Kerby Anderson
Yesterday, I talked about the reality of rising Federal budget deficits. Politicians are going to be looking for additional sources of revenue to keep the government running. They will notice that more than a quarter (27%) of all the wealth in America is held by Americans over age seventy.
Over the next quarter century, there will be at least $84 trillion transferred. About $11 trillion will go to philanthropic endeavors. The remaining more than $70 trillion will be transferred to heirs.
Most of this wealth has been earned, and the Americans who earned it should be able to decide what happens to it. But a government starved for revenue will also see this as another source of government income. All politicians would need to do is raise estate taxes and raise capital gains taxes so more money will flow into the federal government.
The trick will be to convince Americans that these policy changes will only affect the rich. It is a variation of the “tax the rich” slogan we talked about yesterday. But here is the catch. Most of that $84 trillion is not in the hands of the super-rich.
In her recent book, Carol Roth has a chapter on “The Upcoming Wealth Heist.” She runs the numbers on the top eleven wealthiest individuals in America (like Elon Musk, Jeff Bezos, and Bill Gates), whose collective estimated wealth is about $1.2 trillion.
That is a significant amount of wealth. But it’s merely a fraction of the trillions that will be transferred by upper-class and middle-class Americans. We are talking about many Americans who don’t even think of themselves as wealthy who will be transferring stocks, bonds, farms, businesses, and other assets to their children and grandchildren.
Once again, you can see this variation of “tax the rich” will ultimately be taxing many more Americans than you might have imagined.

Kerby Anderson
Federal budget deficits are rising faster than anyone would have imagined. About the only way to reduce spending would be to reform Social Security and Medicare. Congress doesn’t seem to be interested.
Politicians need to find enough money to keep the government running and will find that more difficult in the future. Bloomberg recently announced, “US Debt Interest Bill Rockets Past a Cool $1 Trillion a Year.” When the interest payments on the national debt rival the total amount we spend on defense, you know we have a problem.
One slogan we will hear is to “tax the rich.” Brian Riedl has run the numbers and concludes it won’t be nearly enough. For example, “Seizing every dollar of income earned over $500,000 wouldn’t balance the budget. Liquidating every dollar of billionaire wealth would fund the federal government for only nine months.”
In his study, he set upper-income tax rates at their revenue-maximizing level. He then matched that by reducing the loopholes and tax evasion used by the wealthy. His research shows that the “tax the rich model would only raise at most two percent of GDP in additional revenue.”
He understands if you are skeptical, because most Americans do not realize that the US tax code is already the most progressive of more than three dozen other developed countries. Put another way, the US “taxes the wealthy at European rates, while taxing the middle class at considerably lower rates.”
Other countries can do that because they have a hidden tax on their citizens known as the value-added tax or VAT. It is a consumption tax assessed at each production state of a good or service.
That is why we may hear about a VAT on the middle class in the future, because “tax the rich” is a financial fantasy.