Vanity Fair’s Michael Kinsley: a Doable Tax
|July 21, 2014||Posted by Staff under Good Press|
This 2014 excerpt of Vanity Fair, July issue, is by Michael Kinsley.
From the remarkable reaction in this country to Thomas Piketty’s fairly dense book of translated French philosophy, it is evident that many people believe that a “reset” in the distribution of income or wealth would be no bad thing.
His point — the return on invested capital exceeds the rate of economic growth — means the poor can never catch up. The mean income of the top fifth back in 1970 was 11 times that of the bottom fifth. Today it is more like 16 times as much.
The growing income-inequality figures we see today are wild underestimates. Wealth is larger and even more concentrated than annual income is. Most of it grows completely untaxed, year after year, because you don’t pay taxes on an investment until you sell it, which the very richest people never need to do. They live off the interest.
Suppose you take away the entire incomes of the 1 percent. That would be about $1.5 million from each. Transfer all the money to everyone else. How much money would each household in the 99 percent get? About $15,000. That’d more than double the incomes of those at the bottom of the heap.
Suppose we levy a mere 10-percent-of-income surcharge on the top 20 percent of family incomes, to be spread among the bottom 40 percent (households with incomes up to about $40,000). That’d be about $4,000 per household.
Frenchman Thomas Piketty and his book remind me of my favorite economist, the 19th-century American Henry George, and his best-selling book, Progress and Poverty (1879). Both men’s books offer a comprehensive explanation of the world, in particular the problem of poverty. Both men acknowledge the importance of market incentives and entrepreneurship and the evils of protectionism and all of that good conservative stuff, even as they rail against the plutocrats. Both think we can end or reduce inequality without giving up the benefits of market.
And both see the answer in a new tax. Henry George advocated a land tax to eliminate the need for any other revenue source. That’s why members of his briefly influential movement were called “single-taxers.”
Ed. Notes: People plot to tax wealth after the rich already got it rather than redirect our spending so that no insiders could corral it and become the 1%. “Our spending” here refers to both public and private. Take public spending: we could abolish corporate welfare and disburse revenue directly to citizens as a dividend.
Take private spending. Presently, our spending for things that nobody created — like land, natural resources, the EM spectrum, ecosystem services, and privileges that force consumers to pay “tolls” (jacked up prices) to the privilege holders — go to banks, oil companies, and other insiders, creating that 1%. Instead, we could institute land dues rather than tax buildings, purchases, and earned incomes. When the public gets those values (via the dividend), then they’re not available for the more grasping to amass into fortunes.
We could stop worrying about how much anyone has by redirecting what everyone spends for our common heritage, which should belong to us all already. It’s called geonomics and it has worked wherever tried, to the degree tried.