When there is no news of The Controversy between evolution and creationism, we have to turn to other subjects. But in doing so we stay somewhat on topic by dealing with our larger concern — preserving the values of the Enlightenment, upon which our civilization depends.
Therefore, dear reader, we beg your indulgence as we post yet another Curmudgeonly rant about politics. Go ahead, skip it if you like and wait for something more on topic. We’ll understand. It’s not easy for your Curmudgeon, being virtually the only Republican on the sane side of the evolution-creationism debate. Anyway, you’ve been warned, so here it comes.
Do you want to tax the rich? Do you really want to go after those fat cats with their corporate jets to make sure they pay their “fair share” so that we’ll finally have some “social justice”? Okay then, let’s play with your most fervent fantasy and see how it works out. But be warned, this won’t be a mindless romantic exercise starring you as the heroic and glorious benefactor of the grateful poor — we’re going to use actual numbers.
Speaking of numbers, let’s be sure we understand them. In American terminology:
• a billion is a thousand million, written 109. It’s got nine zeros, thus a billion dollars is $1,000,000,000.
• a trillion is a thousand billion, written 1012. It’s got 12 zeros, thus a trillion dollars is $1,000,000,000,000.
That means that for every trillion of tax revenue to be extracted from the super rich, the government needs to grab a billion from each of a thousand billionaires. No problem, right? Besides, some of those guys have a lot more than a billion. This should be easy! Well, actually there is a problem, because there aren’t very many of those people.
Let’s consider Warren Buffett. He’s worth about $50 billion. Fine. That’s a good place to begin. Grab it. Grab it all! Good start! Now you need to grab only $950 billion more from some other fat cats and then you’ve got your first trillion. Hey hey — you’re on a roll!
But how far can you go this way? Let’s look at last year’s Forbes listing of the 400 richest people in the US. The top 25 have $10 billion or more, and it’s only the top 50 who have $5 billion or more. Most of the people on the list have “only” $1 or $2 billion. Consistent with that, this Wikipedia article, Billionaire, says that in early 2011: “The United States had 413 billionaires with a total net worth of $1.5 trillion.”
Let’s use that figure of $1.5 trillion. It’s about the size of this year’s deficit in federal spending — well, it’s close. The total accumulated debt is far higher, of course; and the so-called unfunded debt is even larger. We’ll get to that. But you’ve got to start somewhere, so let’s begin with this year’s federal budget deficit.
Imagine that the government decided to balance the budget by confiscating that $1.5 trillion from those fat cats — after all, you want social justice, right? We’ll ignore the fact that your “Big Grab” won’t be easy. The rich aren’t stupid. It’s obvious that while Congress debated such a bill, markets would be crashing as they sold their assets, funds would be transferred out of the country, and the targeted rich folks would be packing up and leaving as rapidly as they could. Were the bill to be passed, it’s not difficult to imagine that the anticipated $1.5 trillion wouldn’t be collected.
Well, as an emergency measure, while they’re debating the bill the feds could close the stock markets, halt money transfers, and outlaw international departures, but we won’t dwell on that. It would ruin your fantasy to think of your government constructing its own version of the Berlin Wall, so we won’t go there. But if the “Big Grab” is to be accomplished, such measures would certainly be necessary.
Assuming no draconian emergency controls, and allowing drastic sell-offs, money transfers and hasty departures, not only would the expected revenue not materialize, there would be unpleasant side effects. There might be a number of Timothy McVeigh types springing up, and it’s not inconceivable that there would be serious resistance to confiscation, perhaps amounting to some kind of civil war. But let’s not dwell on extremist scenarios; this isn’t that kind of blog. Besides, we agreed to ignore the necessity of harsh governmental behavior, so we’ll also ignore unpleasant citizen reactions.
This is your fantasy, so let’s assume that the confiscation bill becomes law and the rich meekly comply. (We know things definitely wouldn’t work out that way, but we’ll play along for a while.) Okay, you’ve got the dough. Now what?
Well, now you can boast that you’ve balanced the budget this year. That’s wonderful, but the government hasn’t solved its debt problem. The Heritage Foundation estimates that the federal government’s debt, including unfunded liabilities for “entitlements” is about $61.6 trillion.
Do you grasp that number? It’s more than the combined wealth of a thousand Warren Buffetts, and there’s only one of him. Broken down by program, it looks like this:
• Medicare: $24.8 trillion
• Social Security: $21.4 trillion
• Federal debt: $9.4 trillion
• Military retirement/disability benefits: $3.6 trillion
• Federal employee retirement benefits: $2 trillion
Not only that, but because almost everyone with significant assets will have been essentially impoverished (if they haven’t fled the country), the income tax collected from then on will be considerably less than before. As you can see here: Who Pays Income Taxes?, the top 10% now pay 70% of all income taxes collected. The top 5% pay almost 60%, and the top 1% pay almost 40%. You may imagine that they’re not paying their “fair share,” but they’re carrying virtually the whole load. And after your brilliant policy is put into effect, they won’t be around any more. Whatcha gonna do then?
When the goose that lays those golden eggs flies away, you may be able to grab a few eggs that were left behind, but that’s a one-time windfall. The goose will be gone. So think about it. Although you may daydream yourself into ecstasy with visions of wringing Warren Buffet’s neck and grabbing his $50 billion, it’s a very stupid and destructive government policy. So stop dreaming about it.
[For our somewhat related political rants, see US Budget: 40 Years in the Wilderness, and also Curmudgeon Solves the U.S. Budget Crisis, and also The Curmudgeon’s Health Care Reform Plan, and also The Curmudgeon’s Plan To Save The World.]
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