Taxing the 1% with 1%

Howdy comrades. I didn't have much taxation planned for today, but I want to keep up with the "every other Monday schedule" that I seem to be having, so here's this: we'll use 4 different 1% taxes to raise over $10 Trillion over the next decade. Here's how:

Wealth Tax

As I've done earlier on my blog, I've analyzed Senator Elizabeth Warren's wealth tax to reverse engineer my own wealth tax. In that post, I found that a 1% wealth tax (administered as an Estate Tax registry fee or as an increase to the Alternative Minimum Tax) would raise $1208 Billion over the next decade.

This Option: $1208 Billion
Running Total: $1208 Billion

Financial Institution Coverage Fee

It's not technically a tax, but a "user fee" for the users of the FDIC's orderly liquidity authority. In other words, it's an insurance premium the banks would pay to insure their deposits. If a 0.15% fee on institutions with over $250 Billion in assets would bring in $90 Billion over a decade, a 1% premium would take in $600 Billion over the next decade (90 / .15 = 600).

This Option: $600 Billion
Running Total: $1808 Billion

Corporate Debt Tax

Corporations have a lot of debt. As of Q1 2020, the Federal Reserve of St. Louis has accounted for $10,492 Billion of nonfinancialized debt. If debt stays steady, 1% of that in 1 year would be $104.92 Billion. Assuming debt levels stay where they are now, decade revenues total $1,049.2 Billion. This tax could be implemented as an increase to the corporate income tax. Debts are likely to rise, so revenues are likely to be higher.

This Option: At least $1049.2 Billion
Running Total: $2857.2 Billion

Financial Transaction Excise

According to a CBO analysis, a 0.1% would bring in $776.7 Billion over the next decade. Currently, the Securities and Exchange Commission imposes a 0.0013% to cover its operations, so an increase to 1.0013% could be easily accommodated. As the CBO notes in its analysis, the scaling isn't perfect. If we assume a 99% scaling for every increase of 0.1% (meaning the increase has a 1% reduction in revenue/a 10-fold reduction in activity in comparison to the increased cost of transacting) (Disclaimer: I have no idea if this is correct or not or what), then an increase of 0.9% would mean a (0.99^9) 91.35% scaling factor on the increase from 0.1% to 1%. This would mean the total 1% tax would bring in (776.7 x 0.1 x 0.9135) $7095.1545 Billion over the next decade.

This Option: $7095.1545 Billion
Running Total: $9952.3534 Billion

Conclusion

I used 4 taxes of 1% each to raise almost $10 Trillion. 1% is a marginal change that wouldn't change much. Don't ever let anyone tell you that "we don't have the money" for anything the government could do to help its citizens.

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