Taxing wealth instead of work is touted as an important part of the solution to the wealth gap, but I’m curious which other solutions have been proposed or attempted and have succeeded or failed.
Social assistance, labour unions, funding for infrastructure, free healthcare and education.
The American President Franklin Roosevelt, who was elected during the depression, and his New Deal policies were credited with pulling millions out of poverty, expanding the middle class, increasing standards of living, and rebooting the economy.
The New Deal led to the creation of the SEC (securities and exchance commission) to protect investors from shady stock market practices and the FDIC (federal deposit insurance corporation) to protect people in case a bank fails. It increased public works funding which in turn created jobs and better infrastructure. It also created welfare programs to get people out of poverty and labour unions.
The increasing wealth gap in the United States can be tracked to the slow rollback of these policies and reduced funding for the measures put in place. In the 1980’s, Reagan took the opposite approach with trickle down economics that cut funding to social programs and lowered taxes rates at the top brackets.
Now, the New Deal wasn’t perfect, it left a lot of people behind, but the spirit of it goes to show how economic controls and social supports are integral to a healthy population and economy. Inversely, Reaganomics led to the 1987 stock market crash, higher unemployment, and higher income disparity.
German perspective, I don’t know what is applicable to the US and other countries.
First and foremost: Removing sales tax on (basic) food. Sales tax in general hits the low income population much harder than any other tax. Lowering income tax when your income is low or non existent doesn’t help as much as just to not pay an additional 7-19% on bread, milk, eggs, legumes, fruit, vegetables.
Build more affordable housing and capping rent pricing.
Increase social security and unemployment to boost the economy. Poor people don’t save up. What they get they spend. Every 1€ they get will immediately go back into the economy, hence creating economic growth, which then will create more jobs that need to be filled. The stupidest thing one can do in times of crises when people are unemployed is to save to push them into non existent jobs. If jobs and income make people richer, then you have to provide jobs to begin with. A saving instead of spending economic mindset of the public is the worst thing you can do there, and this especially regards government payouts to low/no income individuals. Or, you know, invest in people.
Inheritance tax. Raise the limit of tax free inheritance, but after that limit is reached, tax much, much more. Nobody cares if you inherit a 2M € mansion. Hell make it a 10M mansion. These aren’t the inheritances we should be worrying about, and making sure everybody knows it is not about their family’s house being taxed away from them will hopefully increase support for inheritance tax.
Would removing the sales tax be in addition to the wealth tax?
As a counter proposal to reducing or eliminating the sales tax, what would you think about eliminating income tax?
Build more affordable housing and capping rent pricing.
This should be done in general. But before I continue asking questions, are all your suggestions in addition to a wealth tax, all together, or separate?
Great questions!
Would removing the sales tax be in addition to the wealth tax?
Yes and no.
Yes, there should be a wealth tax.
No, removing the sales tax stands as a solo proposal.
I am very much for a wealth tax, but removing the sales tax should not be proposed alongside a proposition for a wealth tax. This decreases support since a wealth tax is much more controversial than “hey how about we stop taxing bread?”
As a counter proposal to reducing or eliminating the sales tax, what would you think about eliminating income tax?
(In Germany, income tax is progressive, but I think that the following also applies to countries like Russia, where everyone is taxed 13% of their income.) Eliminating income tax would be a massive tax reduction for the most wealthy. Meanwile, people on social security or low income would basically hardly have any additional money. Studies have shown that sales tax is the tax that, percentage wise, is by far the greatest burden on low/no income households.
This should be done in general. But before I continue asking questions, are all your suggestions in addition to a wealth tax, all together, or separate?
As briefly mentioned above, I am very much pro wealth tax, but you do not need a wealth tax for the suggestions to be sensible. They can stand alone, and they should, since it is easier to get a majority to agree to them one by one (or to somemof them) than to the whole package.
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I would also like to add: free public transport, investing in public transport, invest in (free) education programs, free childcare, and strengthening union rights so that workers have more leverage.
As well as, and this will probably sound insanely evil, but I want it to sound this way, because removing the humanitarian aspect of accepting refugees and immigrants can be beneficial if you want to have right wing people on your side: let more foreigners in. You get young workers that are highly eager to work. They will send money home, sure, but they will also spend money. Get the ruble rolling. Again, they also gotta eat, gotta live, gotta get clothes. They will spend everything they earn one way or another, and this will boost the economy - since most of them work in low paying jobs and won’t put their money in the bank. Hell they will pay taxes and contribute to the pension fund and stuff! You want foreigners! You’re getting fresh meat to exploit!
Where can you buy a 2M euro mansion? Here in BW a million buys you a small house, or even just a Wohnung.
Those who own a house worth one or two million euros aren’t rich. They’ll have bought it for peanuts a decade ago. They’ll have worked hard and paid plenty of tax. So why charge more tax on top of that after they’ve died? You’re just punishing their children, who aren’t going to be well off by any stretch of the imagination.
I’m all for levying inheritance tax on the properties owned by millionaires and billionaires and their trust fund babies, naturally.
I must have phrased it poorly because that is what I meant. Don’t tax 2Mil+ houses. Unfortunately right now when people think about inheritance tax this is what comes to mind. I don’t care if you inherit a huge house tax free. I care if you inherit massive wealth. A high priced family home is not massive wealth.
Change the goal. The French economist Thomas Piketty (https://en.wikipedia.org/wiki/Thomas_Piketty) has demonstrated, using 250 years of historical data, that the wealth gap increases as long as the rate of return on capital is greater than the growth rate. Every institution in the western world (including governments who are trying to maximize tax income) are trying to maximize return on capital. Growth is good if it is in the public interest. If we only want growth because it increases our returns on capital, inequality is the result.
What does “return on capital” mean? Could you define it?
If we only want growth because it increases our returns on capital, inequality is the result.
Which reasons for growth are good? And also, what kind of growth are you talking about?
These are all great questions we should be asking policy makers who cite ‘economic growth’ as justification for policy. In this context, ‘economic growth’ refers specifically to GDP growth. Who benefits most from GDP growth? Tobacco companies provide billions to GDP annually but also contribute to increased public health costs that everyone has to pay for in one way or an other. Growth for the sake of growth doesn’t necessarily lead to the best outcomes for all of society.
The rate of return on capital is a macroeconomic aggregate of the overall rate of return that capital generates. Capital is any asset, so the rate of return on capital is the average rate of return on all of the machines in factories, all of the money in government bonds, all investments in the stock market, literally all capital of any form in an economy that is used for production or savings.
Western economies operate in a form of capitalism, which by definition means to maximize capital. So realistically, all producers in capitalist economies are incentivized to maximizing returns on capital, that’s the goal.
But if we change the goal from maximizing capital to something else, like maximizing human well-being for example, than there would be less incentive for producers to constantly try to earn greater returns on capital and the growth rate of the economy could then surpass the rate of return on capital and inequality could decrease.
So in this case, investing money in libraries, schools, hospitals, transit, infrastructure etc. would generate growth without the expected rate of return on capital associated with that growth.
This is an other option to reduce the wealth gap, as was asked by OP.
Capping wealth. 100% taxation over a certain amount. If you can’t make more money, why steal wages from your employees or raise prices more than it’s needed? And if you do, all extra money will be taxed and gets back to the people anyways.
And if you do, all extra money will be taxed and gets back to the people anyways.
Are you proposing a 100% tax on wealth after a certain limit? How would that work? For example you own a house and from year to the next its worth goes above that limit: what’s supposed to happen?
Removed by mod
I think he’s saying that in reality it’s going to be impractical.
Say his assets gain 10% value due to world economy. You can definitely tax him on it if it’s that clear but things rarely are.
Yes we agree billionaires don’t need to exist but the actual practical way of completely preventing anyone from becoming one is going to br harder than it sounds if you’re only leaving one million as a margin of error.
Universal Basic Income for people who are below an particular netwoth with it gradually decreasing until they get none.
I agree with UBI, but what you’re proposing isn’t universal. On the one hand you could say this ensures everyone gets at least a minimum income, making it universal, but the implementation leads to biases, judgements and disparities. Every individual has unique needs and benefits that make it hard to determine how well they live.
I would support an efficient structure that can truly address each individual’s needs. Administrative cost isn’t just wasted money and social work is a job. On the other hand, half-measures in social supports are how we get disjointed programs, minimum payouts that keep people in poverty, and higher overhead costs for implementation.
Maybe I just want to see what happens if we give everyone the same amount of money and tax wealth and luxury items instead.
Giving everybody the same amount does nothing for wealth inequality. There needs to be a cutoff point. Someone making €150,000 a year doesn’t need ubi where someone making €34,000 it would make a massive difference.
If UBI doesn’t nothing for wealth inequality, then by definition giving it to rich people won’t do anything. A rich person getting 2k/month means getting pocket change. A poor person getting 2k/month will make a much bigger difference because percentage-wise it’s a much bigger chunk of their disposable income. Also, one of the major points for UBI is that it’s universal meaning a lot of bureaucracy can be removed if there are no strings attached and little to no conditions.
I do agree that UBI might not solve wealth inequality but it can be an important part of opportunity equality.
Who’s to say the person making $150,000 is living better?
Anecdotally, I just moved from a city with a median rent of $1600/month to a town where I just pay for utilities, to watch someone’s second home. I make the same amount of money.
I used to live near a low income grocery store that reduced my food expenses by 75%.
When I have access to a garden I can cut down my yearly food costs by a few hundred dollars.
I have no children. My friend with two kids makes twice as much as me and has less disposable income.
I still say give everyone the same amount. If it ends up making them disproportionately wealthy, tax the wealth.
It makes much more sense to just give it to everyone. If you start implementing means testing then you need to hire people to determine who is eligible for what, and administrative costs wind up being substantial.
This would not make it universal and is kind of reminiscent of what we call unemployment checks combined with the income dependent allowances we can receive for health insurance, rent and childcare.
This is in the Netherlands, for reference.
Kinda but not exactly. You would get the benifit even if you are working, unlike unemployment benifits which go away after employment.
If someone has minimal part time hours at Ah or Jumbo then the still get full ubi.
By definition, that is not “universal”. In fact, that already exists with an additional clause: you must be unemployed to receive it - which doesn’t make it basic income either.
But let’s say basic income were implemented in the form you’re talking about, how would it reduce the wealth gap? It’s not like basic income increases wealth, does it?
Didnt say you had to be unemployed.
You reduct a wealth gat 2 ways, lowering the top or raising the bottom.
Can’t do that without taxing the rich.
Cutting the top of the gap and raising the lower end are both parts of the solution. No one thing will fix the gap issue.
Or something similar, like have a UBI with brackets based on net worth. For each bracket the UBI decreases as your net worth increases.
And then also have a bracketed income tax for income earned outside of UBI. Where income earned up to some multiple of UBI (like 3x-4x), is tax free but beyond that it’s taxed at progressively higher rates, eventually reaching 100%.
Pretty much.
Reset minimum wage to an actual living wage, with mandatory cost-of-living increases each year.
If a corporation has workers on public benefits (food stamps, whatever), then that corporation is fined twice the amount of public benefits each employee receives. If an employee working two or more jobs is on public benefits, then each company is fined twice the amount that employee receives.
Firm up Unions and Union protections.
Limit the amount of total compensation anyone involved in a company - including the entire C-suite and Board of Directors - can receive to, say, twenty times the lowest-paid employee. “Total compensation” to include stock options, bonuses, travel and business perks, etc. Also ban companies from employing / hiring / chartering private jets; if the C-suite wants them, they can pay for them themselves.
Semi-related to above, but not directly related to your question: For company travel, ban companies from sticking their employees in cattle class (whether travel, hotels, meals, etc). Nationwide mandatory rest and water breaks for all outside work (none of this bullshit where agricultural workers in Florida don’t have water breaks). Mandatory rest and food breaks at work, with none of this bullshit where the break starts when you leave the line and it takes you ten minutes to get to the lunchroom and ten minutes to walk back. Mandatory sick time for all employees, mandatory vacation time for all employees. Hold companies that out-source work liable for the treatment of the out-sourced workers (none of these “well, those are independently contracted workers, so they set their own schedule even if we’ve given them unrealistic goals and will penalize them for failing to meet those goals”.)
Overturn that law that says companies and corporations have a duty to consider the “rights” of the shareholders (which is where at least some of this “line must go up” shit comes from).
Ban private equity and similar types of predatory businesses / people from investing in human needs. That includes housing; water, sewer, electric, gas, communications and similar utilities; food production; whatever else is essential for people to live half-decent lives.
Actually and aggressively enforce wage theft laws, with employees getting multiples of their deserved payouts, company owners and directors facing personal fines and prison time, and the corporate death penalty for any companies deliberately or systemically engaging in wage theft.
If you’re going to continue to arrest workers who are in the country illegally, arrest, prosecute, fine and jail the owners, C-suite, and managers of companies that employ undocumented workers.
If you retire and your income is over 100 times the federal poverty rate (which currently means an annual income of about $1,200,000), you don’t get Social Security income, and use that money to increase benefits for people on the lowest level of the Social Security ladder. In a similar note, allow people on disability, Medicaid, etc, to have more than $2000 in assets before they start losing benefits. $2000 in assets was nice when it was set in the 1980’s, but I don’t think it’s been raised since, and $2000 isn’t much in today’s economy. Similarly, the max-assets limit should get an annual cost-of-living increase.
No one “needs” more than two homes. If you (or you and your combined shell companies, it you and your family, or whatever other ways you find to get around this) have two or more homes, you personally have to live in that home for at least 90 days each year, with similar aggressive reporting requirements as inflicted on people who get Medicaid, food stamps or other public benefits. Failure to live in the home or meet reporting requirements means you have to pay some decent percentage [maybe 25%] of the home’s current value to the [state? local?] government. If you fail to meet the “actually live here” requirement for a certain number of years (say, 10 years), your home can be auctioned off.
Limit the number of living units an individual landlord / company / corporation can own, run, or otherwise profit from. Limit rent to a certain percentage of the unit’s same value, plus a maintenance/repair fund, plus some reasonable amount of income.
Heavily tax income over a certain amount. Tax wealth over a certain amount. Tax estates and inheritances over a certain amount.
Go over existing laws and start closing so-called “loopholes”. Those “loopholes” aren’t accidental wording in the law that people/companies discovered and decided to take advantage of; that was wording that was deliberately added to the law, at the behest and bribes of corporations and wealthy people, so they could intentionally avoid the law.
Probably a bunch of other shit, but this is a semi-decent start.
All of this sounds good, honestly. I’m cynical and think that loopholes are always present and there is a risk that applying laws that are too strict could push companies to move out (I know this is often also used as a cop-out to not do anything…)
Inequality is always going to be prevalent in a meritocracy. And that’s okay. It should be possible to just get by nowadays and if you want a little extra, you can work or invest what you already have. A Universal Basic Income paid for by a wealth tax would work. There are of course also other means of financing UBI. Heavier taxing of luxury products, air travel, mileage taxing for cars, there are tons of options. Sadly none of these will ever be applied because countries are usually run by people who would feel these measures themselves and it would prevent them from putting spinning rims on gold jetskis.
Inequality is always going to be prevalent
in a meritocracy.Inequality will always be present. We aren’t all the same (I think that’s physically impossible as the universe prefers chaos) and thus any system we exist in will have inequality. It isn’t limited to meritocracy, idiocracy, or whatever.
Sadly none of these will ever be applied because countries are usually run by people who would feel these measures themselves and it would prevent them from putting spinning rims on gold jetskis
We are the 99%. If we had a common goal and agreed on a major path to get there, it could be achieved. Tax Wealth, Not Work is a big thing right now (at least in my bubble) but I’m trying to look outside of it and thus this question came up.
You are correct but I do have one thing to point out. We do not live in a meritocracy and we never have. It is a cultural myth that is very harmful, in that it is a major force in maintaining inequality.
Smart work and dedication can certainly improve a persons individual circumstances, that’s just the way of things. But we most assuredly do not put those with merit on top. It’s the other way around, we ascribe merit to those on top in direct contradiction to any reasonable measure of ‘merit’.
We culturally use the myth of meritocracy to justify extreme wealth accumulation. Once a person gains a certain amount of wealth, their money makes money for them plus society has this lovely tendency to overlook misbehavior if the miscreant has money.
Communism
Maybe I should’ve specified realistic.
Trickle down economy has been tried, but its positive impact is doubtful.
That definitely doesn’t work as the wealthy continue accumulate wealth and only leave scraps behind for the others. They can buy up all the assets with no repercussions.
A constitution that makes the government bound to improving the welfare of its citizens. “All laws shall have the intention of improving the livelihood of the bottom 35%” would be a place to start.
“It shall be illegal to or provide healthcare that is reasonable and affordable for all citizens.”
“It shall be illegal to fail to provide housing for all.”
You know, basic stuff a government should be doing.
How would that be enforced? If the government fails to provide housing for all, for example, what would be the consequence?
I think this is too ideological to implement and by that I mean it’s too vague. Of course, I’m open to changing my mind. Besides enforcement, how would welfare be defined and would the welfare of citizens be evaluated?
Make it illegal. Say 10x more then the median is a jail scentence of 10 years.
There is noting more economically toxic then inequality.
How would that work? The median changes all the time. If you’re at 8x and suddenly the median tanks and you’re at 10x, straight to jail? But let’s say there’s a grace period of 1 year during which you have to reduce your wealth, what if it’s the house you’re living in that was inherited. That house now cannot be sold to anybody because anybody owning that house would go to jail. It doesn’t have to be a house either, it could be land and by chance a rare mineral is discovered on neighbouring land that sends your land value skyrocketing, do you have to sell that land to not go to jail?
A real, functional minimum wage across all jobs (close the loopholes around tips, piecemeal work, etc). Have it pegged to inflation so it stays a living wage.
Universal Basic Income would probably be a better option, I think. No conditions just money into your bank account regardless of who you are, where you live in the country, and what you’re doing. Pegging UBI to inflation would also make sense.
It would make a great addition to a wealth tax.
Direct government support for and Incentivization of worker Co-ops across the supply chain, and specifically for digital infrastructure.
Worker owned and run businesses distribute wealth to the working class directly, and digital infrastructure like datacenters and fiber optic networks which yield strong ongoing revenue in exchange for intensive uo-front work on planning and cinstruction followed by ongoing preventative maintenance are an ideal target for co-oping if a lender would specifically support it. The lender of choice could easily be a government agency, with ag loans, innovation loans, and the SBA in the US all as examples of how this can work.
Similarly alternative energy supply chain can and should be co-op, not just as consumer co-ops like there are in rural power utilities, but worker co-ops as construction and maintenance contractors for the solar and wind fields and power grids, as well as the hardware manufacturing facilities.
Direct revenue-driven worker ownership is the surest way to increase economic equality, as direct share of revenue and worker-member units are resistant to the speculative value manipulation that drives most wealth accumulation at the top in the “public/private” corporation model of neoliberal capitalism.
Land are not the only assets the rich possess. They own your debt (and thus your belongings that are paid in rates), they own stock, bonds, and many other immaterial assets. A wealth tax would include land taxation.
