Monday, January 23, 2006

Show me the Wealth!

I just read an interview with Edward Wolff, a professor of economics at New York University and author of Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It. You can read the interview here.

Some excerpts:
"In 1998... the top 5 percent had more wealth than the remaining 95 percent of the population, collectively."

"The richest 10 percent of families own about 85 percent of all outstanding stocks. They own about 85 percent of all financial securities, 90 percent of all business assets."

MM: In broad outlines, how would you structure such a tax?
Wolff: I would model it after the Swiss system, which I think is a pretty fair system. It would be a progressive tax. In the United States, the first $250,000 of wealth would be exempt from the tax. That would exclude 80 percent of all families. The tax would increase at increments, starting out at .2 percent from about $250,000 to $500,000. The marginal rate would go up to .4 percent from $500,000 to $1 million, and then to .6 percent from a $1 million to $5 million, and then to .8 thereafter.

It would not be a very severe tax. In fact, the loading charges on most mutual funds are typically of the order of 1 or 2 percent. It would not be an onerous tax, but it could raise about $60 billion annually. Eighty percent of families would pay nothing, and 95 percent of families would pay less than $1,000. It would really only affect very rich families.

(As I know very little about the taxation systems of various countries, that idea was very surprising to me. Wow... imagine that. I wonder if there are any cons (i.e., people not caring about certain things because they are not paying in) if that model is used).


Blogger Cosd said...

Indeed, I should go back and read the whole article when I get the chance, but I've heard of this before.

In fact my cousin, who took business, said this is exactly the kind of thing the world needs (this tax system or an even stricter one).

I think it's stupid that the system is already in place!

If you agree, you should vote NDP or Green. :)

12:51 PM  

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