Sorry for the War and Peace essay, but taking a broad, 100 mile high bird's eye view, there is no real reason why we cannot all be just as prosperous today working a 20 hour week as we used to be at 40 hours, if machines hypothetically do half our tasks. If we aren't then the problem stems from a broken wealth distribution system, not from the 20 hour week.
It was noted that municipalities etc. are going to have a hard time getting enough revenue going forward. Agreed (although a currency reset would solve a lot of that problem), but historically state and federal governments usually got "enough" revenues through taxes. Income tax worked when the economy was growing and enough people were employed and actually earning a healthy income that could be taxed. I argue that today when the economy is not growing and unemployment is high, income tax is a totally inappropriate means for governments to obtain funds. Furthermore, big corporations and private companies (Cargill?) have twisted the rules in their favour so that they now hardly pay any taxes. So who is left holding the bag? The upper middle class which Charles points out is being squeezed despite their relatively high incomes. Exactly! That's why the middle class shouldn't be paying tax.
Call me old fashioned or whatever else comes to mind ("socialist" is the usual label, even though it's far from socialism) but I am of the opinion that individual people should not be allowed to own more wealth than entire countries, in a finite world with only 200 countries but 7 billion people, that has hit growth limits. I am also of the opinion that if we do not actively take that wealth back, then we are forever doomed to serfdom regardless of how hard we try to become masters of our own destinies in our mortgaged condos as suggested by mememonkey above. We can debate this morally, which is all great, but from a simple practical standpoint I don't see how a system like that can function with any hope of democracy and sustainability.
Instead of taxing the middle class, let's tax the likes of George Soros, Warren Buffett, Mark Zuckerberg, Jeff Bezos, Jimmy Pattison, Jamie Dimon etc. etc. and of course the Rothschild types at the center of it all. There is a lot of wealth tied up there (to put it mildly) that could fund municipal budgets. Poor Bezos. Under such a system he might be forced to live like the top 1% and only be worth $10 million. I'd really feel for him...
Correct, under such a system it will be more difficult to become a billionaire. Boohoo -- the problem being?? Instead, you'd have an incentive to work and become upper middle class, live a nice life with reasonable free time, and save up enough to fund your own retirement.
So the solution is to ditch income tax, which so many argue is unconstitutional anyways, and replace with a .... get ready for it... a wealth tax! GASP!!! A WEALTH TAX???? What is this, communism???
Far from it, I argue that a properly implemented wealth tax is the most democracy-friendly taxation system and provides for the most individual freedom for citizens and the greatest incentives for individuals to get off their butts and work, to "produce" as so many people say, and to innovate as entrepreneurs. That statement flies in the face of everything you automatically assume, doesn't it?
That's because when people hear "wealth tax", in their minds they envision poverty tax. But I'm arguing for the opposite of that-- a wealth tax. So discard all your preconceived notions about wealth tax because you are confusing it with poverty tax (aka communism). Maybe I shouldn't call it a wealth tax, I think a better name would be "Freedom Tax". There -- now it will appeal to the American readership.
Once people get over their initial gut wrenching reaction to the idea of a Freedom Tax, based on invalid assumptions about what it actually would entail, we can begin to discuss it rationally and will inevitably come to the conclusion that it is the only taxation system that will work in the long run if we hope to have any chance of humanity surviving in a civilized form.
So, what is a Freedom Tax? Pretty simple, we tax 10% of people's wealth (real estate + ownership of companies, bonds etc., anything that can't be hidden from the tax man) per year until that person is worth say $2 million in today's dollar equivalent. Below that, they don't pay any tax except maybe some excise taxes (my numbers are all hypothetical, obviously they would be fine tuned).
You want to get stinking rich? Sure, you can get stinking rich if you want to and if you can find the means, but you will be forced to give back 10% of that stinking pile of riches per year until you are no longer stinking rich, but merely comfortably rich. Then no more tax. This means that if you grow your stinking pile of riches at 20% per year, beyond $2 million, you will still get rich at a post-tax rate of 10% per year. Doesn't seem so bad to me.
It means that if you earn $50k a year you get to keep $50k a year. Wow, what a concept, what an incentive to work. If you own a house that is less than $1 million, you pay no tax. You could own a house, a cottage at the lake, a nice car, and pay no tax. Concurrently, scale back welfare and the work week so that there actually are jobs available for people who would now have a real incentive to work.
From this, most things would automatically fall into place and provided we didn't have a debt based monetary system built around exponential growth, governments would be able to find funding, simply by fine tuning the tax rate and net worth which triggers the tax. Most of Charles' specific objections would just automatically solve themselves as wealth distribution returns to sane levels. Individuals would no longer be able to hoard things and would be forced to sell if they accumulate too much - this would cause prices for those things to drop and find equilibrium with what average people can afford.
Alas, purists will never accept that they should be forced to give up the wealth that they have earned with such determined effort (I mean, billionaires really deserve $10,000 an hour, they are worth it!) But many others do not share that ideology. I say, too bad, we live in a society and it is no longer acceptable for such gross wealth inequality to exist based on an ideological belief system about how wealth is created by private individuals contributing to a capitalist economy. Of course, I've always argued that wealth is not "produced" or created by people, but rather it is harvested from the natural world and transformed by people. Depending on the incentives and regulatory environment, we get different results of how that wealth is transformed and distributed.
In a nutshell, communism is almost always a total disaster. On the flip side, traditional capitalism is unsustainable, unfair, at odds with the natural processes that sustain life, and inevitably ends in what we have today, replete with capitalists up in arms blaming "socialists" for capitalism's failures. So let's get out of the dualist thinking and come up with different systems of taxation.
Would a Freedom Tax provide an incentive for people to convert their wealth into gold which can't be tracked and taxed? Yes. I ask: so what? Gold isn't a productive asset; it is money. To live, people need houses, food, energy, technology and the companies that bring about such things, and those things can be tracked and won't be allowed to be hoarded. If you convert your assets into gold to avoid taxation then all that does is make the assets you are selling (your third house, your farm, shares in some company) cheaper for the next guy to buy, which therefore helps alleviate wealth inequality. If you instead elected to convert your pile of gold into 3,000 acres of farmland, you would be forced to give up or pay the equivalent of 10% of that farm per year until it reaches $2 million equivalent (100 acres?) See how that makes farmland available for the average person to buy, rather than being hoarded by big companies?
Would gold leave the country? Why would it? It wouldn't be taxed. Gold flows are dependent on net trade balances and basically nothing else.
Would there be potential for abuse of the Freedom Tax system? Of course, like there is with any system. Do I see it actually being implemented properly? No, not as long as bankers are in control. But that doesn't mean we can't discuss it. We have a choice: we can either continue struggling with taxation systems that are guaranteed to fail by their very nature regardless of what happens (income tax and communism) or embrace ones that might actually succeed (Freedom Tax) if implemented properly along with political and anti-corruption reforms. Ultimately it boils down to the same issue at the root of so many of our social problems: are the masses going to grow some balls and stand up to their oppressors, or will they meekly beg for more domination like they have for 95% of history and pray that they too will one day win the lottery and become a billionaire like Jeff Bezos?
