Santelli's 'Tax-The-Wealth, Not-The-Income' Plan

Tyler Durden's picture

With the varied interests of constituents very much in mind, finding a compromise over taxation will be worse than Sisyphean in nature we suspect. CNBC's Rick Santelli offers a strawman, that gets around Norquist's 'pledge' and perhaps provides cover for both parties. The Chicagoan recognizes that what seems like a high-salary to some is very much not to others and suggests instead of focusing on the income, we should focus on the wealth. This is not the first time such a proposition was suggested (as we noted 14 months ago that 'muddle-through' was over and "we are confident, that one way or another, sooner or later, it will be implemented. Namely a one-time wealth tax: in other words, instead of stealth inflation, the government will be forced to proceed with over transfer of wealth") Strawman or not, the fact that Santelli is discussing it (and demurs on whether he has been contacted) means it is on the table...


The Pledge...

The Strawman...

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MachoMan's picture

I benefit from the complexity of the tax code, but I would love nothing more than to be out of a job because the tax code was so simple even a caveman could follow it.  When that day comes, I'll find something more productive to do... 

blunderdog's picture

Hey, if you know: I've been wondering if the whole "you must file" concept isn't unconstitutional by virtue of the Fifth Amendment.

Since I have no way at all to know whether I'm complying with Federal law when I fill out a tax form (ok, ok, assume for a moment I filled out a tax form), I could be testifying against myself when I sign my name to it.

Has that been tested in court already?

MachoMan's picture

Look at it this way.  If you have the right not to incriminate yourself.  And this right extends to your tax documents.  And these tax documents are necessary to prove you committed a crime, e.g. tax fraud.  Then how could the state ever prove its case against you when you exercise this right?

Needless to say, your tax documents will be punitively used against you all day.  This is a good start:  Long story short, the privilege would only apply to you speaking about your tax records or being forced to draft documents after the fact...  for the reason stated above (complete inability to ever prosecute).  The state is often retarded, but not that dumb. 

You need to assume that every which way possible to avoid taxes has already been tried.  Sometimes the big boys need to run a test case through, most of the time they wait and let the IRS figure out the loophole.  There are still a few glaring loopholes for the plebs (sec. 179, mileage deduction, etc.), but most of the doors have been welded shut.


blunderdog's picture

Yup, I definitely assume it's all been tried, just like to check on the specifics when I see folks who know better than me. 

I'll stick with the simple approach for now and just remain as poor as shit.

Thanks, BTW!

nugjuice's picture

A 20% cut in discretionary govt spending is a drop in the bucket of our problems and would solve nothing.

The problem is mandatory govt spending and the second you tell people you're taking away their social security and medicare the the second people label you a traitor and a thief.

While what you say sounds nice and dandy, and I'm all for making it simpler, I'm afraid the spending the govt actually has a choice over is a pittance compared to the real elephant(s) in the room.

Calculated_Risk's picture

Flat tax is still invasive to privacy and people that don't work, or work under the table get off. National sales tax (fixed forever), no income tax.

If you wanna be a pimp and buy 24" rims, go ahead. If we want to save,  we shouldn't be punished from the .gov for it by filing my private info,

and be the only one getting stiffed.

venturen's picture

And what lobbyist would be paying off your representatives for this plan?

MiltonFriedmansNightmare's picture

Tax the truly wealthy?

This agression will not stand, man.....

Off with his head, or better yet, his johnson. You are about to enter a world of pain Santelli, a world of pain.

Antifaschistische's picture

Wealth over $50 million - 10%
wealth over $100 million - 20%
wealth over &1 billion - 30%

The buffett tax plan! Sorry warren

azzhatter's picture

But Warren would only have $35 billion left. How will he survive

Bicycle Repairman's picture

I have to believe that Warren would recover quickly.  And the government and the sheep would go right back into debt.

blunderdog's picture

Can't happen.  There's no other economy that's NEAR big enough to soak up all that fleeing capital.  That's why the USA is still the top of the heap, and why the USD isn't going to collapse before any of the other major currencies.

Parrotile's picture

Sorry, there are PLENTY of countries that can easily absorb that magnitude of capital inflow, especialy right now. Just think what a "mass migration" of real, useful capital would do for economies of "certain European countries", and of course there's Asia.

However, the rapid movement of very significant amounts of capital out of the USA would certainly send quite THE signal to the World Markets that there was someting VERY wrong with the US System, and if you don't think China would immediately capitalise on this you must be sleepwalking, knowing full well that in the opposite situation, the USA would be demanding "first dibs" on such a useful bounty.

No mater how it's spun - any large scale migration of capital out of ANY country, is NEVER good for that countries image (financially), and since trading is more on perception (or should we say missplaced optimism) than hard data these days, you know the rest of that story, don't you??

blunderdog's picture

     Sorry, there are PLENTY of countries that can easily absorb that magnitude of capital inflow, especialy right now. Just think what a "mass migration" of real, useful capital would do for economies of "certain European countries", and of course there's Asia.

OK.  What would it do in your mind?

Seems to me it would help the governments of those countries maintain a failing economic model for awhile.  If all the rich folks in the USA emigrated to various countries in Europe tomorrow, they could help fund those countries welfare-states for some period of time--say a decade or two.  (I think you'd have to be sleepwalking to buy into the possibility that there'd be a mass-exodus of wealthy Americans to CHINA, but hey, you can make that case if you like.)

What does that CHANGE?  It just (potentially) alters the order in which the fiat currencies fail.

But the USA still controls the dominant *military* power.  If the US dollar BEGINS to fail before the Euro or the Renminbi, doncha think some other forces would start to come into play?

(I don't agree with you about the ability of other economies to absorb the wealth currently priced in dollars, but absent any data, there's no point in quibbling that.)

lasvegaspersona's picture

Think...where do the wealthy get the cash to pay that tax?...they SELL stuff!

What asset class do you want to see crater? 

With all that selling we will see prices of assets drop along with decreases in taxes on those assets. So in the end do we really get more tax revenue?

The solution is to let nature take it's course. Keep printing to hyperinflation. All debts will be paid with old 100 billion dollar notes that will be found in the trash cans of the nation when the new 100 trillion dollar notes are printed. I do believe this is the actual plan by those few in DC who understand what is really happening.

If I had the timing right I'd load up on debt now. Since I do not have that information....well I just sit with my thumb up my butt like everyone else.

Ain't central planning great?!

ejmoosa's picture

Oh I think Warren could stand a little more pain than that after all the spouting off at the mouth he has done the last four years.

tmosley's picture

Flak, you really and truly are a paragon of the death cult.

Flakmeister's picture

Don't you have some research to do on Endocrine Disruptors?

tmosley's picture

I'm sure you would jack off to such thoughts.  Anything that causes death and destruction seems to get you off.

Why don't you go punch a baby and leave the rest of us alone?

Kiwi Pete's picture

Bring in a 90% death tax on any amount over $1,000,000. Include Trusts. No exemptions. Problem solved!

tmosley's picture

Not quite.  That is just step one.  Step two includes the systematic hunting down and killing of all "rich" people.

Kiwi Pete's picture

Step 2 doesn't follow from step 1 where this has been done. Look at the UK. It's been a great way of removing unproductive family fortunes from society and spreading the wealth around. They certainly felt that massive accumulation of wealth by the Lords etc wasn't good for the country as a whole.The second and third generation generally squander daddy's legacy anyway so you're only speeding that along. The second generation may even be more productive if they have to work for a living. 

Also dis-incentivises the accumulation of great wealth - a lot of which is accumulated illegally. Perhaps society would be better off overall if people knew only so much could be passed on down the line.

Would America as a society be better off if the Kennedy's lost their bootlegging fortune on the death of Joe? Even if the Waltons lost most of their's on the death of Sam? It's hard to argue that the kids have been a deep well of inovation and entrepreneurial vigour.

catacl1sm's picture

I'm neither for or against this plan. I've often tried to think it through as well, but what happens to Wal-Mart and their employees when Walton dies?

DosZap's picture

I'm neither for or against this plan. I've often tried to think it through as well, but what happens to Wal-Mart and their employees when Walton dies?


R U Serious?, or been in a Coma?.

Sam has been dead for years.

His Board now runs the theft n' steal program at all of the WalMurts, and Sammy's.

They LOVE cheap crap, and they love to not pay vendors for 6mos after due dates.They set the prices their willing to pay,or YOU do not get to be a vendor/supplier.

Also, the Head Dik just gave uber millions to Unca Bammy.

Can u think of any other reason to NOT buy one thing from this evil conglomerate?.

Urban Redneck's picture

The is the insidious brilliance of REAL WEALTH.

The system you see is setup as one as one giant game of THREE CARD MONTE.

The sheeple love to believe that if they just turn "that" card over they will find the money card,

when in fact all they will do is sharpen the sheep shears.  


Don't believe me- go implement your system and bump off the Duke of Buccleuch- 

his estate won't pay, but yours most certainly will. 

blunderdog's picture

You don't get it...the American government was created SPECIFICALLY to protect those "unproductive" family fortunes of the early founders.

If a government was conceived for the purpose of benefiting the majority of the citizens, it would *deliberately* grant the poor political power, because there are always far more po'folk than rich ones.

lasvegaspersona's picture

and always eat what you kill...nothing like a little class envy to get the plebes riled up!!!

Kiwi Pete's picture

Class envy has nothing to do with it. I would say that most fortunes have been accumulated through luck or gaming the system. I know that's how the wealthiest families in NZ did. it. 

The richest guy, Graham Hart, made his initial pile by buying an under-priced State business that was sold off. He then levered that fortune up a couple of times by doing a few other deals. Now you can argue that he is entitled to that wealth as he saw the opportunity and had the balls to take it. But his kids cetainly didn't. And that money originally belonged to all taxpayers of New Zealand in the first place so why shouldn't we all get it back when he dies.

Look at our wealthiest family, the Todds. They made their fortune by owning a car assembly plant when car imports were tightly regulated. Only unassembled cars were allowed to be imported and the assembly in NZ created a lot of jobs. The problem was that the cost of a new car in NZ was twice that of one built and assembled in Japan. So their fortune was totally paid for by the New Zealand consumer being forced to buy their overpriced cars.

Now good on Todd senior (along with the misguided policies of the Government of the day) for screwing the rest of us  but should his family reap the benefits of this for generations to come. From speaking to an ex-wife of one of the kids all they do is sit around playing computer games anyway. Everyone would be better off if they lost the bulk of it when Todd senior died.

grunk's picture

The Feds are looking to seize the land from land rich, cash poor farmers.

This is the perfect mechanism.

Kiwi Pete's picture

Don't sieze it from the poor farmers. Wait until they die and they won't mind so much.

Here's some interesting numbers courtesy of RT:

While many millionaires got poorer in the last year, billionaires did just fine, overcoming market and economic turmoil.

The number of people with at least $30 million in their pockets grew to 187,380, while their total wealth fell 1.8 percent to $25.8 trillion – a sum bigger than the combined size of the U.S. and Chinese economies, the Wealth-X research company said in a report on Monday.

At the same time billionaires became even richer. Their number grew 9.4 percent to 2,160 people with the combined wealth of $6.2 trillion, according to the Singapore-based firm that provides intelligence on the ultra-rich to banks, fundraisers and luxury retailers 

Wait till they die and take it back. They might have earnt it but their kids certainly didn't.

catacl1sm's picture

And what about entities that don't die, like public corporations that will just suck up everything at auction when it's given to the government as the tax?

Oppressed In California's picture

I hear this kind of BS from the CPUSA

Catullus's picture

What income taxes tax production? It's not true. Comcast-owned MSNBC told me so!

gmak's picture

Great Idea!  Tax wealth, not income.  Many have been saying that for some time (including me). The wealth transfer has happened without corresponding increase in CONTRIBUTION to GDP by the wealthier classes.  Take some back, and PAY DOWN THE D*MN DEBT so that everyone benefits.  


Then stop spending money you don't have at gov't levels.  Reduce taxes. Encourage Saving. AND GET OUT OF THE WAY OF ENTREPRENEURS!

Beam Me Up Scotty's picture

"Then stop spending money you don't have at gov't levels."

Thats the whole problem in a nutshell.  There is NEVER ENOUGH spending, EVER.  Someone always has something that they think is important to spend money on.  I want the president to tell me exactly how much money will be enough.  Is it 5 trillion?  6?  7?  No matter what level of spending there is, government always wants to spend more.

We could balance the budget today, raise taxes 1.2 trillion and be in balance.  But that will never happen.  They would raise taxes by 1.2 trillion and increase spending by another trillion, and tell us how great everything is because they lowered the DEFICIT by 200 billion.  But then we would still have a trillion dollar deficit.  Would we be better off?  No.

They will raise taxes today, and any spending cuts will happen in so called out years, meaning they will never happen.

akak's picture

When it comes to taxation, governments firmly stand with the old MTV slogan: "Too much is never enough".

machineh's picture

Militarizing space could take all the wealth on the planet ... and STILL not be enough.

Taxing wealth is for gov lovers ... those kindly folks who want to fund THEIR projects with a gun to YOUR head.

disabledvet's picture

Actually the far larger problem if you are the President (who thinks in those terms, right?) is "if all the money I tax goes to servicing the debt how am I as President providing the benefit I wish to confer on my sheeple?" and the answer of course unless you allow pricing power to rise "you are in fact creating negative equity at the Government level." needless to say no sane capitalist wants to pour money into something that has negative equity...well, yes Rick. "taxes are going higher." Perhaps MUCH higher.

MachoMan's picture

The problem with taxing wealth is that wealth, in and of itself, does not necessarily provide any benefit (especially pecuniary) to the owner [aside from being taxed twice on the same assets].  What you have to do is treat all income equally...  do not engage in separate categories for everything...  this creates loopholes and unintended consequences (although very much intended by the folks actually drafting the law).  Then, whenever that wealth generates income, it is taxed to the extent of income.  You avoid double taxation this way...

lasvegaspersona's picture


don't worry...there won't be any ENTREPRENEURS! when they see that wealth will be taxed

MrPalladium's picture

Eisner v Macomber

States can do it, feds can't

DosZap's picture

Eisner v Macomber

 States can do it, feds can't


Dude,WHERE have U Beeeeeeeeeeeen?.

The feds can DO whatever the hell HE says they can.Matter of fact, check your MM Accts,IRA's & 401k's, likely would be deducted w/out ANY notice.

Cognitive Dissonance's picture

A tax by any other name (or contrivance) is still a tax.

<Time to load up on conditioner for all those split hairs.>

SheepDog-One's picture

YAY now come the tax increases! Hey as long as Wall St billionaires who really run the country never have to pay a dime, we're all good. Damn peasants stop lollygaggin around get back on those oars and ROW dammit!

Vince Clortho's picture

Exactly.  This whole economic fiasco could have been avoided if the peasants had rowed faster!

This must be severely distressing to the central planners.

SgtShaftoe's picture

There's no way they can tax enough, especially in the light of day.  If they did, the ponzi would be fully uncovered, and would be plain for all to see the unsustainability.  There'd be an armed, or financial insurrection almost immediately.  The only way forward is to print in ever greater orders of magnitude until the system explodes, or they default/devalue (but that would require honesty).  Bernank will increase asset purchases by the end of the year.  It's about to get real.