It is Time to Eliminate the Income Tax.
The Federal Government needs lots of money and they get most of it through income taxes. Unfortunately income taxes distort behavior, are volatile and are extremely complicated. An asset tax could replace the income tax. It would be fairer, easier to enforce, less volatile and would discourage excessive leverage.
As a Techno-Libertarian I like costs to be associated with benefits. So the people who benefit most from roads should pay for the roads with things like tolls and gasoline tax. Makes sense. So who should pay for rule of law, enforceable contracts, civil society, relative peace and long term tranquility? The wealthy should. Poor people’s lives wouldn’t change much if contracts weren’t enforceable. But the the wealthy get a bargain on all of the government costs that preserve their assets. They don’t pay nearly their share of the taxes that go to paying for the military for instance., Because of progressive income taxes higher earners do pay more and the two correlate but not exactly. Lots of people with large assets have low tax liability. An asset tax would be fairer. All assets both real and intangible would be taxed after an exemption. Most Americans would be exempt and those with assets would have to pay about 1% to 1.5% per year on their assets instead of income taxes.
An asset tax would be easy to enforce. A hundred and fifty years ago most wealth was held in real property. Now it is mostly held in financial assets like stocks and bonds. Financial institutions already report to the government who owns what. For private assets that don’t have a public market, values would have to be self reported subject to audit and/or adjustment when they are sold.
Asset values fluctuate but not as fast as incomes. Since the Government is a relatively fixed cost business it will be a lot easier to run it if the income stream is steadier. An asset tax would held stabilize the cash flow to the government.
Leverage works both ways. Since the asset tax would be on the value of assets and would ignore debt heavily leveraged assets would not be subsidized by more prudent taxpayers.
We have had the income tax for over a hundred years and it took a constitutional amendment to get it going. It is time to try something else. Let tax the people with assets since they are the ones who benefit the most from good government.
Keep your hands off my assets.
As a Libertarian, my property is my own. Governments seize too much already.
This is in the right direction. The more you have, the more you use government and the more you need to protect. That’s how property taxes roughly work. There also are various automated property value tools available to value real estate in the United States. Three challenges: many of the rich right now think they should pay for nothing, these record deficits have made us all (particularly our elected representatives) feel everything is for free, and unfortunately, accountants and lawyers will figure out how to hide assets (off shore, LLCs, trusts, private investments, etc) to reduce their tax burden.