Without resorting to extreme measures, is there any act you could commit today that would have much effect outside the small world of people you know?
Probably not.
Yet, almost every day after they have breakfast Elon Musk and George Soros routinely make decisions that affect thousands of people.
So what’s the difference between you and Elon Musk and George Soros? As Ernest Hemingway has been quoted as saying, “They have more money.”
Something has to be done about that.
Money is but one manifestation of power, and as with most of power’s myriad guises, it is unfairly distributed. I’d like to believe that the proper role of a democratically elected government—in addition to its administrative duties and to providing for the health and safety of its citizenry—is to ensure the most equitable distribution of power that’s practicable under the circumstances. With that end in mind, I’ve developed a plan—a crackpot scheme, if you prefer—that will set reasonable limits on wealth and, thereby, limits on power.
I try to make my case below:
A NEW SQUIREARCHY
At the present time the laws of the United States encourage the creation of huge concentrations of wealth that bestow almost unlimited power on those who control them. Most of us tend to agree with the assertion attributed to Lord Acton that power corrupts and absolute power corrupts absolutely. Perhaps this is true and perhaps not, but there’s no convincing evidence for believing otherwise. Huge concentrations of wealth—and their concomitant concentrations of power—have not been demonstrated to contribute to the welfare of the general population. In fact, it appears to be quite the opposite. As Kevin Phillips pointed out in his book Wealth and Democracy: A Political History of the American Rich, “the cost to ordinary Americans has been substantial—in reduced median family income, in stagnant wages, in a diminished sense of community and commonweal, in fewer private and government services, and sometimes in poorer physical and mental health amid money-culture value, work hours, and competitive consumption.”
I’d like to propose a means to fragment concentrated wealth and to encourage the growth of localized business enterprises. I’m partly inspired by the unique squirearchical governance found in rural England during the eighteenth and nineteenth centuries. Local squires—prominent members of the landed gentry—were appointed as unpaid justices of the peace. In addition to settling legal issues, they also served as parish administrators, overseeing the maintenance of roads and bridges, for example, and generally providing what little government there was to be found in hundreds of towns and villages.
There was nothing the least bit democratic about their appointment, and a fair share were bad choices, but I like Rosamond Bayne-Powell’s characterization of squires in her book, English Country Life in the Eighteenth Century:
”When the squire of the parish was a magistrate his power over the people was very great; and even when he had not been put upon the bench he exercised a very wide paternal influence. That there were some boorish and cruel men and a few rapacious scoundrels cannot be denied; but in many, if not in most parishes the squire tried to do his duty as he saw it. He protected his people against overseers and other oppressors, gave generally in time of need with an open hand, and recognized that he had a duty towards the men whom he employed, and the people who lived upon his land.”
I’ll grant that this sounds a bit like Fielding’s Squire Allworthy, but he’s not a bad model (well, most of the time). And the truth is that in America’s 3,243 counties and equivalents we already have tens of thousands of de facto squires. These are the men and women who sit on planning commissions, organizational boards, and various civic improvement committees. They donate time, money, and expertise to community projects. The wealthier among them build hospitals, city parks, and college buildings. They’re bankers, physicians, property developers, factory owners, retailers, and so on typically doing their best in countless ways to maintain smoothly running, livable communities. They always keep in mind, of course, their own best interests, but that’s not necessarily a bad thing.
To encourage the growth of this unofficial squirearchy, I propose that we use the power of the federal income tax to hack away at the current plutocratic minority with a no-nonsense progressive tax on all income for individuals and associations (commercial and otherwise), no matter what the source: salaries, profits, rents, gifts, stock dividends, capital gains, tax incentives, inheritance, royalties, and so on, imposing, say, 10% after the first $50,000 of gross income, and raising it in 5% increments, eventually reaching 100% at everything over $1 million; furthermore, the only deductions allowed would be for legal dependents and donations to registered local charities and qualifying foreign charities. Deductible charitable giving would be limited to $5 million in any ten-year period. Capital and operating expenses would be tax-deductible only for enterprises situated in the established county of residence of the major stockholder (for-profit) or chief executive officer (nonprofit and not-for-profit).
Subjecting the ultra-rich to exceedingly high income tax rates is hardly a new idea. In 1944, the top rate in the United States was 94 percent on taxable incomes over $200,000 ($3.5 million in today’s dollars). Over the next three decades, it remained above 70%. It’s doubtful that anyone paid anywhere near this amount, but it established a precedent. Applying the tax to all sources of income has previously been suggested, but has never been practiced in the United States or probably anywhere else.
An upper limit on personal income will effectively stymie the formation of outsized corporate aggregates. Top corporate executives are the driving force behind corporate expansion, their goal being to increase the pay ratio of CEO-to-median-worker compensation. In a company with 500 employees the CEO might make 30 times the median worker’s pay; but in a company with 10,000 employees that ratio can jump to over 300 times. If, however, most of that increase is taken away by an unyielding progressive income tax, there will be little incentive to create giant corporations, whether publicly or privately held. There’s a further benefit: the shrinking of national corporations will result in the growth of innovative regional and in-state supply chains.
Rewarding only local investments will force entrepreneurs to live in the community that is home to their source of wealth. They will shop in the same stores, eat in the same restaurants, be members of the same country clubs, and attend the same churches as their employees. By default they will have local friends—boon companions even—among the county’s elite and they’ll have, at the very least, nodding acquaintances among fellow townies further down the economic ladder. As ambitious citizens of standing, many—not all, but many—will naturally assume the role of modern-day voluntary squires overseeing the health of their communities in order to preserve their sources of wealth.
To protect workers from managerial overreach, all enterprises with ten or more employees must accommodate legally mandated branches of established unions. Workers at smaller enterprises can take grievances or other concerns to locally elected labor boards.
What’s to prevent a major stockholder or CEO and his or her chief lieutenants from moving themselves and their enterprise to a country with less stringent labor laws and a more favorable tax code? Absolutely nothing. However, such a move would be regarded as prima facie evidence that it was done to avoid paying United States taxes, thereby disqualifying the enterprise—whether for-profit, nonprofit, or not-for-profit—from selling any products or services or soliciting funds for any reason in this country. If they can live with that, fine.
It’s true that wealthy people will continue to have more power, influence, privileges, and access to amenities than their less economically favored fellow citizens, but nowhere near the extreme degree that exists today. In the first quarter of 2021 the net worth of the poorest (so to speak) of the top 1% of wealthy households was $11 million. The net worth of the wealthiest was in the many billions. By taxing gifts and inheritances the same as all other forms of income, such huge estates will in time be whittled down to size, and this will occur without adversely affecting the bottom 80% of American households. The reformed tax code will also prevent the growth of new outsized accumulations of wealth. Carefully written and enforced laws and regulations will be necessary to prevent economic finagling by the ultra-wealthy and those who would like to become ultra-wealthy. Shoring up the barriers to reversion will require constant maintenance.
Many well-meaning people will object to any system that, even with restrictions, rewards capitalist enterprise, just as there are many others who will be appalled by a system that sets limits on those rewards. The former will be offended by the apparent unfairness of the distribution of wealth; the latter will see it as the breaking of some cosmic law. In fact, it’s a recognition that the human race comprises a wide variety of personality traits that have evolved over the millennia and which show no signs of going away.
The majority of human beings have a more or less balanced collection of traits; some people are more generous than others, some more ill-tempered, some more risk-averse, and so on, but they remain safely positioned on a socially acceptable spectrum. There are a few, though, whose lives are dominated by what Gordon Allport referred to as “cardinal traits.” Some are a matter of concern, and some are not. A hoarder, say, has little effect on society at large; whereas others, such as altruists, can be beneficial. Then there are those, such as the greedy and power-hungry, who can be disruptive and even deadly. Such negatively afflicted individuals will remain with us no matter how society is structured, and they must be taken into account, both by legally constraining their behavior and by allowing them a bit of leeway.
Utopian communities inevitably fail because they don’t allow for wide differences in human behavior; they fatefully anticipate that everyone will act in the community’s best interests—a forlorn hope. Functioning societies, on the other hand, accommodate such differences, including the need of some to till their own little plots and of others to establish their own fiefdoms. This proposal, I contend, will leave people free to pursue their natural bent (their success at this to be determined by their natural abilities) yet curtail excessive greed and authoritarianism, albeit while necessitating a perpetual battle by society at large to defend against those tendencies.
People will be left free to engage in the same culture wars as today: free speech, abortion, racism, health care, policing, education, prayers in schools, and so on. What will be different is that a redistribution of wealth and power will result in fairer fights.
Does such a plan have even the slightest chance of becoming a reality? Perhaps in some form over the very long term. People are made uncomfortable by rapid social change unless they see—or think they see—immediate advantages for themselves, and even then they’re justifiably leery. If instituted overnight, such changes as I’ve suggested would cause a total disruption of the existing order; furthermore, the torrent of billions of dollars into the U.S. treasury would result in massive boondoggles, graft, and corruption. To succeed, revolution must yield to evolution.
Starting the process will require wresting a measure of control from the rich and powerful by passing two already proposed amendments to the Constitution: 1, to permanently eliminate personhood for corporations; and 2, to guarantee the absolute voting rights of all age-eligible citizens. This would be a good beginning that could eventually ease the way for changing the tax code and making other needed reforms—such as a national curb on gerrymandering—many of which must also become amendments to the Constitution. Mere laws can easily be overturned; revising the Constitution is more difficult. Only once in 235 years has an amendment been repealed.
Throughout the process, federal, state, county, and municipal governments will carry on as before, but with one significant difference. Democratically elected officials will be increasingly free to fulfill their constitutional duties without interference from a fading plutocracy.
I frankly don’t know what the effect of such a radical revision of the United States tax code would have internationally. I’d like to think that its gradual implementation would influence people elsewhere to consider similar plans for dismantling concentrations of wealth in their own countries.
This proposal remains a work in progress. Any comments are welcome.