Sunday, January 3, 2016

Best Crazy Idea Ever: Tax the Rich for Their Own Good!

The Rising Sun, owned by American music mogel David Geffen. It's
 the 13th largest yacht. The top 12 are owned by Arabs and Russians.

Jeff Spross of The Week has come up with an idea so ingenious, so apt that, in spite of how whacky it is, makes complete sense in this age of income inequality. Rich people can become so obsessed with keeping up with the Joneses that they don't appreciate how rich they are, leading to income insecurity. Uh, crocodile tears?
Some of this could be alleviated if members of the upper class showed more self-discipline and less concern for how their car or house or lifestyle looks compared to their neighbors'. But demanding this sort of asceticism is not so different from saying the solution to poverty is stronger families and better work ethics. The left correctly realizes that we shouldn't be demanding greater virtue from the poor. Human beings are naturally flawed creatures. Instead, we should be changing the economic systems and structures in which they live their lives. Applying the demand for greater virtue to the rich may be less morally ugly, since it punches up rather than down. But it's no less silly as a basis for political action.
So how do we change the economic systems in which the upper class live?
Well, if the extreme inequality at the top is an issue, starting with tax increases on just the top 0.1 or 0.01 percent is not such a bad idea. The point of taxes is to drive the flow of money and resources into more jobs and higher wages as much as to raise revenue. Mid-century income taxes at the very top were so high they effectively created a maximum income. We should bring that back. Alter the economy from the top down first, which will make higher taxes further down the income ladder more politically palatable.
We should also make necessities like health care, child care, education, and public transportation free and easily accessible to every American, rich or poor, either through cash transfer programs or by having the government provide the service directly. We can help bring housing costs down by doing what we can to deregulate zoning laws. But this isn't a solution in itself, so we should build far more public housing to bring up supply.
Spross feels that all the initial spending won't be covered by taxing the rich, so he presses the case for larger deficits. Finally, he gets to the meat of his argument:
A more just and equitable economy won't be all things to all people. It certainly won't offer the upper class a bigger paycheck than they enjoy now. But it can offer them a less hectic lifestyle, freer from anxiety, where a smaller paycheck actually goes further in buying the concrete things that actually make for a happy life.
 Two main points of Spross's thesis rang clear as a bell. One, the high taxes of previous eras -- 90% under Eisenhower, 70% under Kennedy through Carter, 50% for most of Reagan's term -- acted as an upper bound to income levels, since the more you made, the more got gobbled up by taxes at the top. At a certain point, why have a higher income? Two, it makes no sense to demand that the poor live more virtuous lives. Better that we as a nation improve the economic condition under which they live their lives. I couldn't agree more.

I am once again reminded that there is a way out of our income inequality mess, and that's higher taxes on the well-off, including lifting the cap on payroll taxes. Take all the revenue generated and pay everyone a guaranteed income, something like 130% of the poverty line.

Remember, if we established such a system, we'd be able to eliminate almost all safety-net spending. No more unemployment payments, no food stamps, no WIC, no welfare of any kind. It would be baked into the cake. And I also agree that we should make public education free through college, institute Medicare for all (we wouldn't need Obamacare or Medicaid), and expand Social Security.

Nothing makes for a better consumer society than money in everyone's hands. And the poor spend markedly more of every dollar they get than the rich, who can afford to save.

The biggest argument against this is from the conservatives, saying that we'd be creating a permanent dependent class of people. I don't disagree. But the fact is we have a permanent dependent class of people as it is, costing us all kind of expense in dollars, healthcare costs, and lost productivity. I believe poverty is a drag on our economy, and a proper conservative society would understand that it's good business to manage the bottom of that society in such a way as to alleviate misery and offer opportunity.

We'll always have bottom feeders, so give them enough to not be miserable but also give them enough incentives to work their way higher if they're so inclined. If I were existing at the bottom of our society on a minimal guaranteed income, I'd sure as hell get educated and/or trained to make enough money to live a little. Wouldn't you? Wouldn't almost everybody?

The fact that a few would rather live independent lives of dependency on society is the exception that proves the rule. The rich aren't always rich because they're the hard workers, and the poor aren't always poor because they're slackers.

Finally, I like the idea that Spross suggests, that the rich would lead lives less disturbed by anxiety if they didn't have to battle to be top of the heap. They can be satisfied with their lot in life even if it's trimmed a bit at the top. Less stress, less anxiety, and less competition. Fewer hours enslaved by work wouldn't hurt either. Balance, people!

Fewer obscenely rich people and fewer obscenely poor people. I like it. I like it a lot. That equation also sports a returning middle class. Who would object to that?

Don't answer that last question.

As towns decline in states like West Virginia, such states tend to turn red. Go figure.

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