I am a great fan of Liz Warren and agree with her on most everything, but she’s wrong on this one.
A wealth tax is divisive
Why the wealthy, Liz and most particularly why a tax on net worth? That smacks of closing barn-doors after the horses are gone and trying to get back at a class of Americans we mismanaged tax-wise.
America is divisive enough at the moment and the last thing we need to do is set one class against another.
We know how to get out of a pickle
I never really understood what being in a pickle meant, but it’s a common term for trouble. How could you possibly get inside a pickle? Is it green in there?
No matter, getting out of this pickle in which we find ourselves takes nothing more than a sense of history—and not very ancient history at that.
The graduated income-tax
Let me introduce you. In 1960 the top tax rate was 91%. Only Warren Buffett and I are old enough to remember that. And there’s a common misunderstanding about that.
It did not mean that wealthy people paid 91%. Everyone paid the same amount—through brackets. So, if you were making piles of dough, you paid the same amount as everyone else, in increasing amounts (as they did) until you got over $400,000—and then you were paying 91%, only on the amount over four hundred grand.
Over the first fifty of the past hundred years, big-shots never got below 63%.
And then—drum-roll—came Ronald Reagan
During his eight years in office they went form 70 all the way down to 28%.
And, amazingly, it didn’t do a thing to help the economy, with that trickle-down crapola that was all the rage at the time. What it did do was to make the rich far richer and open the income inequality gap.
As an example, CEOs who were averaging 20 times employee pay at the time are now knocking down 400 times a line-worker’s paycheck.
And Liz Warren wants a piece of Jeff Bezos’ loot
Which is kind of a clever idea and very popular with the people who are not Jeff Bezos. But to grab five-thousand-million of Jeff’s booty is neither fair nor equitable. The fault lies with Ronnie and his blindly obedient followers, who thought blindly throwing tax-beaks at the already rich was a very good idea.
So I have a suggestion
You knew I would. I always have a suggestion.
If we need quick cash, put a 1% tax on flash-trades, those algorithm-derived Wall Street skims that serve no purpose Put a $1 tax on flash-trades in the stock markets. These algorithm-driven trades serve no purpose other than skimming profit and have had dire impacts on the markets when fighting among themselves. Beware two things in the economy: the military-industrial-complex and computers fighting computers.
A buck each on flash-trades would raise about as much as Warren’s Wealth Tax without the stigma of class warfare. Jeff Bezos and Looney-Tunes Zuckerberg could go about their business without fear of being singled out.
And in the longer-term
Presuming the American Experiment survives in the longer-term, we need to get real in the area of taxation. Back to The Future might be a good motto, if it’s not already taken. The graduated tax of the 1960s worked, targeted no one unfairly and created enough tax revenue to run a nation.
But the tax code isn’t the only fruit that fell to the ground during the Reagan administration. We need to deal with tax-havens, off-shoring and inheritance taxes, so we don’t become a nation indebted to the idle rich, who create nothing and harvest profits solely by their inherited privilege.
We’re living in a period of fairness crises
And they scatter the seeds of distrust across a wide spectrum of American society. We better damn well deal with that.
It’s only fair.
Image Credit: FEE.com