4. There are now more than 464,000 households worth $10 million or more. (PDF )
5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).
6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1 percent -- meaning they owe more than their assets are worth.
7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial assets (excluding homes).
8. That means that the top one percent has a positive net worth valued at approximately $5,700,000,000,000 (that's $5.7 trillion).
Why We Need a Financial Transaction Tax
Most Americans live on earned income, which is taxed instantly through substantial payroll taxes. You can't collect a paycheck without paying taxes. The super-rich, however, receive most of their income through financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This is why the wealthiest Americans pay lower effective tax rates than their servants. It's also why our government appears to be starved for income. If we want a vibrant economy and good investments in our public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-WWII period.
For starters we need a financial transaction tax which is a small sales tax on each and every financial trade -- from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets, this kind of tax would directly target their excessive trading and enormous holdings. Not only would this sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.
A Wealth Tax to Improve our Commonwealth
Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes, and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with from $50 to $150 billion per year in income. Spare change for the super-rich.
The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and domestic) and your liabilities are easily calculated. It's easier to spot the cheaters. It's easier to press for information from other countries that may be tempted to launder money for our super-rich. There's nowhere to run unless the super-rich want to give up their citizenship.
Even Ronald McKinnon, a conservative economist writing in the Wall Street Journal ("The Conservative Case for a Wealth Tax") is advocating a wealth tax on the super-rich:
"In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax--say 3%, on wealth so defined--could then be imposed."
Combined with the financial transaction tax, we would have more than $200 to $300 billion per year which could rebuild our crumbing infrastructure, provide higher education for our children, eliminate much of the student loan burden, and hire millions of laid-off teachers. Unemployment would fall dramatically and deficit hysteria would vanish into its own hot air.
We can cry about the distribution of income all we want. We can moan and groan about the top 1 percent and how they have captured political power. We can proclaim our membership in the 99 percent for all to hear. But none of that matters much unless we build a mass movement that reclaims our fair share of the fruits of productivity.
The 1 percent didn't get there just because they were great entrepreneurs or because they were smarter than the rest of us. They got there because they pressed for tax cuts for the super-rich and the deregulation of Wall Street. Those twin policies poured the money into their coffers and stalled our middle-class dead in its tracks. Those policies also crashed the economy and destroyed the jobs of millions of Americans.
A financial transaction tax combined with a wealth tax will bring us closer to the time when the middle-class again was growing year by year. It would put Americans back to work and place our foot right back on Wall Street's neck -- where it needs to be for the good of us all.
But you
know it won't come easy. The super-rich feel entitled to all
they can grab. Which means we'll have to organize like never
before and fight like hell. Let's hope the 99 percent are ready,
able and willing.
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