I see income inequality as a key issue here. I recently read the "Triumph of injustice" and came away with a changed view in our tax system. After reading the book, I now believe that any household with a net worth over $100 million should be subject to both an income and capital gains tax of 99%.
In short folks with income come and or net worth at levels that surpass their ability to buy a life of finical security for several generations only increase income inequality.
High historically high levels of income inequality have torn countries apart.
That's interesting because... right now we have a system that examines income and taxes income.
The "wealth tax" is a system that examines wealth and taxes wealth (not income). It's theorized that it's unconstitutional, and even if it isn't, the conservative US court might cause it problems anyway.
But if instead you examine wealth and tax income, maybe that gets around the issue. Higher income tax brackets for those with more wealth?
A simple wealth tax of 4-5% would completely eliminate idle wealth in a couple of decades and would not destroy the American way of bootstrapping yourself to wealth like a 99% tax would.
Seeing as wealth is rarely in the form of cash, and you need to pay taxes in cash. You would need to sell the wealth, creating income, which in turn is used to pay the taxes. So it seems right.
I think this is the way to go. A wealth tax is unfair. But an income tax rated on your wealth feels very elegant. The richer you are, the harder it is to get richer. Which feels like it is fair because the richer you are, the more you leverage societal structures to become wealthier.
That would not create the semi-communist world you're hoping for: today's rich people are already rich, and the effect would be stopping anybody new from becoming rich.
>> "and the effect would be stopping anybody new from becoming rich."
I read this as you thinking there's a problem with no more people getting rich. Can you expand on that?
For example: how many people need to get rich to balance the economic, social, and political power of the people who already are? Is this the best way to achieve that balance?
How many things were invented or financed because someone wanted to get rich? What happens to those types of things when it's impossible to get rich?
The answer is they don't happen here, they'll happen somewhere else. They may happen with the same people even, and then you're losing knowledge and experience to other countries, which is fine as long as those other countries choose to be friendly with you.
In other words, you willfully put your country's advancement into the hands of other entities. You no longer control your future.
>How many things were invented or financed because someone wanted to get rich?
Not as many as you think I would suggest. In the US a golden era of invention was the postwar era during which inequality fell and the American middle class rose to power and the American government still participated actively in shaping innovation and economic future. Even the Soviet Union invented a good deal of stuff.
Today economic growth is low, inequality is high, it looks like we're on our way to a second gilded age and the things that we call innovation are escooter startups and expensive juice machines. Even die-hard capitalists like Thiel have pointed this out.
If you want innovation what you need is a healthy, equal society, individual opportunity and collective ambition.
Every other developed economy was destroyed by the war. The rise of the middle class here was a result of overall economic growth and the economic suicide of the two world wars and the depression. Holding up the 1940's and 1950's as a model removes the context of cataclysmic world events of the 30's and 40's. Also remember that the US had virtually no welfare state at that time and used higher taxes to pay off war debt.
>I read this as you thinking there's a problem with no more people getting rich. Can you expand on that?
At least with our current system the rich people change every couple generations, if income and capital gains were frozen after $100M without any other changes to the tax code, everyone who is presently rich would keep their money while suddenly there would be no risk of replacing them. Bill Gates would become the richest man in the world, not just today, but forever. That's terrible according to Marixist and modern economic consensus: so not a good plan!
I suggest you look at current income figures and try to come up with a plan where juicing the rich works. There's a reason Germany's 42% tax bracket starts at... €55,961
If you want to pay for these things, you need to bring your idea of who's gonna get taxed way, way down to earth.
That's my point. You can totally have those things, just most middle class people will have to pay in, it cannot be built via taxing only some nebulous $100 million+ class.
Employers can also stop paying $6,000/year[0] for middle-class health insurance and add that to middle-class paychecks, and then the government can take it in the form of taxes, to provide the health insurance.
The difference is that the cost savings should make this enough enough to cover EVERYONE, not just the upper-heeled middle class.
It's possible that quite a bit of the middle class may not notice a large difference in take-home pay even with an additional 10 percentage points of federal income tax.
US healthcare is corrupt and inefficient. It's not only a debate about who should pay for it. Your comment suggests changing the latter would fix the problem with cost, which surely has a lot to do with the former.
What is chuckle worthy about the government running healthcare? Plenty of countries have good government run healthcare system. Several studies have found that patients on Medicare are generally more satisfied with their healthcare than patients with private insurance. Government can run health care.
The us has low governmental capacity and lower trust then most other nations. We don't have a clear view of sovereignty between state and federal and have the most active judicial system in the world.
Where's the remainder of your premium going to come from when you're only paying 10% salary for it? Private insurance companies sure aren't going to reduce their prices.
> the premium stops going into the pockets of insurance middlemen.
This just replaces one middleman (insurance co) for another (government).
I can tell by the downvotes that my point whooshed over everyone's head -- my point was essentially yours. Changing who pays isn't going to change anything. We have to change what gets charged.
I think 99% is an overkill. If you assume 7% ROI and 2% inflation then a 70% top marginal bracket (combined with unifying capital gains and income) would make it very hard to maintain wealth.
To get rid of these high levels of inequality we don't need to make it impossible to be rich, just make it very hard to be rich and let nature take its course.
Note that in my lifetime the top marginal tax bracket has been over 70% so it's not even that radical of a change.
At 2% inflation, it's not possible to maintain $100M of wealth without also having $2M in annual income. If every dollar over $1M in income were taxed at 70%, then you would need over $4M in annual income, plus more than twice your annual expenditures to maintain that level of wealth.
4% rent on $100M in assets is probably sustainable over a long time, so if you live frugally, you could likely self-sustain that level of wealth.
If you have $1B in assets and make a 7% return (which is my conservative estimate of the maximum long-term rent you could extract on a large fortune) then that's $70M return in income, essentially all of which is taxed at the 70% rate, leaving $21M remaining, $20M of which is "lost" due to inflation.
This means that if you have a billion dollars and want to live just off of rents, you would need to both invest prudently, and live on expenses of no more than $1M per year. Mess up either and you are on track to leave the billionaire's club.
In addition, consider an heir who gets a high-paying professional job with a rags-to-riches one. The one with no wealth isn't having unearned income to pad their tax bracket, so the marginal pay they get for working is much higher than the heir who is also collecting investment income, thus allowing them to grow their wealth faster if they have an identical savings rate.
The US right now has an income tax scheme that is regressive for wealth because wealthy people have a greater fraction of their income in the form of long-term capital gains. GP suggested making it extremely progressive vs wealth, and I'm merely pointing out that a properly implemented wealth-blind income tax will work out to be progressive vs wealth due to inflation.
High historically high levels of income inequality have torn countries apart.
https://wwnorton.com/books/the-triumph-of-injustice