of society.
- The Social Contract, that society benefit is a fair return on efforts.
- The claim of Society is what is necessary to provide the opportunities of society.
Accumulated wealth is the “ONLY” earnings.
- A consumer economy, such as our, operated off the exchange of goods and services between the citizens.
- Earnings are when the money has traveled all the way through the economy.
- Net Worth or accumulated wealth is the earning.
Taxing Income is a premature extraction of money from the economy.
- A transfer between labor which removes consumption capacity.
- Removing the income tax frees money for labor to extend the velocity of money.
- Taxing profit at the end of the economy cycle allows the full benefit of money.
Replacing it with Net Worth tax, but only the minimum tax necessary to support the Social Contract to manage the Necessary Government.
The idea the individuals would not contribute is based on a linear understanding of the economy.
- Society is assembled for the Society’s benefit, which is the common good and the individual’s well-being.
- Those that receive the greatest good are the providers;
- Financial Capital, Intellectual Capital, and providers of Labor Capital.
John Locke’s comment that all wealth is derived from Labor is true. It is labor that created the Capital for the endeavor, and it is labor of ideas that created the Intellectual Capital.
The problem in our current tax system is that the wrong people are taxed.
In 2015 there was approximate $80 trillion dollars’ worth of assets owned in the United States. This amount does not include assets owned by the Federal, State, or local governments.
- These assets are marketable and transferable. Consisting mainly of tangible property: real estate, stocks, bonds, and a minor share is in intangibles such as copyright, patents, and other nonphysical items.
- An annual 3% tax based on net value of assets would raise $2.4 trillion a year.
- An amount that exceeds the U.S. National Budget of 2015 net of Social Security and Medicare spending.
A tax on individual net worth or asset tax provides a nonprogressive, yet equitable, alternative to income or consumption taxes.
- A tax that taxes all net assets removes the politicians from selecting benefits and transfer of wealth.
- A flat rate asset-based tax system where all assets are subject to the tax does not favor or punish an investment, industry or individual class.
If the politicians believe an industry is worthy of support, they can provide subsidies outside the tax system. By providing the subsidies outside the tax system, the issue would require debate. The whole country could evaluate the action compared with the current dishonest approach of hiding their actions deep in an obscure section of the IRS tax code.
The greatest benefit of using the asset tax approach is;
- Small business owners will have more to invest in their business.
- Small business is the largest employer in the United States.
- Innovation and new industries are born from these businesses.
- Adopting an asset tax and removal of the income tax would result in effective wages increasing and job expansion because of the added capital available.
The added investment in small business will increase the supply of goods and services while transferring wealth to the working class without a government imperative to do so.