- 11 Oct 2024 03:16
#15326859
Many on the Left seem to hold this idea that the national debt and increases in government spending is no problem because taxes can just be increased on the super rich.
But a mathematical analysis shows that even if the wealth of all the billionaires in the U.S. were completely confiscated, it would only be enough to fund the government for 6 months.
(And if rather, only all their income was taken, it would fund government for only 6 weeks)
U.S. Billionaire Wealth Would Fund Government For Just 6 Months, Nick Gillespie and John Osterhoudt, Reason (magazine), July 23, 2021
"There are 724 American billionaires worth a total of $4.4 trillion, according to Forbes. If it were somehow possible to liquidate all of that wealth without causing a market crash that would obliterate much of it in the process, we could cover roughly half a year of combined local, state, and federal spending."
Let's do some calculations.
The average inflation rate over the past 14 years (2010-2024) has been about 3%.
Let's suppose the average return on investments were 10%. When factoring in inflation, that would mean the real effective rate of return would be more equivalent to 7%.
So let us suppose the average billionaire has a taxable income which represents 10% of their saved wealth. (I think that is generous)
Let us suppose we diverted away all the income from billionaires (basically a 100% effective income tax rate), but let them keep just enough so that their saved wealth would not shrink (through the effect of inflation).
That would work out to $387.03 billion.
(the total net worth of U.S. billionaires was $5.529 trillion by the end of 2023)
In 2023, the U.S. federal government spent $6.13 trillion.
So the total billionaire income represents 6.3% of the federal government budget.
Or in other words, billionaire income would pay for only 23 days of federal government spending in a year.
(Hopefully it doesn't need to be mentioned that taking away ALL the income from billionaires would probably be unrealistic. Think about what a 100% tax on income means)
Although the article was published in 2021, they point out that if current trends continue, by 2050, just paying interest on the national debt will account for about a quarter of every dollar the federal government spends.
(But actually, as we found out a few years later, the timetable for that has been massively accelerating. Already by 2023, interest payments were 18.85 percent of what the government collected in taxes)
Then they criticized the governments so-called "Covid Relief", which was a massive spending bill, for only allocating "5 percent" of its total spending on actual Covid relief.
"In the years to come, the U.S. will have no choice but to raise taxes on everyone and slash Medicare and Social Security, which are the biggest budget-busters. But by then it will be too late for a generation of elderly people to plan accordingly. And a U.S. debt crisis could destroy the dollar and undermine our entire economy. "
The article's ending summary concludes with:
"There's no way to confiscate enough wealth to stave off our looming fiscal catastrophe. Instead of harping on rich people and their rockets, let's start talking about the looming debt crisis fueled by insane government spending and come up with actual ways to avert catastrophe."
But a mathematical analysis shows that even if the wealth of all the billionaires in the U.S. were completely confiscated, it would only be enough to fund the government for 6 months.
(And if rather, only all their income was taken, it would fund government for only 6 weeks)
U.S. Billionaire Wealth Would Fund Government For Just 6 Months, Nick Gillespie and John Osterhoudt, Reason (magazine), July 23, 2021
"There are 724 American billionaires worth a total of $4.4 trillion, according to Forbes. If it were somehow possible to liquidate all of that wealth without causing a market crash that would obliterate much of it in the process, we could cover roughly half a year of combined local, state, and federal spending."
Let's do some calculations.
The average inflation rate over the past 14 years (2010-2024) has been about 3%.
Let's suppose the average return on investments were 10%. When factoring in inflation, that would mean the real effective rate of return would be more equivalent to 7%.
So let us suppose the average billionaire has a taxable income which represents 10% of their saved wealth. (I think that is generous)
Let us suppose we diverted away all the income from billionaires (basically a 100% effective income tax rate), but let them keep just enough so that their saved wealth would not shrink (through the effect of inflation).
That would work out to $387.03 billion.
(the total net worth of U.S. billionaires was $5.529 trillion by the end of 2023)
In 2023, the U.S. federal government spent $6.13 trillion.
So the total billionaire income represents 6.3% of the federal government budget.
Or in other words, billionaire income would pay for only 23 days of federal government spending in a year.
(Hopefully it doesn't need to be mentioned that taking away ALL the income from billionaires would probably be unrealistic. Think about what a 100% tax on income means)
Although the article was published in 2021, they point out that if current trends continue, by 2050, just paying interest on the national debt will account for about a quarter of every dollar the federal government spends.
(But actually, as we found out a few years later, the timetable for that has been massively accelerating. Already by 2023, interest payments were 18.85 percent of what the government collected in taxes)
Then they criticized the governments so-called "Covid Relief", which was a massive spending bill, for only allocating "5 percent" of its total spending on actual Covid relief.
"In the years to come, the U.S. will have no choice but to raise taxes on everyone and slash Medicare and Social Security, which are the biggest budget-busters. But by then it will be too late for a generation of elderly people to plan accordingly. And a U.S. debt crisis could destroy the dollar and undermine our entire economy. "
The article's ending summary concludes with:
"There's no way to confiscate enough wealth to stave off our looming fiscal catastrophe. Instead of harping on rich people and their rockets, let's start talking about the looming debt crisis fueled by insane government spending and come up with actual ways to avert catastrophe."