It is time perhaps to be begin thinking about politics.
With the 2020 election looming and all.
The first thing that’s popped into my head is the wealth tax.
Yes: a 2% wealth tax on fortunes over $50 million and 3% for $1 billion is fine.
Probably good even.
However, it can’t be done in jumps because that will make people squirrelly, incentivizing both not quite amassing $50 million and pretending you haven’t.
The way to do the wealth tax is to start it at a penny over $10 million in assets per household; make the beginning tax rate very small; and then gradually increase it as the fortune goes up.
Make a number line from $10 million to $1 billion, and put a percentage line from 0% to 3% directly above it. Then you just look at where you are on the fortune number line and look up to the percentage number line to see what percentage you have to pay.
For example, if in a given year your assets stand at $20 million, you will pay 3% * (1/9) = 3%/9 = .33%, which is $20,000,000 * .0033 = $66,000; leaving you with $20,000,000 – $66,000 = $19,934,000
For another example, if in a given year your assets stand at $50 million, you will pay 3% * (4/9) = 4/3% = 1.33%, which comes to $50,000,000 * .0133 = $665,000; leaving you with $50,000,000 – $665,000 = $49,335,000
And finally, supposing you managed to hold onto one billion dollars at the end of a given tax year, you’d pay 3% * (9/9) = 3%, which would be $1,000,000,000 * .03 = $30,000,000; bringing you way down to $970,000,000
This is not going to deincentivize getting rich.
And it is a fairer way to redistribute wealth than raising the income tax because in some businesses and lives, you have the occasional bonanza and need to be able to use that money to stay afloat for the dry years.
A wealth tax of this nature would be a gentle and fair corrective against the overaccumulation of capital, which is dangerous because money is power.
And we’re $22 Trillion in debt with an aging infrastructure and a climate crisis that seems to be leaving the looming stage and is now before our eyes weaving a worrisome future.
What about reinventing the economic wheel?
Should we outlaw fracking?
Ban coal?
Make college free?
Put the nation under a single payer plan?
Hmmm, not right now, at any rate.
You presidential hopefuls should talk about where we are and where we can reasonably hope to get to without risking political chaos, which only makes things worse.
And think about the nature of economies: they are hard to steer; they should not be steered, because they cannot be steered reliably.
And though getting deeply into debt for college is onerous, it doesn’t follow that absolutely no financial sacrifice should ever be made by the student towards this expensive collective undertaking.
Rather than banning imperfections, we should nudge the markets with judicious use of regulations and redistributions.
We can incentivize cleaner fuels with a carbon tax, and perhaps a further tax could be placed on fracking. Environmental taxes keeps the free market in charge but help the free market account for the kinds of externalities (costs to our shared resources [note that a democracy is a shared resource]) that the free market often does not on its own adequately consider. And the taxes can be put directly towards righting the wrongs of the polluters (environmental clean-up, greener infrastructure, etc). Rather than banning, we can nudge. Renewables are already competitive. We don’t have to lurch about in the economy outlawing carbon; by preventing established energy industries from gaming the system and taxing externalities we can gently guide ourselves into an exciting green economy, which will be so fun and profitable that, in the absence of excessive corruption, it will succeed on its own merits. Research and infrastructure spending that encourage greener power grids, transportation, waste processing and etc would also help — and money will be spent on energy infrastructure in any case; we should lean green.
This election the Democrats should focus on the basics: fight against dishonesty and confusion-spreading, which undermines democracy; fight against lobbyist-attached campaign money, which undermines democracy; fight against corruption in government, which undermines democracy; fight for education environment and healthcare, which strengthen democracy and its citizens; and redistribute wealth gently so that the rich don’t run away or quit trying to build interesting new businesses, but they do have less ability to buy political campaigns and thinktanks and otherwise exert an oversized influence on our democracy, and we as a collective can find a way out of our current unwieldy $22 trillion debt while also fixing bridges, paying for education, getting all kids access to safe living environments and quality education, etc.
We also need to focus on judges with non-fundamentalist readings of the Constitution, particularly the First and Second Amendment. But that’s for another post.
This year the Democrats should focus on working to improve the health of our shared democracy. It is a worthwhile goal and a sound political platform in a time when the other side has taken to so blatantly ignoring democratic norms and the institutions and processes upon which a democratic nation depends for its structural integrity and the concomitant health and happiness of the whole and its parts.
There’s no need to get it all figured out. And we humans can’t figure it all out. There’s no need to change everything in this election. It is wiser to make this election about a step away from the abyss and towards a healthier, happier, more thoughtful future.
Last Minute Wealth Tax Revision:
Or maybe a 0 to 4% number line next to a $10 million to $2 billion fortune line.
Then at $20 million, you’re rate would be way down at 4% * (1/19) = .21%, and you’d pay $20,000,000 * .0021 = $42,000 and keep $19,958,000
I think that number line pairing is better than the 3% & $1 billion line. It shifts the focus higher. We don’t want to make making money painful; we just want to push back on dangerously uneven capital distribution.
Author: Pigeon Wright, professor of wandering around talking to himself
editor: BW/AW
copyright: Andrew M Watson
