Dangers of Excessive Wealth Disorder

Paul Krugman of the Graduate Center, City University of New York addresses the Taxing the Very Rich conference, June 25, 2019. Mayflower Hotel.
From the Economic Policy Institute in Washington, DC.
www.epi.org

[@martman1466]

The wealth of the wealthiest 1% (about 1.26 million households with a net worth of about $10 million or more) is about $40 trillion. A 3% annual tax on the wealth of those with a net worth of $10 million or more with the first $10 million excluded from the tax would raise more than $800 billion next year and probably close to $10 trillion over the next decade with historical growth in the wealth of this group.

[@nthperson]

I would rather see us adopt a combination of tax simplification with meaningful progressivity. Start by exempting all individual incomes up to some amount (e.g., the national median). Eliminate all other exemptions and deductions. Above the exempt amount impose increasing rates of taxation on higher ranges of income, the rates and ranges determined during the budget process with the objective of raising sufficient revenue to achieve a balanced budget.

[@ComeCleanAmerica]

Economics is ecological: it involves the transformation of the natural environment through resource consumption and degradation of unrecycled waste, the transformation of human societies from local adaptations to global networks, the transformation of production and creation of wealth from human labor to innovation and technology, the imbalance of energy cycling from a photosynthesis basis to a rapid release of sequestered carbon (coal and oil), and many other complex dynamic interactions that have unplanned long-term consequences of short-term gains. Taxing the rich is just another example of short-term thinking based on an archaic flawed understanding of economics and immediate populist discontent. Taxes are necessary for good governance and for correcting the flow of resource utilization to promote the long-term sustainability of life as we know it (not just human life) on planet Earth. I would also add that the accumulation of wealth is an ecological dead end that will eventually destroy its source - hence the consistent repetitions of protest and revolutions throughout the history of the world when a wealthy elite has emerged based on the creation of debt in its society and governing structure.

[@nthperson]

There is a solution if we could only find the political will to put it into place. We must treat the planet as a commons, access to which by individuals and private entities awarded by competitive bidding and payment of an annual rent to society. If our laws require zero pollution and zero waste, the bidders will take this into consideration as part of their cost of doing what they plan to do on the land and bid accordingly. I know this seems remarkably simple, but it is sound economics.

[@williamharty9513]

Why do you reward money to shareholders, When time is the most valuable thing in the world, Those that helped you to create it. The Working class. Why would anybody move to a country with Cain capitalism, shareholders above what's good for our planet, our country, our employees and our customers, this is what's wrong with our government. Boardroom executives not returning the investment in those that work hard for them, their fair share instead giving it to those that already have money. No longer supporting the common good or betterment of mankind. You know, pure greed, selfishness, rewarding the wrong people as shareholders have little or no time invested, yet reap all the rewards. Allowing walmart to only pay poverty wages while taxing the middle class to pay for the social services needed for their employees. The US government only represents corporate lobbyist and have become ghetto makers all across America. Inequality, greed, stealing production and financing endless wars is your enemy, our infrastructure is falling apart, our water systems need updated, our public transportation outdated, We still burn fossil fuels for electricity. Our government has turned into a corporate hoarding death squad representing the evil of this world. We no longer represent the common good, the betterment for mankind, you rig our elections ship our jobs overseas and expect us to support your world domination. All while giving corporate lobbyist whatever they want for money. When FDR tax corporations 90% he built America, Reagan stole not just the American dream, but lost it's integrity just to benefit a few.

[@wellwellwellall]

.01%

[@nthperson]

Income and asset inequality are the consequence of the more fundamental problem of our tax system, which is the failure to distinguish between income that is earned from that which is unearned (i.e., from rents and rent-seeking activities). The ideal way for government to raise needed revenue is the full taxation of rents. This would include the full potential annual rental value of all locations in our cities and towns, as well as the rental value of lands yielding minerals, timber, solar energy or wind energy and such land-like assets as frequencies on the broadcast spectrum or take-off and landing slots at airports. Getting to these legitimate societal funds has always proven to be politically very difficult. Take the local property tax, for example. Getting anything close to the full potential rents of land collected requires changes in law (and state constitutional law) that would permit or require multiple levels of local government (city, town, township, country, borough and school district) to move to a land-only property tax base. Thus, it is necessary to try to collect rent-derived income via the income tax. Here, we need to combine tax simplification with real progressivity. Start with exempting all individual income up to some amount, say, the national median individual income. Eliminate all other exemptions or deductions. Above the base exempt level, begin to impose an increasing rate of taxation on higher ranges of income. At the higher ranges, much of the income that is taxed will be gains on the sale of financial instruments and land, income that is by definition unearned. The rates and ranges should be determined as part of the budget process for each state and the national government, with the objective of raising sufficient revenue to achieve a balanced budget. Edward J. Dodson

[@martman1466]

Actually rent, although classified as "unearned income" is taxed at ordinary income rates.....as are interest (except muni-bond interest) and short-term capital gains (also forms of unearned income).

[@nthperson]

@@martman1466 Thanks for the clarification. My larger point remains, which is that gains on the sale of assets should all be taxed as ordinary income.

[@martman1466]

@@nthperson - Yes, I have always thought that. (except I'd like to see the exclusion from taxation on the sale of primary residences kept in place).

[@nthperson]

@@martman1466 The rationale for exempting the gain on a primary residence is twofold: (1) that this gain constitutes the greater portion of the net worth of U.S. households; and (2) a residence is a capital good, an asset that requires constant maintenance and investment Thus, there does need to be a period of transition from our current, very destructive system of public revenue to the taxation of unearned rents and gains on the sale of assets. Separate the gain from the sale of the underlying land from the gain from the sale of any building, and I am with you.

[@martman1466]

@@nthperson - Who's going to decide how much the land is worth and how much the house is worth? Too complicated and would lessen the wealth of the least wealthy 99% too much. p.s. you continue to call for a change in the taxation of "unearned rents" even after I corrected you? ;-) Short-term capital gains, interest, and net rental income are already taxed at ordinary rates. Your concern should be with the treatment of long-term capital gains (non-primary residence) and dividends.

[@lyvsal9774]

Plutocracy Capitalism.