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The title actually should be, "Why we need to tax the same money again."
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The crisis of income inequality in America is well-known, (Is it a crisis? Why? How?)
but there is another economic crisis developing much faster and with worse consequences. I’m talking about inequality of wealth.
The wealth gap is now staggering. In the 1970s, the wealthiest tenth of Americans owned about a third of the nation’s total household wealth. Now, the wealthiest 10 percent owns about 75 percent of total household wealth.
America’s richest one-tenth of one percent now owns as much wealth as the bottom 90 percent.
Wealth isn’t like income. Income is payment for work. Wealth keeps growing automatically and exponentially because it’s parked in investments that generate even more wealth. (This is an astoundingly ignorant statement. Wealth does not grow automatically. The markets rise and fall. The wealthy are subject to the same investment risks as anyone else, and often they lose.
And sometimes they lose spectacularly. Many of them are entrepreneurs. The wealthy frequently take larger risks in order to start a company, develop a new product, and expand into new areas.
The wealthy are the ones who supply venture capital, they are the ones who are funding innovation and progress. They are the ones who have the means to push technology and development of new ideas.
And, the wealthy took the biggest hit in the 2009 recession. Much has been made about Trump's "failure" to beat the market returns, and his many failed ventures.
Dr. Reich is either ignorant or deceptive.)
Wealth is also passed from generation to generation. An estimated 60% of the wealth in the United States is inherited. Many of today’s super-rich never did a day’s work in their lives. (Depends on what one considers work. I would suggest that Dr. Reich as a government employee then a college professor, has never worked a day in his life.
And of course, the unemployed poor, living from generation to generation on government benefits, have never worked a day in their lives either. But they are so noble and deserving, while the rich are evil and deserve to be taxed more.)
The Walmart heirs alone have more wealth than the bottom 42 percent of Americans combined.
America is now on the cusp of the largest intergenerational transfer of wealth in history. As wealthy boomers die, an estimated $30 trillion will go to their children over the next three decades. (Only wealthy boomers are going to die? What about the vast middle class boomers, who also will transfer their wealth? They also have undeserving children who should forfeit their inheritance because the government deserves it more.)
Over time, this wealth will continue to grow even further – without these folks lifting a finger.(Somehow it is bad that investments increase in value...)
This concentration of wealth will soon resemble the kind of dynasties common to European aristocracies in the seventeenth and eighteenth centuries. (There is no "concentration of wealth" via inheritance. Actually, wealth is dispersed via inheritance.
Dr. Reich cited the Walmart heirs. Notice the plural. Because Walton named heirs, his wealth was dispersed among several people and charities.
Wealth does not get concentrated via inheritance.)
It’s exactly what our Founding Fathers sought to combat by creating a system of government and economy grounded in meritocracy. (Whaaaat? I have rarely read something so egregiously false and obfuscating. If ever there was an example of contemporary agitprop, this statement is it.
Up to this point, Dr. Reich has been calling for more government, more intervention, more taxation, and more involvement in the private sector so as to shift the allocation of wealth. He is absolutely an advocate for increasing government power.
Yet he appeals to the Founders of all people. But the Founders did not create government to make sure no one got too wealthy. Their purpose was to throw off the restraints of oppression by an unaccountable power. They were vehemently opposed to centralized power.
They created a limited government, with few and defined powers. They believed power was to rest in the hands of The People, not the government.
The Left has been busily at work ever since, expanding government to a grotesque and bloated version of the Founders' express purpose.
Indeed, the Left hate the Founders. They were racists, oppressors, slave owners; they were white male patriarchal Europeans. They wrote a Constitution founded on the eradication of indigenous peoples, a document useless for today's problems.
Any appeal to the Founders by a Leftist like Dr. Reich is suspicious at the least, certainly manipulative, and almost invariably misrepresents them.)
Dynastic wealth puts economic power into the hands of a relatively small number of people who make decisions about where and how to invest most of the nation’s capital, (Note the less-than-clever use of language. It's not the "nation's capital." This money belongs to its owners. They get to decide for themselves where to spend it, invest it, or indeed, waste it. It's their money, not the nation's.
Implicit in Dr. Reich's statement is that government makes better choices, which of course is preposterous. But that's what Dr. Reich wants. Because he doesn't trust people to make the right choices with their own money, he wants government to take it and spend it "properly.)
as well as which nonprofit enterprises and charities deserve support, and what politicians merit their campaign contributions. (Again, people just can't be trusted to spend their money the right way.)
That means their decisions have a disproportionately large effect on America’s future. (Again we see the implicit assumption that peoples' money is really not their money. It's "America's future" that is more important. And government apparently is head and shoulders above any other choice as to whom should spend peoples' money.)
Dynastic wealth also magnifies race and gender disparities. Because of racism and sexism, women and people of color not only earn less. They have also saved less. Which is why the racial wealth gap and the gender wealth gap are huge and growing.
Today, government is financed almost entirely by income taxes and payroll taxes – totally ignoring the giant and growing wealth at the top. (That is, a pot of money just sitting there, untaxed.)
So how do we address the crisis of wealth inequality? (One primary way would be to correctly identify the problem. Wealth inequality has risen independent of political party. Tax increases have not changed wealth inequality. Here's some history to demonstrate this:
A wealth tax, as proposed by Senator Elizabeth Warren, would begin to tackle all this by placing a 2 percent tax on to wealth in excess of 50 million dollars.
According to estimates, this tax would generate 2.75 trillion dollars over the next decade, (Funny how these projections never materialize.)
which could be used for health care, education, infrastructure, and everything else we need. (Who is "we?" Most certainly it is not "you and me." No, "we" always means government. Government "needs" this money much more than some wealthy guy who has never worked a day in his life, right?
So government institutes a tax and supposedly brings in a boatload of money. Government spending, already ridiculously high, gets even higher, solving yet again our healthcare problems, education problems, and infrastructure problems. [Remember the stimulus, with its "shovel ready" jobs? Remember how that money instead went to bail out Wall Street fatcats and banks deemed "too big to fail?"]
So picture this. You have a bank account with, say, $100 million in it, and Dr. Reich gets his way and Elizabeth Warren puts in her 2% tax. How much tax will you pay?
Well, you won't pay anything. Because if Elizabeth Warren is elected president, you will either move your bank account to an offshore account, or you will sell your house and move to Costa Rica or the Dominican Republic. You aren't going to hang around and let Elizabeth Warren help herself to $2 million.
And you are pretty sure that if 2% is good, 4% is better. Once the camel's nose is under the tent, these is no stopping government from doing whatever it wants, including the full confiscation of all wealth, i.e., socialism. Hmm.)
Not only would a wealth tax raise revenue and help bring the economy back into balance, but it would also protect our democracy by reducing the influence of the super-rich on our political system.
We must demand an economy that works for the many, not one that concentrates wealth in the hands of a few. A wealth tax is a necessary first step.
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