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The Piketty Dilemma forms up as capital investments generate profits at a rate that is higher than the overall growth rate of an economy. You want growth, but the profits from growth are concentrated. Profits do not spread out. And this continues over decades without much in the way of limits. Capitalism has no internal restraints to stop it shy of a culture of dynasties and government by oligarchy.

The difference between return on capital and rate of growth is running about 2% annually. Put bluntly, this is the unbalanced excess that is driving America into oligarchy. It has already moved Wall Street's Masters of the Universe outside the reach of criminal law.

We need to dig in for the long, difficult process to get this constitutional amendment and take back 2% annually from the wealth of the billionaires:

Amendment XXVIII

The Congress shall have power to lay and collect taxes on wealth in the form of intangible property, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

This amendment will not be easy to obtain. However it is essential, going forward into the 21st Century to halt further movement into oligarchy.

We can expect that it will take decades to push through a new amendment. There is nothing easy, politically, about this project.

Charles Murray documented societal destructions with his book Coming Apart: The State of White America, 1960-2010. "The Great Unraveling" by Krugman works the economics of this change. "The Unwinding" from George Packer covers these same social problems, the same coming, tumbling in harness, of this destruction of the middle and lower income classes in America. Thoughtful conservatives and liberals see the same things.

Now we have Thomas Piketty with Capital in the Twenty-First Century explaining how weakly taxed capitalism is on a roll to make this mess permanent.

California and Florida have Intangible Property statutes. But this has to be implemented federally to get the reach and access needed for effective implementation:

-- Set up non-punitive revenue yields. Start at IP Net Worth above $10,000,000 (at 1/10th of 1%.)

-- Set a maximum rate for IP Net Worth over $1-billion (at 2% per annum.) That 2% figure matches the ROI-to-growth excess. This is where you limit the effects of the Piketty Dilemma.

-- Holdings in offshore financial institutions are not exempted. Same for assets shielded in "family trust" accounts and other "financial planning" tools. Tax At Source is the rule, forcing identification of the beneficial owners of this wealth or else paying the full 2% by default.

Of course this change helps with federal deficit reduction. It also adds a factor to deter Big Bubble stock and real estate price explosions. The Federal Reserve Bank had been shoveling out $85-billion a month and then more recently $65-billion a month through the banks. You know that ended up disproportionately in the pockets of the .001%ers.

We need to use our democracy to do claw back. As soon as possible. We need a tax system that corrects flaws from the last 30 years, working steadily over time. If we are to have government "of the people, by the people, and for the people" then there is no choice.

We need to get at it.

Taxes on real estate and other physical property are applied by the states their municipalities. However, with this Amendment XXVIII as written, taxes on ownership of intangible property such as stocks and bonds can be implemented federally. This will not affect local revenues.

Restrictions on the taxation plan can be defined in the Bill that accompanies this proposal. You do not have to state every restraint in the text of the Amendment.

The big deal is to claw back the 2% at the top. The technique is to pull back 20% every decade from those holding more than $1-billion.

This is a game played in decades and centuries. Getting $115-billion a year is useful, certainly. A simple progressive tax -- an offset to deficits. The big aim is to hinder creation of mega-billion dynasties. Pulling back 20% a decade should hopefully be sufficient to preserve democracy.

* * * * * * * *

Alan "Big Bubbles" Greenspan pumped cheap money into the accounts of America's wealthy. He did this twice and with enormous flows of cash. First in 1998-2000 and then again 2003-2008 with help from Paul Bernanke.

The very rich then bid stock prices up to 200+% of GDP in 2000. And then again to 180+% of GDP by the start of 2008. The both of these Big Bubbles operated to the detriment of investments for industrial base and infrastructure. It got to be crazy money chasing stocks that really didn't have the fundamentals in place.

The traditional ratio for valuation of total-shares-to-Gross Domestic Product from 1931 to 1990 had been 55%.

By 2009 end-of-year, GDP stood at $14.27-trillion.

-- Apply the standard 55% ratio and shares would have totaled $7.85-trillion.

-- Instead, overhang from the second Greenspan Bubble had total shares running right at $20-trillion

The whole investments side of the economy had been blown up like a balloon. Same time, wages stayed flat.

What we observe with Thomas Piketty's work on normal investment patterns had been overwhelmed. Greenspan and Bernanke pumped out cash to the investment class that more than doubled the nominal value of their holdings.

Labor was no longer sufficiently valuable to enable workers to buy much in the way of stocks or bonds. Labor was out of the market more or less permanently.

* * * * * * * * * *

Recently the Top One Percent of wealthy Americans owned 43% of Total Financial Assets. A Wealth Tax levied on Intangible Property with a floor at the $10,000,000 level will affect only a part of the Top One Percent.

Apply to the Intangible Assets of the almost 500 individual American billionaires:

$2-trillion TIMES 2% YIELDS $40-billion a year for Wealth Tax.
Apply the lower rates to all the non-billionaires above the $10-million floor:

$20-trillion TIMES (rate table) YIELDS roughly $75-billion a year.

Each year drops $115-billion into the Treasury.

Over a century you get a staggering difference to the billionaires' accumulation of wealth and power:

$40-billion a year TIMES 100 years EQUALS $4,000-billion out of pocket.

Hardly chump change. The $115-billion a year source of federal revenue by itself justifies going for this XXVIII Amendment. Removing $4-trillion from the billionaires over the next century could be the difference to avoid oligarchy.

Family trusts can conceal concentrated wealth from inheritance taxes. Various offshore schemes "sandwich" and "side" income away from taxation. There always seems to be loop holes that the wealthy bribe legislators to include in real estate tax laws.

Going at wealth directly is the right answer.

It is also feasible to include practical limits for the rate structure in the body of the bill that brings the Amendment to a floor vote -- it is not necessary to state every detail in the Amendment itself. SCOTUS has responded consistently to this tool.

* * * * * * * * * * * *

Discourage oligarchy. Reduce the federal deficit by about a fourth. Very strongly discourage formation of inherited financial empires.

All for getting Amendment XXVIII Wealth Tax passed, ratified, and implemented.

This is not Global Warming. It is not a hold over from the threats of nuclear war 50 years ago. Still, it should be on the table as a top priority for Progressives. Go at it head on !

Originally posted to waterstreet2013 on Tue Apr 22, 2014 at 06:09 AM PDT.

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Comment Preferences

  •  What makes you think (3+ / 0-)
    Recommended by:
    Gooserock, waterstreet2013, mollyd

    a constitutional amendment is required to tax wealth of any sort?

    •  I was typing in the comment below. (1+ / 0-)
      Recommended by:
      Elwood Dowd

      Article I, § 2, Clause 3 and Article I, § 9, Clause 4.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Sun Apr 20, 2014 at 06:36:31 PM PDT

      [ Parent ]

      •  Also note that this Amendment goes after (1+ / 0-)
        Recommended by:
        bluedust

        the American portion of the at-least $6-trillion that tax deadbeat billionaires have squirreled away in offshore tax havens:

        By means of a method he carefully describes, Zucman estimates that the world's wealthy are using tax havens, including Swiss banks, to hide at least $4.5 trillion but more likely $6 trillion from the tax collectors. Just to make it clear, that's $6,000,000,000,000—in the neighborhood of six percent of the entire world's gross economic output for one year. In other words, not chickenfeed.
        -- Meteor Blades
        The 2%-a-year Wealth Tax on billionaires should be extended to apply to wealth discovered in hidden caches. Or perhaps a 5%-a-year tax. Something punitive.

        Of course the Republican Party supports tax cheats and more than its share of Dominionists and child abusers. Expect no help there.

        "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

        by waterstreet2013 on Mon Apr 21, 2014 at 04:05:23 AM PDT

        [ Parent ]

    •  ED - The overwhelming majority of constitutional (7+ / 0-)

      scholars believe that it would require a Constitutional Amendment for the federal government to tax wealth, just as one was needed for the federal government to tax income (the 16th Amendment). Importantly an overwhelming majority of members of Congress believe that a Constitutional Amendment is needed to implement a federal wealth tax.

      I doubt there is the political will to pass a wealth tax, and if one was passed I think it would be with a cap, like not to exceed 3% per year. When the 16th was passed it was proposed that the federal income tax would only apply to the very wealthy and at a very nominal rate, but that wasn't baked into the language of the Amendment.

      "let's talk about that"

      by VClib on Sun Apr 20, 2014 at 06:37:48 PM PDT

      [ Parent ]

      •  What a wonderful place for a link. (2+ / 0-)
        Recommended by:
        waterstreet2013, ozsea1

        To show me how one counts what the "overwhelming majority of constitutional scholars" thinks.

        •  Wiki has lots of links. (0+ / 0-)

          And citations with and without "links."

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Sun Apr 20, 2014 at 06:55:18 PM PDT

          [ Parent ]

          •  And wiki doesn't (1+ / 0-)
            Recommended by:
            ozsea1

            make remarkable claims like "the overwhelming majority of constitutional scholars believes X."

            •  How's about "everybody in the field." (1+ / 0-)
              Recommended by:
              ozsea1

              I've never come across even one counterexample. This is very basic stuff.

              "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

              by waterstreet2013 on Sun Apr 20, 2014 at 07:17:07 PM PDT

              [ Parent ]

              •  Famously, Bruce Ackerman. (1+ / 0-)
                Recommended by:
                VClib

                But I think it's clear that he's arguing against the conventional wisdom.  It's what his paper so well-known.

                •  Ackermann and Alstott wrote this up (0+ / 0-)

                  in an L.A. Times article, not a journal peer-reviewed piece. They admit the obvious:

                  "...Article 1, Section 8 grants Congress plenary power to impose any and all "taxes, duties, imposts and excises," but it contains a special limitation on "capitation and other direct taxes." Under this... proviso, such taxes may be imposed only if they are apportioned among the states according to their population. ...

                  "Given its origins, this provision has consistently been construed very narrowly by the Supreme Court [with] one exception. In 1895, the court used the clause to declare the income tax unconstitutional, but [subsequently] this judgment was reversed by the 16th Amendment."

                  Yeah, it takes an amendment to create an exception to Article 1, Section 8.

                  A&A don't like it. But that's what happened in 1895 and that's what Roberts & Klan will do in a heart beat.

                  "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

                  by waterstreet2013 on Tue Apr 22, 2014 at 08:26:41 AM PDT

                  [ Parent ]

  •  "Passing a law" imposing a wealth tax (8+ / 0-)

    would be unconstitutional under Article I, § 2, Clause 3 and Article I, § 9, Clause 4.  

    That's why it was necessary to pass a constitutional amendment -- the 16th Amendment -- to authorize a federal "tax on incomes."

    An income tax, in tax terms, is a transactional tax. Applying the 16th Amendment you can tax money or property when it is transferred, a transaction.

    A separate constitutional amendment will be necessary to tax that income again, after taxes are levied and it sits as an accumulation.  

    If you want to know more, the Wiki article  on the 16th Amendment can provide background.

    "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

    by waterstreet2013 on Sun Apr 20, 2014 at 06:35:17 PM PDT

  •  this direction could affect net neutrality (1+ / 0-)
    Recommended by:
    waterstreet2013

    better actual enforcement of corporate income and progressive individual income tax or even reconceptualizing sales and property taxes, as well as instituting peace taxes or pollution taxes

    Warning - some snark may be above‽ (-9.50; -7.03)‽ eState4Column5©2013 "I’m not the strapping young Muslim socialist that I used to be" - Barack Obama 04/27/2013 (@eState4Column5).

    by annieli on Sun Apr 20, 2014 at 06:37:41 PM PDT

  •  Citing Charles Murray doesn't seem (2+ / 0-)
    Recommended by:
    waterstreet2013, tardis10

    necessary or especially relevant to your argument, and I'm not sure why you'd wave that red flag here. I haven't read Piketty, so maybe there's a connection I'm not seeing. May I suggest you either explain the relevance or delete the reference so as to avoid rapid derailing?

    •  Read "Coming Apart" instead of jumping for (1+ / 0-)
      Recommended by:
      ozsea1

      an ad hominem attack.

      "The Great Unraveling" by Krugman works the economics of this change. "The Unwinding" from George Packer covers these same social problems, the same coming, tumbling in harness, of this destruction of the lower income class in America.

      Class is what matters. For everything they consider.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Sun Apr 20, 2014 at 06:48:28 PM PDT

      [ Parent ]

  •  This has zero chance of getting through (6+ / 0-)

    There's no way a wealth tax of any time would get through the amendment process without some kind of limitation in the constitutional amendment itself -- like the level of wealth that triggers it, and a cap on the rate.

    The 16th Amendment was supposed to be used only to have a very small tax on the very rich.  When the income tax was passed after it was ratified, it was at extremely low rates (it started at 1%) and less than 1% of the population of the U.S. paid it.  I strongly suspect that if the vast majority of Americans had any idea that it would subsequently be  used to tax the middle class at substantially higher rates, the 16th Amendment never would have been ratified by the necessary number of states.  

    I can't imagine that the country will give Congress free rein to tax intangible wealth.  All that the opponents would have to say to people who work for a living is that the amendment you propose would give Congress the ability, if Congress wanted, to take 10% (or even more) of everyone's 401(k) plan every year.  And they would be right - this amendment WOULD give Congress the authority to do that.

    Which is why this has no chance whatsoever.  

    •  Indeed, the Republican Party will have to (1+ / 0-)
      Recommended by:
      buckstop

      repeat its collapse of 1973 and 1974 to see a Wealth Tax get through.

      But this is not impossible. The Tea Party guys are falling out with the billionaires' shills at quite a pace. What's important to  teabaggers is never what's important to the billionaires.

      Medicaid Expansion, for one, is a big winner with blue collar Republicans. Those folks are coming to their senses.

      Let them vote to tax billionaires ??? You betcha.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Sun Apr 20, 2014 at 07:10:40 PM PDT

      [ Parent ]

      •  I don't think a majority of Democrats in Congress (3+ / 0-)
        Recommended by:
        fcvaguy, AlexDrew, MGross

        would vote for a Constitutional Amendment implementing a wealth tax that didn't have specific limits baked into the Amendment so that Congress wasn't free to change it at any time.

        "let's talk about that"

        by VClib on Sun Apr 20, 2014 at 07:15:37 PM PDT

        [ Parent ]

      •  This amendment lets Congress tax the middle class (2+ / 0-)
        Recommended by:
        waterstreet2013, VClib

        and their 401(k) accounts, not just billionaires.  That's the point.  

        The ups and downs of the Republican party don't matter.  Here's the commercial:  "This amendment will let Congress, if it wants, tax your 401(k) account 25% a year if it wants.  Your savings would no longer be safe because this lets Congress take as much of your savings as they want..  Sure, Congress can say it will just tax the rich -- but that's exactly what they said about the income tax, and look what happened."

        Would YOU vote to give Congress the right to take your savings or your 401(k)?  I don't know many people who would.  

        If you want this to pass, you need something built into the amendment itself that limits it to the top .001% of personal wealth, for example.  That's the ONLY way you can say this just taxes the rich.  Otherwise, the amendment literally gives Congress the right, if they want, to tax your savings account (whatever it is) or your 401(k) account (whatever it is) at 25% a year -- or even more.  How do you think that will play with working people in their 40's or 50's trying to save for retirement?

        •  That seems easy enough to get into the (0+ / 0-)

          bill.

          Not "the top .001% of personal wealth" though.

          I do understand what you're getting at.

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Sun Apr 20, 2014 at 07:28:09 PM PDT

          [ Parent ]

        •  There wasnt much 'middle class' to tax when the 16 (5+ / 0-)

          Amendment passed. Part of the Progressive Era legislation when poor white folks had quite enough of the gilded age.

          And you think, given current trends among a shrinking middle class and a rapidly expanding population of people of color that there wont be a wealth tax...ever? Id say history is probably trending to repeat. At some point, folks are going to have quite enougn.

    •  Never say never. (3+ / 0-)
      Recommended by:
      Gooserock, waterstreet2013, ozsea1

      We will have a very different country in 40 years or so.

      •  We're Running a Planet So As to Be Killing Around (2+ / 0-)
        Recommended by:
        waterstreet2013, sfbob

        a scale of a billion or so by 2 generations from now, between climate changes and resource bottlenecks such as drinking water.

        Meanwhile here it's been 2 generations in the past, the last time the American government represented its people against ownership economically. The last Americans to experience popular democracy are  becoming grandparents.

        Wheels are flying off this bus in all directions. It's not helping to keep confining our brainstorming to policies that can reach Obama's desk this year.

        We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

        by Gooserock on Mon Apr 21, 2014 at 04:50:35 AM PDT

        [ Parent ]

  •  Be careful how you define intangible property, (3+ / 0-)
    Recommended by:
    waterstreet2013, JamesGG, Chas 981

    because it includes minor little things like copyrights and patents, trademarks, contracts, etc. Lots and lots of ways to play foul in that area.

    At least half the future I've been expecting hasn't gotten here yet. Sigh.... (Yes, there's gender bias in my name; no, I wasn't thinking about it when I signed up. My apologies.)

    by serendipityisabitch on Mon Apr 21, 2014 at 04:43:16 AM PDT

    •  Making this apply to all intangible property (1+ / 0-)
      Recommended by:
      serendipityisabitch

      is aimed, economically, to prevent using the alternative value instruments to avoid the tax.

      And as well, folding money is an intangible asset. Just like a T-Bill.

      One big argument is gold and precious metals. I'd go for gold but not stamp collections.

      You want to exclude houses and cars and furniture. But not the common "investibles." (From the Latin root, "investire" and formed similar to "audible.")

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 05:23:05 AM PDT

      [ Parent ]

      •  Well, no. I see what you're doing here, and I (3+ / 0-)
        Recommended by:
        waterstreet2013, fcvaguy, ozsea1

        think I rather like it, but the very word "tangible" comes into dispute when you're talking about things of value, and especially when currency comes into the mix. Mostly because "value" isn't an inherent property of things; it derives from societal beliefs and expectations concerning the item you're valuing. Which is to say, it's an intangible.

        Go for gold and not stamp collections, and you're likely to see a sharp increase in the perceived value of stamp collections, simply because they're an exception.

        I'll stop here, because I don't want to threadjack, but I did want to point out that you're trying to deal with an area that will shift in accommodation to any laws you may pass.

        At least half the future I've been expecting hasn't gotten here yet. Sigh.... (Yes, there's gender bias in my name; no, I wasn't thinking about it when I signed up. My apologies.)

        by serendipityisabitch on Mon Apr 21, 2014 at 05:39:26 AM PDT

        [ Parent ]

        •  Nobody has mentioned BitCoin. (0+ / 0-)

          Or holding foreign stocks and bonds.

          And yes, there's hundreds of careers for smart lawyers and tax wonks, getting together a solid implementation strategy.

          Republican opposition will be led by Darryl "Car Thief" Issa.

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Mon Apr 21, 2014 at 05:47:19 AM PDT

          [ Parent ]

          •  If the tax is based on citizenship or residency, (2+ / 0-)
            Recommended by:
            waterstreet2013, VClib

            foreign holdings wouldn't have any benefit (and they have terrible income tax consequences now, so there wouldn't be any reason to see capital flight).

            There are two primary objections to the tax:

            - It would have to include "all property," otherwise the tax would distort the economy.  Excepting real estate, for example, would see an enormous shift into real estate assets.

            - As a practical matter, it would require annual valuations of hard-to-value assets like family businesses etal. A simple valuation for a single small business can run from $10 - $20k. That's not insubstantial.

            •  Real estate is already taxed. Locally. (0+ / 0-)

              Family businesses are not intangible assets. Not predominately. Not a whole lot of families own hedge funds.

              And how many family holdings rise above the $10-million lower limit ??? (That limit excludes real estate.)

              "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

              by waterstreet2013 on Tue Apr 22, 2014 at 07:05:55 AM PDT

              [ Parent ]

  •  if we had a workable and equitable income tax (2+ / 0-)
    Recommended by:
    Gooserock, waterstreet2013

    system, we wouldn't need this--if we taxed all income as income (instead of giving the wealthy their very own special sort of non-income income taxed at a lower rate) and taxed all income at a graduated progressive rate (like we used to do in the 50's and 60's), that would cover everything.

    All "wealth" was once "income". They didn't print any of it themselves--they got all of it from someone else, one way or another. It could (and should) have been taxed there.

    And it still can be--without any need for a big long constitutional-amendment process that likely won't go anywhere anyway.

    In the end, reality always wins.

    by Lenny Flank on Mon Apr 21, 2014 at 04:59:32 AM PDT

    •  But That Followed the Mother of All Wealth Cor- (1+ / 0-)
      Recommended by:
      waterstreet2013

      rections from 1929 through 1933, the stock market crash followed by 3 years of Republican governance.

      This time, after a lifetime of economic wargaming, the rich came out of our crash with the conservative policies imposed on the people while the New Deal was given to the rich and many of their biggest enterprises.

      Income taxation is probably something like light bulb conservation is to climate change, it would work given half a lifetime or more but we could be past system collapse before it had time to turn things around.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Mon Apr 21, 2014 at 05:04:27 AM PDT

      [ Parent ]

    •  That's good going forward, applied to new (0+ / 0-)

      income.

      But the distortions that have been introduced since January, 1981, can only be repaired by taxing accumulated wealth directly.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 05:12:36 AM PDT

      [ Parent ]

  •  Just After Turn of Millennium Bill Gates Sr. (2+ / 0-)
    Recommended by:
    waterstreet2013, ozsea1

    and an associate Chuck Collins were promoting a book and encouraging among other things a one-time wealth recapture tax, on the grounds that the very rich had done so spectacularly in the then-recent 90's and nobody else had, and society had so many needs.

    Here's 2003 audio from the interview I heard on Seattle's KUOW with Gates and co-authors of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

    In the mid 20th century we got the rich down to their lowest share of family wealth, and the middle class to its highest in the industrial era, without a specific wealth tax but with much more aggressively progressive individual income taxation including estate taxes, regular income taxes and capital gains taxes (and I think stocks were forbidden to be offered for some kinds of compensation??).

    I wonder if it might be more politically palatable for an amendment to empower a one-time wealth recapture, and then go back to otherwise already empowered income taxation to keep a healthy lid on the top end.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Apr 21, 2014 at 05:00:20 AM PDT

    •  Capital gains were taxed at 30%. (1+ / 0-)
      Recommended by:
      Gooserock

      Then the GOP and Bill Clinton cut a deal that slashed that to 15% in 2000.

      The estate tax might as well be a wealth tax. I'd prefer to see this implemented as an intangible property tax at federal level, mostly for economic reasons. Today it starts at $5-million, roughly, and takes a small bite.

      For the GOP's teabaggers/birchers all of taxes and fees are theft. They make Occupy Wall Street's anarchists look like clones of Alexander Hamilton.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 05:10:10 AM PDT

      [ Parent ]

      •  For Them the Constitution is Theft and Communism (1+ / 0-)
        Recommended by:
        waterstreet2013

        For one thing they've never surrendered states "rights" and "sovereignty."

        Search the complete text of Constitution and amendments for either of those concepts in connection with states. You'd find them right up front --of the Articles of Confederation.

        They also oppose the 2 promotion of general welfare statements, one the fundamental purpose of government in the Preamble, and two the specific empowerment of congress to tax to pay for it.

        Among other things.

        We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

        by Gooserock on Mon Apr 21, 2014 at 06:01:27 AM PDT

        [ Parent ]

        •  I (heart) GOPer craziness. (2+ / 0-)
          Recommended by:
          ozsea1, a2nite

          Milwaukee, Wisconsin's Journal Sentinel is covering a 6th District GOPer proposal to enact a state secession law.  

          Then there's the rancher who's been stealing use of about 1,000 acres of public land for years. He owns all of 160 acres, so he should certainly be allowed to steal what he can get his cows on !!

          The GOP collapsed in 1973/1974. It could happen again.

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Mon Apr 21, 2014 at 06:18:24 AM PDT

          [ Parent ]

  •  It seems like "intangible" assets (1+ / 0-)
    Recommended by:
    waterstreet2013

    would be the very easiest to move off-shore where they'd conveniently be beyond the reach of the IRS.

    Seems like we just need to go back to Reagan era taxation and we'd be ok - case closed.

    •  These assets can be taxed at point of origin (1+ / 0-)
      Recommended by:
      Roadbed Guy

      and bypass all efforts to disguise ownership.

      Where the "disguise" appears, as with a pass through a Caribbean "trust" account, dump the tax to the 2% level and say "Thank you!"

      You do get to go after the Cheney family. And the Romneys. I (heart) that.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 05:39:36 AM PDT

      [ Parent ]

    •  Roadbed Guy - Reagan Era with the 28% cap? (0+ / 0-)

      That's where we ended the Reagan Era. The Tax Reform Act of 1986 so changed the IRS code for individuals that marginal rates before and after are not comparable. They are apples and oranges.

      "let's talk about that"

      by VClib on Tue Apr 22, 2014 at 08:57:46 PM PDT

      [ Parent ]

  •  Won't work. (1+ / 0-)
    Recommended by:
    waterstreet2013

    Didn't work in Florida either. There's just no way to enforce it. On the day of measure, people just transfer ownership to third parties. Or they invest in a stock indirectly, through a derivative. Or do a simple swap. People with wealth have access to all sorts of legal structures, and there's just no way to write such a thing without allowing for smart lawyers to exploit loopholes.

    •  All of that is easily enough defeated. (0+ / 0-)

      Financial databases record ownership for every stock, bond, derivative, et.al.

      Jailing "smart lawyers" is a big part of the fun for USAOs.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 05:35:22 AM PDT

      [ Parent ]

      •  Oh really? Do you understand (3+ / 0-)

        just what makes up the world of derivatives? There is no limit to the complexity, and there is really no way for the IRS to know who is the beneficial "owner" of the asset (as opposed to the named owner). And what about inventories of stock held by brokers or intermediaries - are you going to tax them for simply owning their inventory on Dec. 31? This has been tried. It does not work.

        •  "Tax at source" is the key. (0+ / 0-)

          A listed "named owner" has every motive including legal compulsion to identify the beneficial owners.

          If the "named owner" fails to do that, tax pops to 2% with that heart felt "Thank you !"

          And no, the American system has never implemented tax-at-source for these instruments. We're kind of backward.

          financial database are quite thorough. And now standardized.

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Mon Apr 21, 2014 at 06:23:34 AM PDT

          [ Parent ]

  •  This is a silly idea (1+ / 0-)
    Recommended by:
    waterstreet2013

    It would never pass and it would very little to recirculate vast fortunes which are held in trust or in assets. Just bring back a very punitive estate tax where no individual heir can inherit more than say 10 million dollars in total asset or income from an heir. Then take the remainder and throw it back into the economy.

    Do facts matter anymore?

    by Sinan on Mon Apr 21, 2014 at 06:22:52 AM PDT

    •  "Silly" ??? (1+ / 0-)
      Recommended by:
      johnny wurster

      And why would family trusts be exempted ?

      Limiting inheritance to $10-million is fine in theory, but this is a bald redistribution. A taking from the wealthy on that scale -- far less likely than an Amendment that tops out at 2% on billionaires.

      This is not going to happen tomorrow. But the income tax amendment took 20 years to get through. It was "silly" back then, except for the Progressives.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 06:37:24 AM PDT

      [ Parent ]

  •  so. this would create quite a real estate bubble. (1+ / 0-)
    Recommended by:
    waterstreet2013
  •  Seems like a lot of work (2+ / 0-)
    Recommended by:
    waterstreet2013, NotGeorgeWill

    From what I can gather your proposal would generate $75 billion a year from what you say.

    Quite frankly this seems like a lot of work and political heavy lifting (constitutional amendment) for a relatively small payout.

    There are plenty of much easier ways to raise $75 billion that don't involve the near impossibility of getting an amendment passed.

    We spend like $3.5 trillion yearly in the budget, so that $75 billion is like 2% of the budget.

    At the end of the day it's small ball when you look at the grander scale of our needs.

    I would rather focus our attention on things that would tangibly change our situation considering how bruising the fight would be politically to try and do what you are proposing.

    If we are going to put in that kind of effort, it should have a bigger payout.

    •  $75-BB/year times 100 years = $7.5-TT. (0+ / 0-)

      That's $7,500-billion that doesn't go to powering our crash into oligarchy.

      The billionaires contribute $4,000-billion of it.

      And yes, calculating the impact over a century is the way to do this problem. That's how family dynasties operate.

      For the billionaires, this is one 2% tax that adds up.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 06:00:18 PM PDT

      [ Parent ]

  •  Simpler...a 99% inheritance tax. With no lower (2+ / 0-)
    Recommended by:
    waterstreet2013, NotGeorgeWill

    limit.  I think the current one kicks in at $1 million.  The fundamental issue is equality of opportunity.  Where would the Kochs be without inherited wealth?  Nowhere.  Where would the  members of the Walton family be?  Nowhere.  Let's not discourage the next Bill Gates, let's just make hereditary financial aristocracy impossible forever.  Unlike the wealth tax, that won't take an amendment to the Constitution.  Only tweaking the existing inheritance tax laws.  Let anyone keep what they personally earn (right or wrong) but let them not pass it on to the next generation...  

    Armed! I feel like a savage! Barbarella

    by richardvjohnson on Mon Apr 21, 2014 at 05:15:35 PM PDT

    •  Unfortunately, tax-free trusts exist (1+ / 0-)
      Recommended by:
      richardvjohnson

      that can preserve a block of wealth across generations.

      Avoiding inheritance taxes is relatively easy.

      Implementation of this wealth tax would have to have sections to avoid these tricks. It is too late in more than one sense for the inheritance tax. Law is settled and trusts are endowed while the source is still alive.

      Endowing a trust is not a "transaction" in the usual sense related to taxation. It is a charitable gift. Generally a write off.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 05:43:00 PM PDT

      [ Parent ]

      •  It's easy to avoid estate tax on what your (2+ / 0-)
        Recommended by:
        waterstreet2013, ElaineinIN

        future assets will be; not so much on what your assets currently are.

        •  Just transfer assets to a family trust. (0+ / 0-)

          It's done every day.

          The trust is not taxed and the transfers never qualify as inheritance.

          This is a major loop hole for wealthy families.

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Tue Apr 22, 2014 at 06:51:31 AM PDT

          [ Parent ]

          •  Like I said, those transfers shift future (2+ / 0-)
            Recommended by:
            waterstreet2013, VClib

            growth on the assets to vehicles that will escape the estate tax.  But you have to use unified credit to do so, which increases your taxable estate by the amount of the transfer.  eg, if we assume zero growth on an estate, there would be no tax savings if one gifted an asset to trust or keeps it. (although state estate tax is a different matter)

            •  I think you are confusing gifts to (0+ / 0-)

              individuals -- where the Unified Credit Exemption applies -- with gifts to nonprofits such as a family trust.

              Family trusts are now treated like any other charity. And you can give to a qualified charity without limit, without having a dime of it taxed.

              "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

              by waterstreet2013 on Tue Apr 22, 2014 at 07:22:02 AM PDT

              [ Parent ]

              •  Family trust? You mean family foundation? (3+ / 0-)
                Recommended by:
                ElaineinIN, NotGeorgeWill, VClib

                The assets in that have to be used for contributions to 501(c)(3)s.  Sometimes - rarely, but sometimes - family members will draw some small salary or something, but it's highly inadvisable (because of the self-dealing rules) and can't be used to shift more than peanuts.  Neither is it terribly tax efficient, since the income drawn is subject to ordinary tax rates + SE tax (which is between 3.8% and 15% on top of ordinary income tax)

                •  Trust funds live in a 3D maze of loop holes. (0+ / 0-)

                  They exist to avoid taxation. Works just fine.

                  "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

                  by waterstreet2013 on Tue Apr 22, 2014 at 07:43:31 AM PDT

                  [ Parent ]

                  •  no, they're taxable. (3+ / 0-)
                    Recommended by:
                    ElaineinIN, waterstreet2013, VClib

                    Their tax treatment really isn't that complicated.

                    Like I said, I work w/ trust tax all the time.  Any questions, let me know.

                  •  You might want to check your trust tax law (3+ / 0-)

                    But for a charitable remainder trust under 664 or a private foundation that Johnny describes above, trusts are in fact taxable for income tax purposes, and quite unfavorably - they reach the top marginal tax bracket on undistributed income almost instantaneously.   Distributed income is deductible, but taxed to the beneficiary on receipt.

                    There are family trusts that are designed to limit multiple impositions of the estate/gift tax (not the income tax) - those are generally dealt with by the generation skipping transfer tax, which is an imperfect vehicle and often avoided by good planning.

                  •  And there's no way that trust fund money (0+ / 0-)

                    finds its way to offshore "tax haven" pirate-banks. And the Cheneys and Romneys are honest.

                    And the concept of a tax loop hole is fantasy.

                    O.K., fine. (But I'll still push for Tax At Source and against letting tax advisors gain much influence over public policy.)

                    "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

                    by waterstreet2013 on Tue Apr 22, 2014 at 09:07:15 AM PDT

                    [ Parent ]

                    •  Offshore trusts have *horrible* tax (1+ / 0-)
                      Recommended by:
                      VClib

                      consequences. Really, there's nothing worse for tax purposes than an offshore trust (unless it was grandfathered in by the law that established punishing consequences for offshore trusts.  I think that was in the 70s or something)

                      It's not that loopholes are fantasies, it's that non-experts have really, really weird ideas of what trusts are and do.

          •  Then eliminate the loophole. (1+ / 0-)
            Recommended by:
            waterstreet2013

            A Constitutional amendment requires much more heavy lifting and wouldn't be needed to address this type of tax avoidance maneuver.

  •  Worse than pointless. (1+ / 0-)
    Recommended by:
    waterstreet2013

    This would further incentivize the 1% to give up American citizenship, which is fiscally the last thing the US budget needs.

    I realize one could make that argument with any form of progressive taxation, but this one is particularly pernicious, in that it imposes a burden any number of other easily accessible citizenships don't possess.

    •  What's taxed is Intangible Property (0+ / 0-)

      that is either owned by U.S. citizens or is of the U.S. as an investment instrument.

      Changing citizenship ??? O.K. Doesn't change a damn thing.

      And if the Murdochs and the Kochs and the Trumps git themselves offshore permanently, YES !!

      And make sure they sell all their holdings before the door hits their butts on the way out, cuz that's the only way they won't get taxed despite leaving.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Mon Apr 21, 2014 at 07:52:38 PM PDT

      [ Parent ]

      •  Capital Flight (1+ / 0-)
        Recommended by:
        waterstreet2013
        that is either owned by U.S. citizens or is of the U.S. as an investment instrument.

        Changing citizenship ??? O.K. Doesn't change a damn thing.

        That'd just result in a value write-down of US investment instruments (i.e. a crash) followed by capital flight to other markets (of which there are many.)
        And if the Murdochs and the Kochs and the Trumps git themselves offshore permanently, YES !!
        The federal tax base is extremely progressive.  The government can't afford to have the wealthy leave.
        And make sure they sell all their holdings before the door hits their butts on the way out, cuz that's the only way they won't get taxed despite leaving.
        Many of their holdings aren't in the US, and once they're no longer citizens, the US has no way at all to get ahold of such things.
        •  Sure we could get them. (1+ / 0-)
          Recommended by:
          waterstreet2013

          If they're US residents, it wouldn't be hard to get at their foreign assets.  If they're US non-resident citizens with foreign assets, that could be tougher, but we have treaties with a number of other countries and could probably leverage FATCA to get at the assets.

        •  That's funny. (0+ / 0-)

          The billionaire sells off his U.S. assets, leaves the country, and dumps his citizenship. And that's supposed to hurt us ???

          Singapore is wonderful this time of year !

          "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

          by waterstreet2013 on Tue Apr 22, 2014 at 08:48:53 AM PDT

          [ Parent ]

  •  #1 Recognize Trickle Down as Voodoo Economics (1+ / 0-)
    Recommended by:
    waterstreet2013

    Trickle Down Economics is the biggest Ponzi Scheme that has ever been foisted on the American public.  Recognize it, condemn it and that is only a beginning.

    Voters should select people to represent them in their government. People in government should not select people who may vote!

    by NM Ray on Tue Apr 22, 2014 at 06:35:05 AM PDT

  •  I am in complete agreement with this proposal (1+ / 0-)
    Recommended by:
    waterstreet2013

    but it is not as pressing as a couple other Amendments that could be adopted, in particular, federally funding all elections.  That should be our goal for the remainder of the Obama administration.

    The Stars and Bars and the red swastika banner are both offerings to the same barbaric god.

    by amyzex on Tue Apr 22, 2014 at 07:42:32 AM PDT

    •  John Paul Stevens likes six: (1+ / 0-)
      Recommended by:
      amyzex

      No need to stop work on all but one. That'd be like going out in the spring and only working on one pot hole at a time.

      -- The “Anti-Commandeering Rule” (Amend the Supremacy Clause of Article VI) This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges and other public officials. in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.

      -- Political Gerrymandering – Districts represented by members of Congress, or by members of any state legislative body, shall be compact and composed of contiguous territory. The state shall have the burden of justifying any departures from this requirement by reference to neutral criteria such as natural, political, or historical boundaries or demographic changes. The interest in enhancing or preserving the political power of the party in control of the state government is not such a neutral criterion.

      -- Campaign Finance – Neither the First Amendment nor any other provision of this Constitution shall be construed to prohibit the Congress or any state from imposing reasonable limits on the amount of money that candidates for public office, or their supporters, may spend in election campaigns.

      -- Sovereign Immunity – Neither the Tenth Amendment, the Eleventh Amendment, nor any other provision of this Constitution, shall be construed to provide any state, state agency, or state officer with an immunity from liability for violating any act of Congress, or any provision of this Constitution.

      -- Death Penalty- (Amend the 8th Amendment) Excessive Bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments such as the death penalty inflicted.

      -- The Second Amendment – (Amend the 2nd Amendment) A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear arms when serving in the Militia shall not be infringed.

      * * * * * * *

      Simple enough. Leave gun laws to legislatures. You probably want different laws in different municipalities, right?

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Tue Apr 22, 2014 at 08:01:10 AM PDT

      [ Parent ]

  •  Not clear why this is necessary. (1+ / 0-)
    Recommended by:
    waterstreet2013

    We could deal with a number of these issues through the tax code as it currently exists.  At some point assets are sold or transferred.  Raise the estate tax, raise capital gains rates and it seems like you would cover the overwhelming majority of issues related to income inequality.

    If you can't even do either of those things, then the Constitutional amendment is the least of anyone's worries and even more unlikely to become law.

    •  This Amendment XXVIII has permanence. (0+ / 0-)

      Once enacted, it would be nigh impossible to repeal or amend. Also, it meets the problem of the Piketty Dilemma directly: concentration of wealth is the problem, so take it head on.

      Estate tax is not reliable, historically. Cap gains is a partial solution at best.

      Sure thing, this proposes a 20 year project. Just like getting the income tax a century ago.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Tue Apr 22, 2014 at 09:45:30 AM PDT

      [ Parent ]

  •  Book net worth not = FMV (wealth) (1+ / 0-)
    Recommended by:
    waterstreet2013

     My recollection from filing FL IP tax returns years ago is that at least some of the IP tax basis was only on book value of the capital of a company, not it's FMV (which is what you're wanting to tax.)
      As a (now former) CPA, I can tell you that attempting to value privately held interests in businesses (regardless of entity type) on an annual basis would be highly impracticable.  Then again, as I'm currently unemployed, it would be a great job creator for beancounters and appraisers.

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Tue Apr 22, 2014 at 10:19:14 AM PDT

  •  A list of the objections in these comments (0+ / 0-)

    takes up a number of lines:

    -- "What makes you think a constitutional amendment is required...."

    -- "What a wonderful place for a link...."

    -- "So you believe the estate tax is
    unconstitutional?"

    -- "this direction could affect net neutrality...."

    -- "Citing Charles Murray doesn't seem necessary or especially relevant...."

    -- "This has zero chance of getting through."

    -- "if we had a workable and equitable income tax system, we wouldn't need this."

    -- "well, being the socialist that I am, I prefer we simply take [wealth] from them whether they like it or not."

    -- "This is a silly idea."

    -- "Simpler...a 99% inheritance tax."

    -- "Worse than pointless. This would further incentivize the 1% to give up American citizenship...."

    -- "...it is not as pressing as a couple other Amendments that could be adopted, in particular, federally funding all elections."

    * * * * * * * *

    They go all over the place. Except that no one argues that the billionaires should be allowed to expand their wealth without limit.

    Responding to the Piketty Dilemma is a matter of common sense.

    About a half-dozen comments either asked sensible questions about the Piketty Dilemma or went to the issues of wealth accumulation. Zero set out to discuss Piketty's work.

    Capital in the Twenty-First Century

    Start there. Then I recommend Murray, Klugman and Packer if you've missed them.

    Of course, folks, getting a constitutional amendment is difficult. What else ???

    "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

    by waterstreet2013 on Tue Apr 22, 2014 at 02:24:38 PM PDT

    •  Similarly, David Kocieniewski's 2012 Pulitzer (0+ / 0-)

      for his series, "But Nobody Pays That" includes the piece "A Family's Billions, Artfully Sheltered."

      Comments above from alleged professionals claim less than artfully and repeatedly that such loop holes do not apply to family fortunes. They lie. They lie their wealth-sucking asses off.

      * * * * * * *

      As he stood in the opulent marble foyer of a Fifth Avenue mansion late last month, greeting the coterie of prominent guests arriving at his private art gallery, Ronald S. Lauder was doing more than just being a gracious host.

      To celebrate the 10th anniversary of the Neue Galerie, Mr. Lauder’s museum of Austrian and German art, he exhibited many of the treasures of a personal collection valued at more than $1 billion, including works by Van Gogh, Cézanne and Matisse, and a Klimt portrait he bought five years ago for $135 million.

      Yet for Mr. Lauder, an heir to the Estée Lauder fortune whose net worth is estimated at more than $3.1 billion, the evening went beyond social and cultural significance. As is often the case with his activities, just beneath the surface was a shrewd use of the United States tax code. By donating his art to his private foundation, Mr. Lauder has qualified for deductions worth tens of millions of dollars in federal income taxes over the years, savings that help defray the hundreds of millions he has spent creating one of New York City’s cultural gems.

      The charitable deductions generated by Mr. Lauder — whose donations have aided causes as varied as hospitals and efforts to rebuild Jewish identity in Eastern Europe — are just one facet of a sophisticated tax strategy used to preserve a fortune that Forbes magazine says makes him the world’s 362nd wealthiest person. From offshore havens to a tax-sheltering stock deal so audacious that Congress later enacted a law forbidding the tactic, Mr. Lauder has for decades aggressively taken advantage of tax breaks that are useful only for the most affluent. ....

      for example:
      An examination of public documents involving Mr. Lauder’s companies, investments and charities offers a glimpse of the wide array of legal options for the world’s wealthiest citizens to avoid taxes both at home and abroad.

      His vast holdings — which include hundreds of millions in stock, one of the world’s largest private collections of medieval armor, homes in Washington, D.C., and on Park Avenue as well as oceanfront mansions in Palm Beach and the Hamptons — are organized in a labyrinth of trusts, limited liability corporations and holding companies, some of which his lawyers acknowledge are intended for tax purposes. The cable television network he built in Central Europe, CME Enterprises, maintains an official headquarters in the tax haven of Bermuda, where it does not operate any stations.

      And earlier this year, Mr. Lauder used his stake in the family business, Estée Lauder Companies, to create a tax shelter to avoid as much as $10 million in federal income tax for years. In June, regulatory filings show, Mr. Lauder entered into a sophisticated contract to sell $72 million of stock to an investment bank in 2014 at a price of about 75 percent of its current value in exchange for cash now. The transaction, known as a variable prepaid forward, minimizes potential losses for shareholders and gives them access to cash. But because the I.R.S. does not classify this as a sale, it allows investors like Mr. Lauder to defer paying taxes for years. .... [including further deference techniques when this is finally delivered.]

      * * * * * * * *

      And for every one hole that gets filled, there's more that come along. It's a business. Bribery in the millions fuels tax avoidance in the billions.

      Offshore tax trusts ??? Audacious scams? A tax code for the billionaires? You betcha.

      Unlike what's described by the comments up above -- but they also avoid saying that these loop holes are for the wealthy. So if you're a 99%er then maybe there are no loop holes. As a 99%er you've got nothing going -- you do pay the going IRS tax rates.

      "But nobody pays that" is for the wealthy.

      This diary limits the focus to people with $10-million in intangible assets and above. Not the 99%. Not people who lack access to the criminal-lawyers and accounting-cheats who run tax mills.

      "Stealing kids' lunch money makes them strong and independent." -- Ryan Paul von Koch

      by waterstreet2013 on Wed Apr 23, 2014 at 04:53:43 AM PDT

      [ Parent ]

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