A tax on billionaires is fair, kind of

For the longest time Democratic socialist Bernie Sanders has been campaigning in his raspy Brooklyn voice for the rich to pay their “fair share.”

To my knowledge he never put a number on “fair share” and I could not go along.

Well, he has now and to my surprise I find myself in agreement. The Vermont senator, with California Democratic U.S. Rep Ro Khanna, introduced a bill to soak the rich hit billionaires with a special, extra tax.

Sanders’ “fair share” is a 5% annual tax that would be applied to billionaires. That’s billionaires with a B and America has almost 1,000 of them.

I like the idea, but it’s two cheers out of three. First, the bad news.

One point understandably fastened on by many news sources is a giveaway — a $3,000 check to every member of a household earning less than $150,000. That would mean $12,000 to a family of four earning less than $150,000.  

More than three quarters of American households would qualify, according to my AI search. The money would be shoveled out irrespective of need.

To me, this is unpalatable and the worst part of the bill.

It rains money on a huge majority while we all face a staggering $30 trillion national debt. Why not divert some of the windfall to reduce that?

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Quite a bit can be done with an estimated $4.4 trillion that would be raised over a decade.

Here are some highlights of what Sanders said the money can do:

• Fund the expired Obamacare tax credits and restore cuts made to Medicare
• Expand Medicare to cover dental, vision, and hearing bills
• Build, preserve, rehabilitate 7 million affordable homes
• $60,000 minimum annual salary for public school teachers
• Expand Medicare home health care for seniors and the disabled

Being as I generally oppose targeted taxes — such as the so-called soda tax and other sin taxes — how come I can swallow this idea?

For starters, I am onboard with a progressive income tax, by which people with larger incomes pay steeper taxes than people who earn less.

The policy supposedly  helps reduce income equality, and supports the principle of taxing according to ability to pay. The wealth tax would just be an extension of the existing progressive income tax.

As you probably know, I don’t have a degree in economics, but you don’t have to be Milton Friedman to understand the yawning chasm between rich and poor.

Today, 1% of the households control 31% of American wealth, and this is the greatest ever. Some call this the New Gilded Age.

Thanks mostly to a soaring stock market, the wealth of the  billionaire class rose last year by 20%, according to the left-leaning Americans for Tax Fairness.

I can’t vouch for that group, but I can tell you this: I can buy a very safe CD that pays 5% interest. 

Billionaires can do much better than that, but for the sake of argument let’s say they earn 5% on their investment — the same percentage as the proposed wealth tax. The two numbers cancel each other out, which means billionaires would not lose a cent because of the tax.

And, realistically, they can do much better than 5%. That means their fortunes would actually grow.

A 5% tax would change their lives in no way whatsoever, but it could fund some life-changing programs for the middle and lower classes.

Look at it that way and it’s fair, kind of.