“I’m talking more than 70% of income and an initial net worth tax on existing wealth”

Doesn’t matter. It;s not nearly enough. I already showed you how an increase in the marginal rate wouldn’t give you enough; and if you kicked it to 70%, you eliminate the incentive to earn. The US has never had a tax anywhere near that high that people actually paid. When marginal rates were at 70–90%, the tax code was loaded with loopholes that allowed the rich to get their AGI’s down to no more than half that.

As far as the net worth idea is concerned, even you could convince the courts to throw current law aside and do it, you have no idea what the scope of the problem here is. You can take the entire net worth of the thousand richest Americans and all you do is fund the deficit for a few years. Think about that for a minute. The thousand richest Americans, and all they can do is cover our overspending for fewer years than we have numbers on our hands.

And we haven’t even started to talk about the generational imbalances on Social Security, Medicare, and Medicaid.

“I know that you know this is true.”

Actually, I don’t. People make money, even the vastly wealthy, through hard work. Obviously, since investment proceeds are based on a compounding of investment capital, having a lot of investment capital yields a lot of proceeds. But financial markets react to supply and demand signals. It used to be that people could make a nice buck by doing merger arbitration; then, everyone and their brother started doing it, and the returns dried up. Markets react. That’s a problem.

“Disagree completely.”

You disagree that low priced global competition matters? :-) If you have that solved, write it up in detail, with math, and submit it to the Nobel Committee. You’ll win hands down.

“Also, the Constitution can be amended and, perhaps more importantly, reinterpreted.”

No, you’re ripping it up. What you’re suggesting would require the end of the American experiment, a new nation, and the annexation of most personally held financial instruments and cash and redistributing it in a way that seems more fair to the …… government/politburo. I will simply point out that this experiment has been already tried several times, and in each case ended up with crashing standards of living.

“You realize some billionaires report negative income, right?”

Very few do. The reason the few can is because they’re carrying massive business expenses on their personal returns. That is VERY unusual, because it’s extremely risky. Trump is not normal. Your regular run of the mill rich guy is paying the going rate on their income. Their investment income is being taxed at the cap gains rate, currently 20%. Most of their net worth sits in long term investments; it gets taxed when they sell.

“Don’t create pointless jobs because you think humans have to work.”

I wouldn’t create any pointless jobs. I want to keep the ones we have. Further, let me correct your grammar; I don’t THINK that humans have to work; I know it to be true based on the data. There is ample evidence from the Soviet years that it is true; initial experiments in Switzerland with guaranteed income have had the same result. Then, there is our own clear evidence from our own working class towns who lost employment, and ended up in mires of alcoholism and opiod abuse. The man who is in the White House today is your living evidence; if Clinton had had any solution at all other then “we’ll increase welfare” she’d be President today. That working class demographic spoke clearly. They don’t want government money. They want to work.

“Name an industry besides the arts that would be bad if automized for a reason other than “working builds character.””

You’re missing the point entirely. The moment you automate away trucking, for example, you cut off the income source for 1.5 million working class families. That’s not going to be a very happy day for anyone other than the trucking companies.

Then write your own article, “do better,” and link me to it.

I have no need to write an article. It’s math, not social science nor politics. Math proves that if you tax something you get less of it. The more you tax income, the less income people earn. It is well known that if you raise taxes by 10%, the government will get 6–7% more revenue, not 10%. Been like that for centuries, and there is a law of diminishing returns at the top end of the scale.

Plus, I know how much capital there is out there held in net worth by the top 5%, and how that matches up against current deficits and the generational imbalances of SS and Medicare. The math doesn’t work. And as we both know, rationalizing our tax system where the poor and middle class pay taxes at world standards is a political nonstarter. Thank Mr. Clinton for this part of the problem.

So, you need to look at better ideas and better revenue sources. My thoughts on the subject lead me to a multipronged approach. Part of this is the choice not to automate. Let people work, for crying out loud. I used to like going to Chile’s; then these ordering tablets appeared on the table. Pooh on that; I like to talk to people when I eat out.

Another part is what is generally known as the “Japanese approach”. The Japanese have been dealing with an unemployment problem since their economy blew up in the early 90’s. If you travel there, the joke is that they “pave the ocean” — — meaning that they solved the problem with massive infrastructure spending which has continued for decades.

New revenue sources should focus on the broadest sources possible; a financial transactions tax, properly designed, has potential in this area.

You’re also maybe thinking of it as UBI happening tomorrow rather than down the line when it will become absolutely necessary to the middle class rather than just those subjected to poverty.

My point is that UBI isn’t absolutely necessary. In my view, UBI is an easy, clean sounding idea that sounds like a solution to what will be a dirty, nasty problem. It won’t be.

Providing valid revenue sources for people displaced by automation is what is absolutely necessary. UBI is just the idea du jour. We can do better.

Written by

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store