Republicans are currently planning to pass a tax bill that would, for the most part, benefit 65% of Americans, yet provide the same tax benefit for the top 10% as for the bottom 90%. Let’s say the total bill provides $100 billion in tax cuts (this is not the real value); $50 billion would go toward 33 million people, and the other $50 billion in cuts would benefit the remaining 300 million people.
If you ask me, that is lopsided. The rich always argue for a flat tax, so why not simply give an equal benefit to each person? The fact is, things are done to benefit the wealthy.
A real solution to taxes, if the Republicans were serious, would be to take a step back and focus on three primary areas. The first is income tax. Let’s face the facts: a person making less than $50,000 per year should not pay one penny in income tax. This would naturally cover tips. The other fact is that anyone making less than $50,000 per year is probably spending every penny consuming things, and this consumption stimulates the economy. The best economy is one where millions of people spend all their money at stores buying things. A bad economy is when people making less than $50,000 per year pay taxes; although low, it is still painful for a person with little disposable income. Historically, the bottom 90% were responsible for 73% of the consumption in the USA, and today it is 50%, with the top 10% accounting for the other 50%. Cutting taxes for the bottom 50% of society to zero would greatly help this depressed group consume more, and this consumption will help rich people as their businesses increase sales.
The next category of tax is that rich people—the top 2%, top 1%, but mostly the top 0.1%—need to pay a much higher income tax and capital gains tax. What is the logic? It is simple: Rich people have all the disposable income, and they are not using it to stimulate the economy. So here is how this works in practice: Rich people need the right to write off and deduct more of the things they spend that would normally go toward helping grow the economy and create jobs. If a rich person were to get a country club membership, then they should be able to write it off, as this factually does create a lot of jobs. If a rich person hires staff for a house, these expenses should be fully deductible; right now, it is only when they care for a dependent. If a rich person invests in a brick-and-mortar business in the United States, not a publicly listed stock, this should be deductible. With all these deductions, a rich person would be escaping a massive amount of tax, and that is why the tax rate would need to go up to 70% for income and as high as 40% for capital gains. Yes, the taxes are high, but a large segment of their luxury lifestyle spending would be deducted. Why do this? The goal is not to penalize rich people, it is to penalize rich people who do not spend their money on the economy. That is why people in the lower income brackets should never pay taxes, they litterally spend everything and the goal is to force the rich to spend more, even if the things they spend it on are ridiculous, it is better to spend that pay taxes.
The last tax remedy to balance the U.S. fiscal situation is a simple one: it is the great wealth transfer of approximately $100 trillion over the next 20 years from parents passing it on to children. Right now, the allowed value with the new tax bill will be $15 million per parent to their children. Then, basically, everyone below this has nothing. The only solution is to have a progressive inheritance tax where: $0 to $1 million has a 10% tax, $1 million to $4 million has a 20% tax, $4 million to $8 million has a 25% tax, $8 million to $15 million has a 30% tax, $15 million to $20 million has a 40% tax, and $20 million and above has a 50% tax. This will result in at least $20 trillion in tax collection over 20 years. Right now, I estimate, based on my calculations, that between $4 trillion and $6 trillion will be collected. I get it, certain parents want to pass down a ridiculous amount of money to their kids so they can continue to do absolutely nothing in their life.
All of these remedies are the only way to really drive the economy, as people simply consume and spend more. The deficits would greatly be reduced and fiscal discipline will return to the USA.
