FINANCING HUMANITARIAN STABILITY: A 1% BILLIONAIRE SURTAX AND THE HUMANITARIAN AID RESERVE FUND. White Paper created with AI.

Written By david wecal

Executive Summary

This paper proposes a targeted, sustainable financing mechanism to cover the U.S. humanitarian aid shortfall of $9B annually. By combining a 1% surtax on billionaire income with a 1% surtax on billionaire stock gains, revenues would flow into a Humanitarian Aid Reserve Fund (HARF). The fund stabilizes aid flows, guarantees predictable baselines, and creates capacity for extraordinary crisis response.

1. Context and Problem

  • Humanitarian aid is underfunded, with a $9B gap in U.S. contributions.

  • Volatile appropriations undermine planning and reduce effectiveness.

  • Billionaires have seen extraordinary wealth growth: U.S. billionaire wealth totals $5.5T (2024). A small surtax could fill the shortfall without burdening ordinary taxpayers.

2. The Proposed Revenue Mechanism

A. 1% Surtax on Billionaire Income (AGI)

  • Applies to taxpayers with net worth > $1B.

  • Adds 1% to all taxable income (AGI).

  • Revenue: $3–6B/year, based on estimated aggregate billionaire AGI ($300–600B).

B. 1% Surtax on Billionaire Stock Gains

  • Public stock: mark-to-market annually using brokerage reporting.

  • Private stock: taxed at realization, with interest charge to neutralize deferral.

  • Revenue:

    • Typical year: ~$4B,

    • Boom year: up to $10B,

    • Weak year: $0 (covered by reserves).

C. Combined Yield

  • Typical year: $7–10B,

  • Boom year: $13–16B,

  • Weak year: $3–6B.

3. The Humanitarian Aid Reserve Fund (HARF)

Structure

  • Receives all surtax receipts.

  • Pays out $9B annually as a guaranteed baseline for humanitarian programs.

Rules

  • Surpluses: 70% to reserves, 30% to extraordinary crises.

  • Shortfalls: reserves fill gaps. If reserves fall below 1 year’s need, surtax rises automatically by +0.25% for up to 2 years.

  • Investments: U.S. Treasuries only.

  • Oversight: Board of Trustees (USAID, State, CDC + 3 NGOs). Public quarterly reports, GAO audits biennially.

Example Flows

  • Normal year ($10B revenue): $9B baseline, $0.7B reserves, $0.3B crises.

  • Boom year ($15B revenue): $9B baseline, $4.2B reserves, $1.8B crises.

  • Weak year ($5B revenue): $9B baseline, $4B from reserves.

4. Advantages

  • Predictable: $9B guaranteed each year regardless of market cycles.

  • Fair: Contributions come from billionaires, whose wealth has soared.

  • Efficient: Uses existing IRS reporting for income and stocks.

  • Legal: Structured as an income surtax (avoids direct tax/wealth tax challenges).

  • Flexible: Builds capacity for extraordinary crises without new appropriations.

5. Risks and Mitigation

  • Revenue volatility: Addressed by reserves + automatic surtax bump.

  • Valuation complexity: Limited to public assets for annual mark-to-market; private taxed at realization.

  • Political resistance: Framed as humanitarian solidarity, not redistribution.

  • Legal challenge: Narrowly framed as income taxation to withstand scrutiny.

6. Conclusion

The U.S. can secure predictable humanitarian aid funding by tapping a fraction of billionaire income and stock gains. A 1% surtax combined with HARF ensures $9B annually, stabilizes U.S. global leadership, and provides flexibility for future crises.

 

david wecal
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