I've said in the past: The United States government does not have a tax problem. It has a spending problem. The government exhausts whatever tax revenue it can lay it's hands on and then some. Spending is so out of control the Feds not only spend every dollar they can tax. They borrow heavily against future tax revenue building up a deficit of over $17 Trillion.
Tax Reform is likely to be a key issue of the 2014 and 2016 elections.
Tax Net Wealth is a proposal to include a direct tax on net wealth in the tax equation. The site is a bit vague on how one calculates net wealth. The site gives a tax rate blend of 2-4-8. There would be a 2% tax on wealth, a 4% tax on sales and an 8% tax on income. I assume that this is in addition to all the state and local taxes.
I love the low rates; however low rates can be deceiving.
Again, the site is not clear on how it determines net wealth. My guess is that the two percent tax is an annual tax that is recurring. So, let's say I had an asset worth $100.00. 2 percent of $100 is $2. I would have to pay two dollars each year for the privilege of owning the asset. In 25 years, I would pay $50 dollars for the privilege of owning the asset. I would pay a full $100 dollars in taxes (100% taxation) if I owned the asset for a full 50 years.
I am not sure how the program avoids double taxation. In this reform, I would pay an 8% tax on my income. I would then pay a 4% sales tax when I bought something, I would then pay a 2% yearly tax on durable items included in my net wealth.
The appeal of the tax is that it uses the magic numbers 2-4-8. I am always suspicious of tax reform proposals that start with magic numbers like 2-4-8 or 9-9-9 because Congress always has the ability to change the rates.
Once we have a direct tax on net wealth, there is likely to be politicians using wealth envy to drive the tax to astronomical heights. The deceptively low rate makes it even more tempting to jack up the wealth tax.
This said, I really think the author is on to something. The progressive tax rate should be triggered by net wealth rather than net income. I hope the author develops the idea further so that people can analyze it.