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We’re in trouble. At last count, the U.S. national debt is just under $22.5 trillion. According to John Mauldin, president of Mauldin Economics, the debt will hit $23 trillion by the end of this year. And by the end of 2020, this onerous liability will near a stunning $25 trillion. It’s an impossible situation, yet many on the left think they have a solution: the wealth tax.

Across the leftist spectrum, politicians have forwarded several variations. But it goes something like this: tax the wealthy at an extraordinarily high rate, like 70% of income. Obviously, what constitutes wealthy varies from individual to individual. However, key Democrats have suggested imposing a wealth tax on income of $10 million or greater.

As Mauldin points out in a Forbes article, taxing affluent members of society won’t significantly impact the national debt crisis. To be sure, the extra generated tax revenue is nothing to scoff at. However, when you’re dealing with a fiscal Category 5 hurricane like we are, a wealth tax won’t cut it.

So what about simply imposing a hard tax on the wealth itself? Surely, billionaires are sitting on top of more money than they can spend. From the liberal perspective, siphoning that for the greater good is a morally sound objective.

Except here too, Mauldin notes that we’ll simply end up spinning our wheels. Simply put, there’s just not enough affluent people to tax. As he states, the most effective way to resolve this crisis is to cut expenditures: the safety nets like social security, health-related costs like Medicare, and down to defense spending.

Of course, that will never happen, which is why we end up in this merry-go-round.

 

Wealth Tax Can’t Touch What’s Not There

Invariably, though, discussions about the wealth tax keeps sprouting up. Over the years, the leftists admittedly have made their message more palatable to everyday Americans. But no matter how it’s packaged, a wealth tax will not work.

The most obvious reason why is the structure of income. Income is something most Americans receive in exchange for their time: it is, quite literally, “in coming.”

But speaking in generalities, wealthy folks don’t make gobs of income. Instead, they have earnings. This is the portion left over from revenue after expenses have been accounted for. In other words, wealthy people are involved in businesses. They don’t make income; they provide income for the worker-bees beneath them.

Thus, taxing income on the wealthy is merely a political trick. It sounds good but accomplishes nothing. Why do you think so many social elites and political influencers vote Democrat? They get to be in the popular crowd without having to incur any real costs.

It’s a diversionary and divisive tactic at its best. Thus, the best thing you can do when you hear the wealth tax debate on the mainstream is not listen.

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