I spent a little time at the Idaho West Valley Fair last week. I put in a few hours at the Convention of States Action booth explaining what we’re trying to accomplish to fair goers. As an attention getter, we had a big-screen TV displaying the Debt Clock in real time. It showed that our national debt had just passed 40 trillion dollars, and continues to go up by about a million bucks every 20 seconds!
Virtually everyone who stopped by the booth was appalled at our astronomical debt. Most saw it as a spending problem. But a few people, had an alternative theory – that it’s a problem of revenue rather than spending. They insisted that our federal government isn’t spending too much. The problem is that it’s taxing too little – especially for the upper income brackets.
One particularly animated fair goer took the time to debate his position that we’re working on the wrong side of the “money in vs money out” equation. He pointed out that during the Eisenhower administration, our top income tax rate was 92% and we had a balanced budget. But after a string of tax cutting Presidents, starting with John F. Kennedy, our debt has exploded. He insisted that our high number of billionaires, and even on on-again off-again trillionaire, are an indication that the wealth is not being shared fairly – thus creating our debt crisis. He assured me that all we have to do to stop that debt clock from ticking off numbers with 12 zeros behind them, is to make the rich pay their fair share.
Where have I heard that before?
Putting aside the obvious moral question of whether a majority of citizens are entitled to take the property earned by a minority of citizens; could his plan even work? Do the guys with the private jets and their names on big buildings have enough money stashed to balance Uncle Sam’s checkbook?
My being an engineer, I figured math could answer that question. I came home from the fair, got out my calculator, and started looking up numbers.
Since this was going to be a feasibility study, and not a redesign of the federal tax code, I decided to avoid getting in the weeds with tax brackets, realized vs unrealized capital gains, and Incentive Stock Options vs Non-Qualified Stock Options. I’d keep it simple: Could the government balance its budget if it redistributed (to itself), the wealth of every American with a net-worth that required nine zeros or more to express?
According to Americans for Tax Fairness, the United States has between 935 and 985 billionaires. That number is a bit squishy because it changes when the stock market moves. Those billionaires have a collective net-worth of about 9.2 trillion bucks. If we were to seize every penny of their wealth (which is way more than my fair buddy was suggesting), would it make America fiscally sound for the foreseeable future?
Unfortunately, our federal government is currently racking up debt at a rate of $1T every 100 days. At our current spend rate, billionaire/trillionaire wealth “redistribution” would only balance the federal government’s budget for 920 days – just over 30 months. Then that debt clock would be back to screaming an additional 3 trillion dollars of debt every year – assuming Congress doesn’t increase its spending binge above current levels. Maybe it’s just me, but I don’t think that assumption is particularly sound.
Clearly, to solve the debt problem by making the rich pay their fair share, we may need to dig a bit deeper in our pool of rich people.
Fortunately, according to Ramsey Solutions, America has 24 million millionaires (i.e. rich people) subject to the Internal Revenue tax code. They have a combined net-worth of 113 trillion dollars! Surely that’s enough to balance the budget until Yellowstone erupts and renders the problem moot.
According to my calculations, if we seized “redistributed” the wealth of America’s millionaires/billionaires/trillionaire, we could balance the federal budget for another 31 years. Voilà, if we just take the stock holdings, 401K’s, IRA’s, and home equities, of 1 in 14 Americans, our government wouldn’t run out of other people’s money until it’s my granddaughter’s problem to solve! Of course, if we did that, she wouldn’t be very happy with dear old granddad.
But that simple calculation doesn’t account for one teensy little problem: We will have killed the geese that lay the golden eggs. Those “rich people” have a high net worth because they own stock in the companies which they built. That’s what stock ownership is – shared business ownership. When they liquidate assets to pay the taxman, they will be liquidating our future economic development – our children’s jobs.
My simplistic calculations convinced me that our government doesn’t have a revenue problem. It has a spending problem. In fact, every time taxes have been cut since the 1960s, government revenues have gone up, proving that Arthur Laffer was on to something. Unfortunately, every time revenue went up, Congress took that as a greenlight to spend even faster. Hence our approaching economic Armageddon.
Every fairgoer, regardless of their political allegiance, looked at the debt clock and said the same thing. “That can’t go on.”
They were 100 percent right. What can’t go on, eventually won’t go on. It will either end gracefully, or catastrophically. We can either stop our runaway government spending now, or leave our grandchildren to experience what “economic collapse” looks like.
Unfortunately, neither political party seems interested in solving our debt problem – making the states are our last hope. Either the states will step up to address the problem (such as through an Article V Convention) or we will all eventually suffer the catastrophic consequences.
[Image generated by ChatGPT]
Author Bio: John Green is a political refugee from Minnesota, now on strike in Galt’s Gulch – which the locals call Idaho. He is a retired engineer who spent much of his career applying engineering principles to organizational development (yes, really). He has written for The American Spectator, Convention of States Action, and American Free News Network. He can be reached at greenjeg@gmail.com.
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