Berko: Habit of robbing Peters will end in lack of Peters

Dear Mr. Berko: I have two questions.

First, what do you think of a wealth tax, as advocated by economist Thomas Piketty, on those Americans who have substantial assets as a way of restoring financial equality to America and paying down our huge national debt?

My contemporaries and I believe that XXXX was born to be president. XXXX has all the presidential skills, has the necessary experience, understands what America needs and is trusted by Congress and the voters. We love America and hope you’ll endorse XXXX in your column as you have past presidential candidates. Could I also persuade you to write a check for XXXX?

— S.B., Akron, Ohio

Dear S.B.: Your request is early and egregiously wrong.

I get an avalanche of emails and letters during the summer of each presidential election year asking me to endorse a candidate. And my response is always: “Please don’t waste time seeking my approval, because I won’t respond.” In the 40 years of writing this column, I’ve commented on economic and political events that have affected the market, but I’ve never endorsed a political candidate. I’m glad that you zealously support your candidate, whom you believe “was born to be president.” But from my observations, politicians are not born; rather, they’re poured from the contents of colostomy bags. I’d send a contribution if it would stanch the stench, but checks from people like you and me to a candidate are only crumbs that end up (tax-free) in the candidate’s pocket. The enormous contributions from Fortune magazine’s richest American families, on the other hand, buy an easy influence that even the pope might envy.

‘Wealth tax’ gaining favor

The wealth tax was first proposed by Ronald McKinnon in a 2012 Wall Street Journal article. McKinnon was a professor at Stanford University for more than 50 years and wrote extensively about monetary systems, economic development and finance. He died last year and is best-known for developing his theory of “financial repression,” which he believed explains the disparities in economic development among individuals, social groups and nations. Thomas Piketty, a French neo-Marxist, has borrowed extensively from McKinnon’s ideas and has been significantly more eloquent at marketing this philosophy than McKinnon.

The attractiveness of an annual “wealth tax” seems to be growing. Thanks to the recent financial crisis, government borrowing has exploded. The Federal Reserve’s quantitative easing has issued over $3 trillion of new debt, while private-sector debt has increased 133 percent since 2010. And in most industrial countries, total debt as a percentage of gross domestic product is 50 percent higher than it was prior to the financial crisis. So when shove comes to push, those with the means will be told they have to pay more to the piper.

The U.S. has about 9.6 million households — about 8 percent of all U.S. households — with a net worth (assets minus liabilities) of more than $1 million, and about 4 million households have a net worth of $2 million or more. Tommy suggests that those with less than $1 million would pay no tax. Those with $1 million to $5 million would pay a 1 percent annual tax. And those above $5 million would pay 2 percent annually. Tommy believes that this would bring in about $300 billion — only a bit less than the $358 billion the government gets from corporate income tax receipts.

Under the right economic and fiscal circumstances, Piketty’s wealth tax could emerge from our manicured, beautifully coiffed and finely tailored members of Congress, who, for as long as they live, will never worry about their personal pensions and retirement income or their costs for health care, life insurance and college tuition.

Tommy also wants this tax paired with a higher tax on personal and corporate income. And as the shift in the political power base continues to cultivate those who have failed economically, their demands are becoming the tribunal of opinion and eventually will be made into law. Tommy’s Marxist, Santa Claus philosophy espouses equal opportunity from the starting block to the finish line. Most Americans support equal opportunity to succeed, as long as it comes with equal opportunity to fail.

However, I sense this is changing. And if Congress continues to rob Peter to pay Paul, fairly soon we will run out of Peters.