One solution that has not been put forward to the perceived crisis in the American economy with regard to our national debt and deficit problem is one that was proposed by Donald Trump in 1999. He suggested that for just one year, we levy a wealth tax of 14.25% on individuals with net worth in excess of $10 million. At the time, it would have resulted in $5.7 trillion in one-time revenue. Today, the same effort would result in $7.7 trillion in one-time revenue. The wealth tax is not a new or crazy idea. It's up to us whether we tax income or wealth or both, and there are many countries that tax wealth, including Switzerland and Norway. It's not a difficult equation (assets-debts=wealth), and perhaps a simpler calculation than income actually.
Of course, in Trump's original proposal, the one-time wealth tax was one part of a two-part proposal, the second part of which was to eliminate the inheritance tax forever. But it makes me wonder if we could not institute some sort of extremely simplified income tax system (even a flat tax to calm the libertarians) but at the same time, provide a sustainable wealth tax rate for those estates that could be assessed annually.
The current distribution of federal tax revenue is 44% income tax, 42% payroll tax, 7% corporate tax, and 7% excise and other (estate tax is in the "other"). If we added a meager 2% wealth tax to just those individuals with net worth over $10 million ($10m exemption), we could add over $1 trillion to revenues each year (equal to the 2010 individual income tax revenue). This 2% figure is in line with what Norway, France, and Switzerland have in effect today, and their thresholds for exemption are far below $10 million.
With the new wealth tax, we can go a long way towards wiping out the deficit every year moving forward, and in the process begin to pay down the debt. We can also take a step towards addressing the incredible income disparity that has ballooned in the US over the past 30 years. And 2% each year is not much when you consider that the year-on-year percentage increase in the income earned by the same individuals has been well over 15% during the past decade, while the real wages for the rest of America have stagnated or fallen every year.
Update: I don't think that Mr. Trump would still admit to having had this policy position twelve years ago. If anyone knows anything about his present position...