Nov/Dec LD Mini Topic Analysis

Table of Contents

• DEFINITIONS

• The U.S Tax System

  • Wealth Tax System

  • Affirmative

  • Negative

October is over. That means a new resolution is easing its way into place for debaters. The November/December topic chosen was straightforward and bound to be enjoyed by both novices and experienced debaters

The resolution is: “The United States ought to adopt a wealth tax.” Pretty simple right? Well, there are a lot of complex implications tied to the topic. No worries though! That’s what we’re here for. Let’s break this resolution down:

DEFINITIONS

Okay, so the resolution is essentially saying that the Federal Government has an ethical obligation to implement a policy where tax is based on what individuals own (AKA their net worth). Let’s go deeper into what that entails

The U.S Tax System

First, let’s explain how the U.S currently taxes individuals. In America, there are a variety of taxes but the important ones for this topic are the federal income tax and property tax. individuals are taxed based on their annual income and property.

• Federal Income Tax: Levied on individual income with a progressive rate structure where higher incomes are taxed at higher rates.

• Payroll Taxes: Fund Social Security and Medicare, taken directly from wages.

• Property Tax*: Levied on real estate by local governments, based on the value of the property.

(*Some consider property tax a form of wealth tax since they are based on real estate value. There is also an estate tax that applies to high-value estates upon death, but this contributes a small portion to total tax receipts)

Wealth Tax System

A wealth tax is charged on an individual’s net worth (Assets - Liabilities). This tax targets the overall wealth of individuals rather than their income. Assets subject to wealth tax can include: cash, bank deposits, stocks, real estate, vehicles, and retirement accounts.

Some Key Features of a Wealth Tax:

1. Calculation of Net Worth: Wealth tax assesses what a person owns (assets) minus what they owe (liabilities). For example, if someone has $500,000 in assets and $50,000 in liabilities, their net worth is $450,000.

2. Types of Wealth Taxes:

- Ad Valorem Taxes: Typically applied to real estate based on its value.

- Intangible Taxes: Applied to financial assets like stocks and bonds.

3. Global Context: Currently, only five OECD (The Organization for Economic Co-operation and Development ) countries—France, Norway, Spain, Switzerland, and Colombia—impose a net wealth tax. The number of countries with such taxes has decreased over the years, from 12 in the early 1990s.

Let’s visualize the difference:

Consider a taxpayer with an annual income of $120,000, resulting in an income tax liability of $28,800 at a 24% rate. If the same individual has a net worth of $450,000 and the wealth tax is also set at 24%, their tax liability would be significantly higher at $108,000. However, in practice, wealth tax rates may generally be lower than income tax rates, as seen in France, where tax rates apply to real estate above certain thresholds.

Affirmative

Reducing Income Inequality: A wealth tax can help address the growing gap between the rich and the poor. By taxing the wealthiest individuals more, we can redistribute resources to fund social programs, education, and healthcare, creating a fairer society where everyone has access to basic needs.

Generating Revenue for Public Goods: Implementing a wealth tax could provide a significant source of revenue for the government. This income can be invested in other areas like infrastructure, benefiting society as a whole and helping with long-term economic growth.

Productive Use of Wealth: A wealth tax would incentivize individuals and corporations to invest their assets more productively rather than hoarding wealth. By incentivizing the circulation of money, it could stimulate innovation and job creation.

Negative

Here are three arguments against the U.S. adopting a wealth tax system:

Implementation Issues for AFF: Implementing a wealth tax creates significant administrative challenges. Valuing assets accurately and fairly can be complicated, leading to disputes and loopholes that wealthy individuals will likely exploit.

Capital Flight Risk: A wealth tax could drive high-net-worth individuals and businesses to relocate to countries with more favorable tax systems. This "capital flight" could result in a loss of investment and economic activity in the U.S. (Not to mention the correlation between number of billionaires and economic productivity), potentially harming job creation and economic growth.

Impact on Investment and Innovation: Wealth taxes might discourage saving and investment. If wealthy individuals know their assets will be taxed heavily, they may choose to invest less, which could slow down economic growth and innovation. A thriving economy often relies on the willingness of the wealthy to invest in new ventures and technologies.

As always, remember to iterate and improve as you go along. Keep learning about the topic and evaluating it wholly from each perspective. You got this

Happy Debating,

The Forensic Funnel Team