(KIRO Radio - 97.3FM) - The idea of a federal wealth tax on the stock holdings of billionaires was proposed Wednesday, and died Thursday.
Talk about cancel culture! Not even Joe Manchin calling it a “Patriot Tax” could save it.
So why would that be, do you suppose?
“Well, Dave,” you might say, “because it’s one thing to tax a rich person when he sells his stock, but it’s totally unfair to tax him just for owning stock.”
Really? Then what about my property tax? Every year I have to pay a tax based on the current value of my house, which is now way more than I paid for it. That’s a wealth tax!
“But Dave, it’s not stock, so, it’s different,” you might answer.
Ok, so let’s talk about stock. Like a lot of people who intend to retire someday, I have a brokerage account. It’s full of stock I haven’t sold. Every year I pay a fee to the people who manage that account. What’s that fee based on? The current value of that account! That’s a wealth tax! It doesn’t go to the IRS, so it won’t subsidize pre-school, or daycare – except maybe for the children of my financial team (who are great people) – but it’s a wealth tax!
So, wealth taxes are everywhere. Just not in the Build Back Better bill, because that wealth tax would have cost some serious money.
“But Dave – won’t the government still get that money when the rich people sell their stock?”
No! Because people who bought Tesla at $38 dollars are never going to sell that stock! It’s worth 28 times as much now. The capital gains tax would be huge. So, they’ll just borrow their spending money using the stock as collateral, and carry the debt. When they die, the heirs will get the stock free and clear of any capital gains tax, and easily pay off the debt.
This doesn’t make rich people bad, but it does mean they will continue to keep a much larger percentage of their wealth than you and I get to keep. Which is fair because we’d just squander it anyway.
Do I think the politicians were paid off to kill the wealth tax? No. I’m not going to say they were paid off. But I am going to speculate that when it comes to the kind of wealth that can swing entire elections, politicians understand what needs to be done … without being told.
BY DAVE ROSS
Seattle's Morning News
Listen to Seattle’s Morning News weekday mornings from 5 – 9 a.m. on KIRO Radio, 97.3 FM.
