Recently-announced presidential candidate Donald Trump has considered running for the presidency before. One of his more memorable taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. policy ideas came in 1999, when he proposed a one-time 14.25% wealth taxA wealth tax is imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary. on those with a net worth of over $10 million. He said that the tax would raise over $5.7 trillion, wiping away the national debt. While everyone loves an easy fix, this proposal was poor tax policy.
Assets are mostly illiquid, meaning people own property, businesses, cars, gold, and other valuables that aren’t in money form. This one-time tax would require many millionaires to sell off physical assets in a very short period of time. Even If this were possible, liquidating $5.7 trillion worth of assets would be catastrophic for the economy.
Citizens deserve sound tax policy, which includes stability and no retroactivity. One-time revenue raisers are proposed frequently, but they are unfair and cause people to change their behavior in response to an unpredictable policy environment. In the future, Mr. Trump should look into adopting stable long-term sources of revenue.
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