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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MsCreant's picture

Does the Fed pay taxes? It is a private bank, right?

dadichris's picture

the private banks behind the Fed do not pay taxes on interest income earned from conjured money, as I understand it.

MiltonFriedmansNightmare's picture

You don't really think the Rothchilds pay tax, now do you?

blunderdog's picture

It doesn't, no, it's kinda like a non-profit.  It pays its "surplus revenues" to the Treasury.

Savyindallas's picture

bull- they'll never show a profit, but that won't keep them from owning all our homes, farms, businesses, etc. at a loss (conveniently covered by a computer entry) when they crash our economy. Theyre not buying half a trillion a year of mortgage backed securities because they fear they will have to pay profits to the treasury. And even if they do ever pay the government profits  -they own the fucking government. It won't help us a lick.

blunderdog's picture

Silly.  Banks don't WANT your shitty homes, farms, and businesses.  That's *not* why the Fed is doing what it's doing. 

They're trying to protect their current membership.  If things go too wrong too fast, they know full-well government has the "legal authority" to strip them of power.

This is a simple enough conflict, but not many folks have snapped to it.  It's bankers against the world, and they're NERVOUS.  They are not in a strong position right now.  Most of the industrialized world would jump at the chance to elect an FDR at the moment.  (Don't bother shrieking about how horrible that'd be--I'm not offering a value judgment, it's just an OBSERVATION.)  The Hollande election is an important datapoint. 

If such a thing happened, it would be a disaster for the handful of folks who currently own the planet.  The Fed will side with the Nazis or La Raza or Iran way before it'll start allowing nominal valuations to fall, and the only way to protect nominal valuations is by killing the dollar.  The proportionate distribution of "money" is what's cruicial to maintain.

If the folks who own the banks wanted your puny assets, they'd already have bought them, and you'd have been thrilled to death at the opportunity to cash their check.

orangegeek's picture

Tax the wealthy is doable.


It's called defaulting on bonds.

in-Credible Banker's picture

Evidently our man Rick has been spending rather than saving his trading profits, therefore has zero or negative net worth.  For those of us who have saved a couple mill he can up and and kiss my ass.  Ain't nobody confiscating yours truly's wealth.

MsCreant's picture

Then, kind sir, you would be wise to observe OPSEC.

Savyindallas's picture

If you only have a couple of million, you have nothing to worry about.  I'd take a big chunk of Robert Rubin, Bud Paulsen, Lloyd Blankfein, John Corzine, George Bush, Dick Cheney,Nancy Pelosi, John Boehner,  Bill and Hillary Clintons money in a heartbeat. If that makes me a Communist -so be it.

FrankDrakman's picture

This, of course, is exactly what Keynes suggested, lo those many years ago. It's a pity so few here actually read the guy. He was very much in favour of the entrepeneur class - you know, the people who actually do something, create jobs, etc., - and not at all in favour of what he deemed the 'rentier' class - those who lent out money, and as we old-timers used to say, 'clipped the coupons'. His solution to gov't revenue problems was a tax on wealth, or a 'capital levy', as he called it. But he was not going to count your stock market holdings, or if a sole proprietor, the value of your machinery or plants; he was interested in taxing the money holdings - bonds, cash, bank accounts. The idea was two-fold - to get money for the government to pay for expenditures, but also to encourage 'dead capital' to get out and moving again.

And since Keynes was, to put it mildly, a snob, he would be horrified by an America where 47% of the populace were on the dole in one way or another, and clamoured for even more of the rich's wealth. Dismissing Marxism, he wrote

"How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement? "

Waterfallsparkles's picture

Santelli is right.  If they taxed the value of Stock holdings then there could be lots of income raised.  Even on the State level they tax a Companys Personal Property.

After all they Tax Real Estate every year, which is in effect an asset Tax for revenues to run State Governments.  In Baltimore City the yearly tax rate is 2.38%.

I would love to see Buffet live long enough to see his reaction to taxing all of his Stock holdings every year.  Even at 2% a year.  Bet my bottom dollar he would not be for THAT Tax.  He is only for Taxing every one because his actual income is low.  All of his money is in Stock assets which are not Taxed.

ejmoosa's picture

So you can keep working and we won't raise taxes on your current income.

But on your old income you did not spend on crap, we are going to tax.

Fuck that! 

That equates to an anti-consumption tax. 

Consume or be taxed?  Is that the new strategy?


Seasmoke's picture

are we still talking about this ???

yrbmegr's picture

Isn't that what Santelli calls the "death tax"?  Was he against it before he was for it?

grunk's picture

I think I've seen this movie.

It's called "Doctor Zhivago."

The funniest part is where they say: "a one-time wealth tax."

One time? Bwahahahahahahahahaha!!!!!!!!!!!!

Fool me once, shame on you, fool me, er, uh, fool me twice, uh, Won't get fooled again!

flacorps's picture

First, a constitutional amendment that whatever government impositions occur outside the beltway must be doubled inside the beltway. After that let them do whatever floats their boats.

hankwil74's picture

Fuck Republicans for putting their idiotic pledge to Grover fucking Nordquist over the good of the country.  God for bid they ever do anything responsible.

Thisson's picture

You need to do the math.  There is no way out of this problem via raising taxes.  The spending is so big, that it completely dwarfs all revenue sources such that tax increases cannot plug the gap.

DosZap's picture

You need to do the math.  There is no way out of this problem via raising taxes.  The spending is so big, that it completely dwarfs all revenue sources such that tax increases cannot plug the gap.


IF they took 100% it still would not make a dent.

Grasping at straws, likely HE will do both.............increases, and stea, er' deduct.

optimator's picture

How about simply taxing, even 10% on billionaires s inheritance taxes, or closing the loopholes that let them pay no taxes?

Abraham Snake's picture

Wikipedia claims a staggering 83% of federal tax revenue comes from income taxes and SS/medicare withholding, paycheck scalping if you will, and those huge mountain sized piles of income scalps isn't nearly enough anymore. More paycheck scalping will hurt the vast majority of the public, will likely trigger widespread anger and produce negative social and economic outcomes. Cutting spending seems like a sensible approach, but all the really expensive outlays are untouchable. So how can the federal government get more money? Right now they're essentially printing it, OK for now, like a gigatron impact asteroid a few years away is OK for now. FYI, It's not OK.

So, income scalping is out, spending cuts are out, endless printing is out, what is left? What about obscenely hoarded and essentially unproductive wealth? Barely taxed corporations are sitting on lots of OHEUW Mitt is hiding OHEUW offshore. What is the likely outcome of a modest tax on OHEUW? Will it fence the fiscal cliff? Will it Atlas Shruggle those few of the OHEUW?

Since it looks like the OHEUW are calling all the shots and pulling all the strings, we'll probably have a severe Brazilian income wax legislated upon us.

spooz's picture

All they have to do to make this acceptable is to figure out how much wealth is exempt.  A wealth tax should be aimed at the elites, not the merely well off. Add in a financial transaction tax, and maybe we can reverse the inequality a bit.

I don't know too many people who are unhappy with Obama's idea of extending the Bush tax cuts for incomes under $250,000 either.  Guess I'm too middle class to understand why letting them expire for higher incomes is a problem.  Maybe Boehner can explain that to me.

"The president wants to let George W. Bush-era tax cuts lapse on income of individuals above $200,000 and of married couples above $250,000. That would push the top tax rate to 39.6 percent from 35 percent."

Snoopy the Economist's picture

How can a tax of any kind be the answer? The more $ govt gets the more they spend. The problem is spending - not income.

spooz's picture

The problem is crony capitalism, where every good piece of legislation (SNAP for poor) is tied to a crony handout (subsidies for Big Ag).

"Combining food-stamp and crop subsidies in Farm Bills creates a logical disconnect. Farm subsidies make all consumers, including food-stamp recipients, pay more for groceries. Yet a majority in Congress fails to see the irony in paying row-crop subsidies that reduce the purchasing power of food stamps as they help drive up the costs of the food-stamp program."

topspinslicer's picture

NO NO NO NO A THOUSAND TIMES NO!!!!! Because with big brother it is never just one time!!!!!!!!!!!!!!!!!!!!!

spooz's picture

Sounds like elite propaganda.  The libertarian utopia is a fine hiding place for vast stores of wealth.

Bicycle Repairman's picture

The "wealth tax" would only hit people with estates over $4 million.  LOL.  What shit.  Those people have no idea how to hide their wealth, right? And the threshold would never be lowered, right?

Here's your wealth tax: a sales, VAT or carbon tax.  So basically anyone who paid taxes on their income and saved can pay more on their savings when they spend them. 

Fuck that.

More money fed to the machine simply means more money to be consumed by the machine.  Cut spending.  If the people @ ZH don't get this, then America is 100% dead.

spooz's picture

And your solution leaves us looking like a third world country.  So much better than "dead", whatever that means (sounds good, though).

Bicycle Repairman's picture

If we cut military spending deeply, I doubt if that would make the USA more of a 3rd world country.  But look around.  Vast stretches of America are 3rd world, and a lot of it always has been.

MeBizarro's picture

Up until even 1960, yeah it was including huge areas with no indoor plumbing, water, or electricity.  

WizDumb's picture

Rick Santelli just created a new plank for the COMMUNIST party...

WizDumb's picture

That would hobble U.S. Citizens...the rest of the worlds people would have such an advantage over us...
Evil idea.

topspinslicer's picture


topspinslicer's picture

I thought Rick was the good cop?

holdbuysell's picture

If I understand correctly, the elite don't own the vast majority of their wealth; they control it. Look at Gates, Buffet, Rockefellers, etc. They donated much of their wealth to non profits that they control.

Seems this control vs. own would get around this tax in a heartbeat.


Lord Koos's picture

Because wealth is a lot easier to hide than income.

"what seems like a high-salary to some is very much not to others"

Because it's a bitch to make ends meet on only $250k a year...

Debugas's picture

taxing capital (especially non productive one) instead of taxing labour IS EXACTLY WHAT IS NEEDED to redistribute wealth in a more fair way

But of cause the government will abuse it as it always does.

WizDumb's picture

taxing wealth is COMMUNIST...
it is akin to their platform of NO INHERITENCE
Whover voted down my comment man up to it ...commie

WizDumb's picture

taxing wealth is COMMUNIST...
it is akin to their platform of NO INHERITENCE
Whover voted down my comment man up to it ...commie