A 10% Income Tax Surcharge on the Rich?

Among the more idiotic ideas being pitched to solve the current mess in the financial markets is a 10% income tax surcharge on individuals making more than $500 thousand a year and individuals earning $1 million per year. While this proposal will certainly appeal to those on the liberal side of the fence, those who have yet to realize that Karl Marx's theories have been rejected as simply wrong, even its supporters (the provision was included in the Senate Bill by Bernie Sanders (Idiot-Vermont) admit that it won't survive! Since the Senator, and everyone else, knows that money equals both political power and private access to members of congress, why would you waste the taxpayers' money on sponsoring something that you know your biggest campaign contributors would never support?

Even if congress were to impose a 10% surtax on the net worth of the richest Americans, such a proposal wouldn't pay for the proposed bailout. Take a quick look at the following numbers.

And for those who will criticize my conclusions by pointing out that I'm not an economist, I point out that apparently most members of congress appear to be unable to spell the word.

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According to Forbes Magazine, there are at least 220 individuals or families with over $1 billion in net worth. A conservative survey of the top ten yields the following, along with the source of their wealth:

1. William H. (Bill) Gates (Microsoft) $ 43,000,000,000

2. Warren E. Buffet (Berkshire Hathaway) $ 36,000,000,000

3. Paul G. Allen (Microsoft ) $ 21,000,000,000

4. Helen R. Walton Wal-Mart $ 18,800,000,000

5. Alice G. Walton (Wal-Mart ) $ 18,800,000,000

6. Jim C. Walton ( Wal-Mart) $ 18,800,000,000

7. John C. Walton (Wal-Mart) $ 18,800,000,000

8. S. Robson Walton (Wal-Mart) $ 18,800,000,000

9. Lawrence J. Ellison (Oracle) $ 15,200,000,000

10. Steven A. Balmer (Microsoft) $ 11,900,000,000

Total: $ 221,400,000,000

10% Tax Surcharge: $ 22,100,000,000

If we further assume an average net worth for the remaining 210 to be $1.5 billion per individual or family, we arrive at:

210 × $1,500,000,000 = $ 315,000,000,000

10% Tax Surcharge $ 31,500,000,000

CNNMoney.com has reported that as March 21, 2008 there are 9.2 million families in the United States with net worths in excess of $1 million. If we subtract those mentioned above, and assume an average net worth of $1.8 per family, we realize that:

(9.2 million families) × ($1.8 million per family) = $ 1,656,000,000,000

10% Tax Surcharge $ 165,600,000,000

Total Revenue Realized $ 221,200,000,000

Assuming the congress passed a bill appropriating $700 billion to bail out the financial markets, with a first year payout of $300 billion, the above-derived $221.2 billion dollars would result in a $79.8 billion addition to the national debt! If we carry the calculated the remaining bailout appropriation over three more years, we get $133 billion per year ($400 billion over 3 years). If the 10% surcharge were to be continued over the same period, and under best-case scenarios which assume a 10% per year decrease in net worth per individual/family, there would not be a positive cash flow (~ $21 billion) into the federal treasury until the conclusion of year three of the bailout.

Over the three year lifetime of even a 10% yearly surcharge on the net worths of the richest 5% of American taxpayers the federal government could legally confiscate, via taxation, over 750 billion dollars of the private wealth in the country.

The proposed 10% surcharge on income alone would generate far less revenue.

I don't know about the reader, but I smell a taxpayer ripoff in the making!