This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A Tax the Wealthy Can Get Behind

NEW YORK (TheStreet) -- Trapped in a bitter conflict the wider public tunes out, politicians have lost sight of one key to unlocking a "Grand Bargain" in America's long-smoldering budget fight.

This country's small yet powerful investing class might now enthusiastically support an "extraordinary" one-time tax on net worth, if it's accompanied by profound reform in the way our government spends money, monitors its finances, and treats those seeking to create, preserve and protect wealth.

Implemented consensually and not via populist-inspired confiscation, a new compact toward shared prosperity just might work fast enough to convince frightened global investors that the U.S. can regain economic sanity.

A Case for a Tax on America's Wealth Mountain

The U.S. continues to operate out of fiscal and monetary control.

If America were deemed a "developing" nation and were no longer able to create securities accorded value on global markets, the International Monetary Fund long ago would have screamed at Washington politicians.

Even with benefit of global support for blank checks written by the Federal Reserve, there is no credible way of paying off the U.S.'s enormous debt if we rely on increased income taxes alone.

The table below shows how much total collections of personal income taxes would have to increase to close the Federal Government deficit for each of the years from 2002 through 2012.

Figure 1: Absolute Value of the Federal Deficit as a Percentage of Personal Income Tax Receipts

Source: Bureau of Economic Analysis National Income and Product Account Table 3.2 Federal Government Current Receipts and Expenditures. Note that figures used in calculating the Federal deficit are total expenditures and total revenues shown in the Addenda section of the table.

Yes, from the depths of fiscal depravity in 2009, politicians made "progress" reducing the federal deficit. Still, America remains far away from proving we manage our own government finances using a semblance of prudence.

Even with goodwill in Washington, no set of politicians now will vote for doubling personal income tax collection to close a $1.1 trillion gap between the 2012 run-rate for federal expenditures and federal receipts.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs