The draft proposal by the co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform would cut federal deficits by reducing cost-of-living increases on Social Security benefits and raising the retirement age, as well as limiting mortgage-interest and other deductions that middle-class taxpayers rely on. At the same time, it would reduce tax rates on the top income group by 12 percent. New York Times columnist and Nobel Prize–winning economist Paul Krugman sums up the proposal as follows: "Same old, same old—tax cuts for the rich and erosion of the social safety net." An alternate plan, put forth by a group headed by Alice Rivlin and former Senator Pete Domenici, would also reduce tax rates on the rich as well as on corporations, while eliminating many deductions. To raise additional revenue, it relies heavily on a permanent 6.5 percent national sales tax, which is notoriously regressive and would fall most heavily on the lowest earners.

Is it really necessary that the poorest among us give up benefits or pay more sales taxes to reduce the deficit, rather than have the richest make a fair contribution? How can we significantly reduce the current deficit of more than $1.3 trillion and similar deficits in the future without cannibalizing Social Security, Medicare and other mandates? One obvious place to look is at the wealth of the top 1 to 5 percent of the population. Every study of inequality in this country has noted the growing wealth of those at the top, largely the result of the Reagan tax cuts of the 1980s and the Bush tax cuts of 2001 and ’03. The top 1 percent of the population now own 35 percent of the total wealth of the nation (they owned 20.5 percent in 1979). The next 4 percent own 27 percent of the total wealth. So together, the top 5 percent own 62 percent of the total wealth of the country.

What does this mean in actual numbers? As of March 31, the total net worth of all American households was $54.6 trillion, according to studies made by the Federal Reserve Board. The top 1 percent consists of about 3 million households, each with a net worth of at least $8.3 million. The total net worth of that group is 35 percent of $54.6 trillion, or $19.1 trillion.

Wouldn’t that amount be an appropriate target for a federal tax? Imposing a tax based on wealth rather than income is not a new idea. The federal government and most state governments impose an estate tax based on the total net worth of the individual at the time of death (the federal estate tax, which lapsed in 2010, may be reimposed in some form next year). And most local government units have a tax that measures the value of each person’s real property, which is levied on an annual basis, but such taxes do not touch personal property.

Many European countries have a wealth tax—that is, a tax on the total net worth of each household, which must be paid not just at the time of death but annually. It is like an estate tax, since it requires each household to measure its total net worth and to pay a tax based on that net worth. If a Norwegian citizen has a net worth of $5 million, he must pay, in addition to any income tax, 1 percent of $5 million, or $50,000, to the government every year. Our government could impose such a tax on an emergency basis, to be applied only during the immediate financial crisis, say for two or three years.

Of course, the new Congress is not likely to impose a wealth tax when there are already such loud objections—sure to get louder—to reimposing higher income tax rates on those making over $250,000. One of the objections to re-establishing those higher rates on the rich is based on the claim that many small businesses are individual proprietorships, which may make more than $250,000 a year, and that raising taxes on those businesses would limit their ability to hire more employees. But David Cay Johnston, along with other commentators, has demolished the idea that a significant number of small businesses would be affected this way. Only about 3 percent of them, mostly professional organizations like law firms, fall into the higher taxable category. There are more than 22 million sole proprietorships filing tax returns each year, and their average salary or income is below $100,000. On the other hand, there are only 3 million households in the top 1 percent. Asking that small group to pay only 1 percent of their considerable assets for a limited period would certainly not affect job creation.

There are many good reasons for imposing such a tax. First, the rich can afford it. Second, there are a lot of rich people whose wealth is partly the result of government largesse, like the Bush tax cuts, 30 percent of which went to the top 1 percent. Third, taxing the wealth of the very rich will reduce the massive deficits and thus obviate the need to cut vital government services, as well as Social Security and Medicare.

Suppose such a wealth tax were imposed on the top 1 percent of households. It would raise $191.1 billion each year (1 percent of $19.1 trillion), a significant attack on the deficit. If we extended the tax to the top 5 percent, we could raise $338.5 billion a year (1 percent of 62 percent of $54.6 trillion).

Many years ago, Donald Trump suggested a one-time wealth tax of 14.25 percent on all Americans worth more than $10 million to wipe out the entire federal debt at the time, amounting to $5.7 trillion. Today we would need $13.5 trillion—about 40 percent of the wealth of the top 5 percent—to do it, which is highly unlikely to happen. But if we had the courage to take such a step, we would eliminate $414 billion in annual interest payments on the national debt.

There is one potential problem: Article 1, Section 9 of the Constitution states, "No Capitation, or other direct Tax, shall be laid, unless in Proportion to the Census, or Enumeration herein before directed to be taken." That is, no direct tax on individuals can be made unless it is levied in proportion to the total population of each state. In 1895, in the infamous Pollack decision, the Supreme Court interpreted that provision as barring a federal income tax. It was only after the Sixteenth Amendment was ratified, in 1913, to amend the quoted provision that an income tax was reinstated.

However, constitutional scholars like Professor Bruce Ackerman of Yale Law School have studied the history and background of the provision and conclude that it should not be a bar to a wealth tax. They point out that the provision was imposed at the 1787 Constitutional Convention by the Southern states, which were worried that Congress would impose an individual property tax on the value of the slaves they owned. Subsequent decisions by the Court confirmed the wide latitude of Congress in getting around the Section 9 provision.

So what would a wealth tax mean? Because of the openness of our stock markets and the filings of the Securities and Exchange Commission, it’s easy for Forbes to determine the wealth of the 400 richest Americans. Thus, we have no trouble determining who would be subject to the tax. If a very rich person had a net worth of $10 billion, he or she would have to pay 1 percent, or $100 million, each year to the government. In the face of the nation’s stark financial problems, our richest Americans can afford this modest diminution of their wealth. And they certainly would have no right to complain, since it was previous government actions that enabled them to accumulate it.