So I had this idea yesterday that I initially loved. Then, today I keep trying to poke holes in it and it just keeps looking like a winner in my brain, so I thought I’d share. Here are some of the thoughts that have been bouncing around my head in the lead-up of the idea:
-Elizabeth Warren’s 3%/2% Wealth Tax idea (vs AOC’s 70% idea)
-Andrew Yang’s Freedom Dividend (umm, Universal Basic Income) idea
-American’s Household Net Worth Surpasses $100 Trillion
-Current Fed Budget outlay/receipt roughly $4T & $3T
-How to pay for some form of Universal Healthcare
-My FIL (Miton Friedman libertarian) history lectures on how evil the income tax is
Another quirk with me is I’ve grown to loath “fairness” arguments from both sides. The left’s rich & poor argument and the (even more so) the right’s exclusionary group thing. The arguments are like molotov cocktails of pure emotion which generate nothing but fury from the opposing side.
I like to frame the rich vs poor argument a different way. My first day question to my Macro-Economics 101 professor would be something like: Isn’t flowing money good and idle money bad as a basic rule of thumb for any economy? Even word “currency” implies “the flow of”. My problem is not that Jeff Bezos has too much wealth compared to someone else. My main problem is that he has a pile of idle gold that sits behind him and doesn’t effectively participate in our economy. Bezo’s ($150B) money is bad in the grand scheme of things, compared to ($150B) in the pockets on say 100,000 households (picture Mom/Pop Shop flowing goodness). The argument should just be basic economic theory, not an emotional “they got more than me” rant, IMO. My framing helps keep both sides thinking about the numbers, rather the fairness emotional rants.
Okay, with that aside, I’ve always somewhat found theoretical agreement with my (libertarian)FIL about any tax that takes from “the flow”. I’d heavily prefer a way to tax “idle money”, but I didn’t know how. Carbon taxes target “bad” carbon usage, I’d like to target “bad“ idle money. I’ve thought to penalize any “super-evil idle” hidden funds in a Swiss or Cayman Island account type thing, but didn’t go much further with solutions.
So, in theory, I don’t like income or sales taxes. Income tax is particularly damaging to people. Almost everyone feels their paycheck gets hit by a tax wrecking ball. It’s 1/3 gone when we see the pay stub and virtually completely gone once it hits the bank account. I very much agree that the more money in consumers hands, the more the economy grows. Although my caveat is poor/lower middle money tends to flow further and deeper where we need business seedlings. Plus income is just a small part of our overall economic pie graph. We need a tax based on the full pie chart of everything.
So here is the idea:
Eliminate the income tax.
Replace it with a flat 5% asset tax (Remember USA has $100T in net wealth)
Compliment that with $1000/month Universal Basic Income & Universal HealthCare.
We are the richest country in the history of the world. All citizens should be thought as shareholders in this richness. The UBI, which I’d rename the Citizen Dividend because it should be thought of as a dividend is good economic flow policy. Free public health care is also part of the basic benefit of citizen shareholding in the richest country/org ever.
I was talking to my friend about the idea and he said, “when you live in a country with a net worth of $100T, the economic floor for the 325M citizen shareholders should not be zero”. It should something above that...enter the $1000/month dividend plus healthcare as the floor.
I think eliminating the income tax and getting paid a citizen dividend, in addition w/all health care covered could be political gold for people on both sides of the aisle. Paging someone who can sell it better than me.
Imagine a world, where you collect 100% of your pay check and you get a citizen dividend check of one grand a month in addition to that. You would have to have a net wealth of over $250,000 to even pay more taxes than you bring in via only the citizen dividend. Plus for those high on the wealth hog, I’m only asking you an investment growth of a measly 5% to beat your annual tax bill. A basic conservative investment plan of treasury bonds/bank CDs/real estate inflation/etc gets you there.
BTW, all entities get taxed this way, including all multi-national corporations, all churches, the NFL...no exceptions. I don’t care where your headquarters are located, if you do $1 of business in the USA, you must pay 5% of your net worth in tax annually. I was toying with the idea of making individual household citizens only pay 3% (& corps/big boys pay 5%), but I want to have the “it’s just flat tax” come backer for all my conservative pitchfork “it’s just socialism” friends.
Obviously this would have to be phased in gradually over say 10 years, but just seems like the beginning of a good idea.
