Last month in this space, we posted a blog entitled What If? It suggested we stop taxing income and start taxing assets. How’s that for a long shot? Wonder of wonders, a small piece of that idea briefly seemed like it might actually happen.
When the President’s efforts to increase taxes on corporations and high earners cratered, we weren’t surprised. That was expected. What surprised us was replacing it with Senator Ron Wyden’s plan to tax unrealized capital gains of billionaires HERE. That’s another way of saying tax their assets.
Even though he’s our home state senator, we didn’t know about Wyden’s plan. And even though it’s tempting to bash the billionaire class, we aren’t completely on board. Neither were others who ultimately must approve such schemes and the plan was quickly withdrawn. Some people suggested the only symmetry in the entire proposal is that Biden and Wyden rhyme. Rhyme but no reason perhaps.
We really enjoy standing things on their head. Seeing what they look like upside down. It works best when the entire subject is discombobulated. Turned inside out instead of merely wrinkled. The pound not just the penny.
Policy makers, those folks who propose solutions to our litany of vexing problems, tend to fiddle with one part and leave the rest untouched. We nibble at the edges of change rather than shake up the entire premise. The outcomes are needless complexity and intrinsic inefficiency.
We tinker a little here, we rearrange this over there, we compensate for that shortcoming in this way, we balance that with this and ultimately it’s Goldbergian. A jumble of confusion that invites critique. Why not change this rather than that? Why not this much instead of that much? It’s pretty much a sitting duck. Quack!
What’s wrong with Wyden’s plan, wildly popular as it may be in some circles, is that it’s piecemeal. It’s not a solution but rather another complexity layered on a system already so byzantine that whole businesses and richly rewarded professions exist simply to interpret it.
Soaking the billionaire class would be fun but yet another inequity in a vastly unfair tax code. It does nothing to solve the problem. What problem? The problem with taxes and the social contract they fail to fund.
Government exists to ensure the public well-being. Taxes are raised to support that function. Legislation is passed to guide the application of those monies in addressing need. It isn’t working. Social systems still are skewed to favor the wealthy at the expense of the forlorn. It would be easy to change that equation and there is good reason to do it.
Nobody likes paying taxes, mostly for the same reason. We all sense the system is inequitable. We question how it’s applied and what it’s used to fund. We all suspect maybe we could do a better job with the money. We read about how the ultra-wealthy protest taxes on one hand and help themselves to benefits with the other HERE. And, of course, we are told how much higher a tax rate we commoners pay than do those same folks.
Elon Musk would rather not pay taxes and prefers to send you to Mars to “preserve the light of consciousness” HERE. Jeff Bezos was so impressed by his trip to the edge of space that he has decided to spend multi-billions of his own money to address climate change, in a tax-exempt manner, no doubt.
Critics of him and Mr. Musk note the irony of coupling space flight and environmentalism HERE. Although the rocket fuels they use are better by far than solid fuel, which burns aluminum, there’s nothing about launching a rocket that is harmless to the atmosphere HERE.
Once upon a time, Keep It Simple, Stupid! was the mantra that guided policy makers and political operatives alike back in the Clinton era, that time of a balanced budget and laboratories of democracy. At its essence, it’s wonderful advice. But all these years later we continue to suggest complicated solutions to fundamental problems.
Perhaps we never will see a time when equity is the governing principle of how we raise and spend public monies. But a concerted effort to realize that goal, rather than endlessly tweaking a demonstrably flawed and unfair system, may be our only chance to solve the problems that so fracture our social contract.
Let’s try something different. Let’s get rid of all the clumsy and convoluted schemes, deductions, exemptions, dodges, and simplify things. We don’t want to punish billionaires (or anyone else for that matter). We don’t want to limit their ability to make money. In fact, we want them to make as much as they want. We do want them to pay their taxes. On their assets. Just like the rest of us. We all will be taxed the same percentage on the increase in our wealth each year.
We will say it again: here’s a simple solution that we really ought to consider. Provide basic income to everyone with assets below a certain level, and tax the increase in assets above that level. Extend the “full faith and credit” of the USG to all its citizens until their assets exceed a basic subsistence level and then tax the annual increase in wealth above that level. What if?