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All billionaire wealth funds one year
The math
An asset tax does not move the needle on federal spending. America's total net worth is $183 trillion, and $160 trillion of it sits with the middle class.
Three unpopular paths
Closing the gap takes one of three paths: taxing the middle class, cutting spending massively, or restructuring the entitlement programs. All three are deeply unpopular, and when the only path left is an unpopular one, the question comes to a head.
Crises ahead
Social Security is the first looming crisis. Interest rates and their effect on affordability are the second, and the asset tax idea is the third. The pressure is likely to peak between 2026 and 2028 and shape the political calculus going into 2028.
Why can't billionaire wealth simply be spent?
Most billionaire wealth is held as shares in companies, not as cash. Those shares are often unrealized gains, meaning the owner has not sold them. Selling a large stake all at once would push down the share price, so the stake would be worth less than its listed value. Lists such as the Forbes 400 estimate net worth from stock prices, not from money in the bank.
Why does Social Security face a shortfall?
Social Security is funded mostly by a payroll tax of 12.4 percent of wages up to an annual cap, split evenly between employee and employer. Benefits for current retirees are paid largely from the taxes of current workers. The ratio of workers to beneficiaries has fallen from about five to one in 1960 to roughly three to one in recent years. The program's trustees publish a projection of its finances every year.
Why would a wealth tax face constitutional debate?
Article I of the Constitution requires that direct taxes be apportioned among the states by population. In 1895, in Pollock v. Farmers' Loan and Trust, the Supreme Court struck down a federal income tax as an unapportioned direct tax. Legal scholars disagree about whether a tax on net worth would count as a direct tax under that clause. The Sixteenth Amendment, ratified in 1913, exempted income taxes from the apportionment requirement.
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