Numbers Don't Add Up In Trump Wealth-Tax Plan
November 16, 1999
Donald Trump's suggestion that the gross federal debt could be paid off by imposing a one-time 14.25 percent tax on the net wealth of every American worth more than $10 million doesn't even compute, say experts who have done the math. Even if it did, such a plan could generate horrendous income-shifting consequences, they warn.
- To retire the $5.7 trillion debt with a 14.25 percent tax would require a $40 trillion tax base -- but the net worth of all U.S. households and nonprofit organizations totaled only $37.4 trillion at the end of 1998, according to the Federal Reserve.
- To retire the debt this way would mean taxing the equity of every homeowner, forcing the sale of trillions of dollars of stock by every shareholder, and taking 14.25 percent out of every bank account -- no matter how small.
- University endowments, foundation assets and church property would have to be taxed because leaving them out, along with assets from households worth less than $10 million, wouldn't raise anywhere near $5.7 trillion.
- The tax would lead to sales of huge blocks of stock, driving down share prices, and the liquidation of thousands of businesses.
Just to save $229 billion a year in federal interest expenses, Trump would seriously imperil the entire U.S. economic structure.
Source: Bruce Bartlett (National Center for Policy Analysis), "Can Anyone Trump this Goofy Tax Plan?" Wall Street Journal, November 16, 1999.
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