The Rich Should Pay More : Economy: A wealth tax would be the most equitable and practical way to raise revenue.

President Clinton wants to stimulate the economy and control the deficit. He obviously needs to find more tax money and is now reportedly considering a surtax on incomes over $1 million. There’s a better answer, one that will raise a lot of revenue, require the wealthy to pay a fairer share and mightily please the people who elected him. It is a wealth tax.

During the 1980s, the rich got richer and the poor got poorer. Even a 1% gain would have been a large increase, but it was not a 1% gain. The wealthiest 1% of our nation increased their share of wealth we all hold from 31.3% in 1983 to 37.1% in 1989. With such a distribution, $100 divided among 100 people would give $37 to one person and 64 cents each to the other 99.

Suppose we adopt a 4% wealth tax with an individual exemption of $500,000; this should more than cover the “basics,” like equity in a home and savings for college.

Now consider a couple worth $1.5 million. After deducting $1 million for two exemptions, a 4% annual wealth tax would cost them only $20,000. Yet such a tax would raise $225 billion a year. With 1992 federal individual income taxes projected at $480 billion, a wealth tax could go toward cutting personal income taxes by almost half or toward reducing the debt.

Ross Perot said that rich people should pay more taxes. A recent Gallup poll found that three out of four Americans agree.

Thanks to federal policies adopted during the 1980s, the disparity between rich and poor is growing. Are we exchanging our democracy for a plutocracy?