To The Editor:

I grew up in Wellston and my mom’s uncle was our Republican congressman for many decades, Congressman Thomas A. Jenkins. Although I moved away a long time ago, so I’ve lost touch I’m sure, it seems to me that almost everyone in the county should favor a “wealth tax” like the one proposed by one of the presidential candidates recently. 

The case for such a tax, generally, is this: the U.S. has far more inequality in income and in wealth than ever before in any of our lifetimes and it would be good to reduce that inequality somewhat.  This tax would do the job and would only apply to a very small percentage of taxpayers – about 0.1 percent of the households in the nation.  It would have a small impact on those tax payer’s wealth level annually, but would provide a very big boost to government revenue that could pay for lots of things whether lowering our debt level or securing our infrastructure or lowering the personal cost of medical care or schooling or securing the long term viability of Social Security.  Let me make the case.

Wealth in the United States is less evenly distributed than any time in well over 100 years.  One way of describing that unequal distribution is this: “the richest 130,000 families in America now hold nearly as much wealth as the bottom 117 million families combined.” Or put differently, the bottom 90 percent own about 25 percent of all our wealth, the next 9.9 percent have about 55 percent, and the very top 0.1 percent have about 20 percent. That’s an awfully lop-sided distribution!  I don’t know many people who think that’s an attractive or even a respectable outcome of the labors and efforts of all Americans.  The last time the distribution was lop-sided, a Republican president, Teddy Roosevelt, took on the task of addressing the inequality, becoming known as a “trust buster” and things got better for several decades.  This wealth tax is only one way, but an appealing way, to address the inequality today.

The “wealth tax” proposal is pretty simple: it imposes a 2 percent tax annually on the wealth of any tax payer whose wealth level is greater than $50 million.  Fifty million dollars!  Consider Jackson and Wellston Ohio with their populations of somewhere around 6,200 and 5,500, respectively.  If Jackson and Wellston have households with that level of wealth at the same rate as the U.S. overall, there might be 2 households in each town that would face that tax, probably fewer since Jackson County isn’t as wealthy as the average county in the U.S.  So the tax would likely only affect maybe three or four households! The tax wouldn’t affect any of the rest of the county, nor is it likely to in the future since it’s awfully unlikely, unfortunately, that many will acquire wealth at that level, ever. Almost no one in Jackson County would be expected to pay that tax.

And what about those who would be subject to this tax?  Suppose we consider one of the estimated 75,000 households in the whole U.S. that would be taxed. Suppose we think of a household with $75 million in wealth: they would be taxed $500,000 – that’s the 2 percent of the excess above $50 million, so after paying the tax they’d have left $74.5 million. I think they would hardly notice the difference.

Most of us who don’t have anything close to that level of wealth find it hard to even imagine what it would be like to have that much wealth or face a tax of this sort.  Let me pare this down to a level we can relate to: Let me use those same percentages and imagine how it would feel to face a tax like this if it applied to a household with, say, a home, an IRA and some other mutual funds and a total wealth of, say, $250,000.  If that tax were imposed on wealth above $200,000 – remember, that’s NOT what’s actually proposed – the household would face a tax of $1,000. Not very onerous for one with $250,000: about a dollar for every $250 they have.  But, remember, the proposal is to tax only the wealth above $50 million, and that’s not you or me.

As I understand it, the tax would generate about $275 billion a year on average, and that’s a lot of revenue.  I’ve heard it said that a wealth tax is “double taxation” since the income was already taxed once when it was generated, but most of this extreme wealth comes from capital gains not salaries so it was taxed at a low rate the first time. Besides, it’s no more double taxation than your state sales taxes and your county property tax on a home, so there’s nothing wrong with a small tax on accumulated wealth, much of which was inherited from earlier generations.

I’m persuaded that a wealth tax like the one proposed by Elizabeth Warren is a fair, effective and attractive tax, one that would be of real benefit to Jackson County.

Robert Michael

University of Chicago