There are only a few ways to reduce national debt.
One is to raise taxes. Another one is to create jobs. It is a blessing that President Donald Trump has already created and saved more than 10 million new jobs in 3 years. The last way is to sell national assets to pay debt (which isn’t part of this discussion).
Based on my analysis of Trump’s speeches in 2015 and 2016, “Candidate Trump” was never against raising reasonable taxes on the super-rich who weren’t being taxed to offset the debt and deficit.
Remember, President Barack Obama already created $9 trillion-$10 trillion in new debt. Obama also created another $17 trillion in unfunded health-care liabilities, which is about $216,000 of total new debt forced upon every working-class or poor family in the U.S. Health-care costs surged from $4,800 a year for a working mom with kids to $14,000 a year by the time Obama left office.
Trump had 50 years of work experience in real estate and construction before getting into politics. Trump understands that investing in real estate is a costly business because bureaucrats always want higher taxes on buildings, wages, land, water, sewerage, entertainment, etc. Trump has been an advocate of leveling the playing field for all investors and has stated this in public speeches for more than 20 years.
Barron’s Randell W. Forsyth recently said that a whopping 73% of the wealth of Americans who are in the top one-tenth percent is held in equity (stocks) of public or private businesses. If that 73% of the wealth of the top one-tenth percent is all publicly traded growth stocks without dividends, then there would be no income tax, sales tax, or capital-gains taxes on this stock equity until stocks are sold or an estate pays taxes.
Forsyth analyzed wealth-tax plans of Democrats seeking the presidential nomination who want to levy a 2% tax on wealth over $50 million or a 3% tax on assets over $1 billion.
The politicians running for president have a fundamental lack of understanding of the rudimentary legal differences in taxation on various types of assets and entities.
Example 1: Warren Buffett or Mark Zuckerberg can hold stock assets for 50 years and pay no tax on the value of the stock. If you own a home or car, you must pay tax each year on the value of the asset. Zuckerberg also could remarry an 18 year old when he is 90 years old, and the assets of the new marriage may not be taxed until his second hypothetical spouse dies.
Example 2: Warren Buffett or Google’s founders can put their stock in a foundation. The stock won’t be taxed for all capital gains during life or after their death. Imagine that! “Stock profits” of Facebook or Google going untaxed forever. If the foundation money is used to help eradicate poverty, homelessness and drug addiction, sure it is great, but it seems that government and charity are only spending a small portion of their revenues on those who need it.
I am not against entrepreneurs creating a company and selling stock for large profits and capital gains. However, many founders will never sell stock nor pay any tax on it. The brutal truth is that if a nation pays off the debt with a brilliant chess move, the “Santa Claus-minded politicians” would probably bankrupt Social Security again in just a few years with an equal or greater amount of new waste, corruption, and debt.
The solution for fiscal conservatives and sustainable-minded thinkers would be to put an “annual valuation tax” on the super wealthy who own securities or stocks which do not already pay assessment taxes. You could capture 1% per year of the value of stocks in the form of an IOU or pledge. Then, at death of the person or parents, the annual percentage would be “added up” and captured in the form of an estate tax. Further, this would only apply to assets over $50 million in stocks generally speaking. My plan would work, and it wouldn’t affect the ongoing economy or share prices.
Remember, Trump was fighting to get rid of some of the loopholes in the tax system in 2015 and 2016, including such escape hatches as hedge-fund tax breaks. However, getting Nancy Pelosi or Mitch McConnell to agree on big tax changes is going to be difficult for any president.
Overall, my wealth-protection and preservation-plan works. I simply call it the “Mentz Standard.” It actually collateralizes the debt without taxing anything from citizens until after they are dead. It is a pure mix of a property tax and an estate tax. The government could restructure tax on existing foundations to level the playing field for all. Instead of the gold standard, we would be on the “stock standard” with our money, pensions, health care and military backed by shares of Berkshire, Google, Apple and others.
As a fiscal conservative who is in favor of “laissez-faire” economic policies, I don’t like raising taxes on companies who employ millions of people. However, many of the billionaires who don’t pay taxes on their wealth are the largest users of the infrastructure maintained by working taxpayers.
My plan is also a “fair-use” infrastructure tax. If you look at your airline ticket, a tax on your travel home for a funeral can be as high as 20% or more of the ticket price. In the same vein, the biggest corporate users of our infrastructure should contribute to maintain the integrity of our governmental system, which is the “greatest in the world.”
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award winning author and advisory board member to several companies around the world in education, charities, and crypto currency.
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