ILENE DAVIS, CFP: Taxing Wealth Instead of Income Would Reduce Income Inequality and Wealth Inequality

By  //  January 18, 2019

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Reduce both income and wealth inequality

One of the goals of a socialist government is to reduce income and wealth inequality by higher income taxes on the rich, but is there a better way?

BREVARD COUNTY, FLORIDA – One of the goals of a socialist government is to reduce income and wealth inequality. 

Hearing that newly elected representative and avowed socialist Alexandria Ocasio-Cortez has been appointed to serve on the House of Representative’s finance committee and has suggested a 70 percent income tax on “the rich,” I have a suggestion.

In Dr. Thomas Stanley’s book “The Millionaire Next Door,” he breaks the wealthy into those who are “income affluent (IA)” and “balance sheet affluent (BA),” and points out that many who are IA are actually not really rich – they can just afford to live an expensive lifestyle.

One look at highly paid athletes and celebrities that file bankruptcy if they lose their income demonstrates the veracity of Stanley’s concept.

However, if someone in Stanley’s BA group has a billion in actual net worth, even if it earns only 1 percent a year, would accrue $10 million a year in income, year after year. Enough for a decent lifestyle even in places like New York City and San Francisco.

It seems to me that taxing wealth instead of income is a good start to both reducing income inequality and wealth inequality.

I encourage those in Congress who think “the rich” should pay their “fair share” to offer the following legislation: For each dollar a household has in excess of $1 billion in net worth, less what they give to U.S. based charitable organizations annually, have them pay 10 percent of that net worth in taxes per year.    

According to Forbes magazine, there were 540 billionaires in the United States, with a combined net worth of $2.399 trillion in 2016.

For example, if you took the balance sheet of someone like technology magnate Jeff Bezos, who, depending on the day, is worth around $150 billion or more, and also donates about $5 billion a year to helping organizations that provide assistance to needy Americans, and applied the above “Fair Share” legislation it would look something like this:  $150 billion – $5 billion (donated) – $1 billion (exempt) = $144 billion. 10 percent of that would be $14.4 billion.

Imagine how applying that to the national debt would help reduce federal interest payments by millions of dollars a year.

This seems a way to truly tax “the rich.”

ABOUT THE AUTHOR

Ilene Davis, CFP

Ilene Davis, a resident of Brevard County since 1971, is a Certified Financial Planner with a bachelors degree in Mathematics from the University of Michigan, a bachelors degree in Accounting from Rollins College, and a Masters in Business Administration from Webster University.  

Davis became a stockbroker in 1982, earned her designation as a Certified Financial Planner in 1984, and with a desire to serve clients more on her own terms, opened her own financial consultant office in Cocoa Village in 1986.

She has combined her professional and personal experience with keen financial insight and instinct into her first book, Wealthy By Choice: Choosing Your Way To A Wealthier Future, which was recently published by Tablet Publications of Cocoa Beach and is now available on Amazon.comBarnesandNoble.comTabletPublications.com and ChoosingWealth.com

She is committed to helping each client create their own “Financial Freedom Fund,” and believes strongly in free market capitalism and a “hand up rather than a hand-out” as the best path to prosperity.

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