Donald Trump has a new tax proposal: Tax the very rich on their net worth and use the money to pay off the national debt; stabilize Social Security and reduce taxes for the middle class. Although the idea sounds great at first, realistically it would benefit the very wealthy and might hurt the average American.
Trump, a prospective candidate for the Reform Party presidential nomination, revealed his plan in a series of television and radio interviews over the last few days. Given the actual feasibility of the plan, it appears to have little value beyond garnering Trump a lot of publicity.
The plan calls for people and trusts worth $10 million or more to pay a one-time 14.25 percent tax on their net worth, with the exception of their primary residence. Initially, Trump had called for the payment to be made over the course of one year but has now lengthened the time frame to 10 years.
The likelihood of the plan ever passing Congress is about zero. Initially, Trump is a long shot for the presidency. He has not even won his party’s nomination, and Gov. Ventura is the sole politician elected to a statewide office under the Reform banner. In addition, regardless of which parties win majorities in the House and Senate, it would be nearly impossible for Trump to get enough votes to pass the plan.
The plan is not just politically difficult; it also carries very high risks for the nation’s economy. The vast majority of stocks are owned by the very people who would be affected by the plan. If they were suddenly forced to sell their stocks to pay taxes, the stock market could crash, leading to economic chaos. “If you think this is a bubble in the stock market, this is a sure way to prick it,” said Mark Zandi, chief economist at a Pennsylvania economic consulting company. A stock-market crash would likely hurt middle- and lower-class America the most, as businesses would decrease wages and lay off workers in an attempt to minimize the damage of a crash.
Beyond the possible havoc the proposal could wreak on the country, it is ultimately self-serving for Trump. While the plan would be a huge hit for the rich, it would only occur once. After that, Trump plans to drastically reduce income taxes for all income groups, and to eliminate the inheritance tax. For those who are worth $10 million or more, the one-time payment will likely be made up in only a few years, allowing enormous profits to be realized after. For Trump, who estimates his net worth at about $5 billion, this plan would truly be a blessing in disguise. The elimination of inheritance taxes would also be a huge benefit for the wealthy, who would then be able to easily pass on gigantic amounts of money to their children with no tax penalty at all.
While it is possible Trump truly has not considered the ramifications of his plan, his willingness to advocate this idea creates some doubt about his qualifications for the presidency. A leader must be able to stand up for unpopular ideas, but Trump’s tax proposal seems more like a publicity stunt than an earnest recommendation for the country. Eliminating debt and strengthening Social Security are admirable goals, but Trump’s plan is dangerous and poorly thought out.