Chapter Six: FOR RICHER, FOR POORER
Let’s get back to the themes we were discussing. Aside from the Bad Republican theme, there were themes related to the environment, children, seniors, the Constitution, and our economy. One of the more common Democratic Party criticisms related to the economy is that Republicans favor the rich to the detriment of the poor. It’s what you might term “Robin Hood Politics”. Republicans are cast as the ones who are taking away school lunches, removing healthcare resources from kids, and making our older citizens choose between heating their homes, having food on the table, or taking prescription medicines. If you have a Republican political affiliation, you no longer care for the disadvantaged of our society. Republicans apparently have an inherent desire to hurt the less fortunate. We have no sense of charity or compassion!
But there is hope. The Democrat Party can be vested with powers that will change all of that.
THE EXCESS WEALTH AND INCOME TAX
The problem with older people in America is that they are not all the same. While there are people aged 60 and over who are in difficult times, there are also people in this age group who are doing quite well. In fact, some of them are doing VERY WELL. These are the people that the Democratic Party refers to as “The Rich”.
I realize that there are younger people who have done well for themselves, and many of them happen to be in show business or are playing professional sports. However, it somehow seems inappropriate to turn on someone who is very popular and making lots of money. You might think that they have achieved too much too soon, but life can be filled with unexpected twists and turns, and a younger person might end up penniless by the time he or she reaches the age of sixty. If that were the case, it would be unseemly to deprive them of their joy early on, only to find out life deals them even greater difficulties in the later years. The right thing to do is to wait until they have passed the age of sixty. At that point, they become subject to the Excess Wealth and Income Tax.
This is another program that would be strictly and totally run by the Democrat Party. Again, there is no need to achieve consensus. What the Democrat Party thinks is the right thing to do is what gets done. Here is how it would work:
First, there are no hard and fast definitions. The level at which one becomes “rich” does not have to be set in advance. It certainly entails levels of income and levels of assets, but the Democrat Party does not need to explicitly define these levels. Being rich or being poor is simply something that one “knows when he or she sees it”.
So how would it play out? Let’s say that you are an American who has reached the age of sixty. At that point, your assets and income are subject to Democrat Party review. Your tax forms would change to where you don’t just report income, but you also report assets. If during the prior years you had worked to accumulate too much wealth, or you are currently earning too much income, the excess would be subject to the Excess Wealth and Income Tax. It would be levied by the Democrat Party, and would be due and payable when the Democrat Party says it is due.
What would be done with the money? The Democrat Party apportions it back to individuals based upon their needs. Thus, the Excess Wealth and Income Tax becomes the way for the Democrat Party to do away with the misfortunes of our children and Seniors. It is a “Robin Hood effect”, without a Sheriff of Nottingham. The Democrat Party takes care of the redistribution of wealth, with the necessary money coming from those who can afford to give it up.
I think the only requirement to make this concept a reality is a reporting requirement. The Democrat Party would have to disclose where the money comes from and where it goes. If there is a need to avoid a problem with “taxation without representation”, the Democrat Party could provide a list of the potential “Rich Taxpayers” to Congress, and they could vote on who is taxed.
It seems to be a pretty good idea, and it certainly has some appealing features. Let’s look just at the “Excess Income” part of the tax. You don’t necessarily have to restrict this to people who are sixty years of age and older. It could apply to anyone making too much money.
The Democrat Party would work the income problems in our country from two sides: There would be thresholds at both ends of the spectrum. For example, you could ensure that anyone submitting a tax form receives a minimum amount of income. If I submit a form saying I made $4,000.00 in a given year, and the Democrat Party threshold for minimum income is $10,000.00, then I would get a “refund” of $6,000.00 after submitting my tax form. Thus it would set a floor on the minimum amount earned by an American tax filer. There would be no tax filer who would make less than $10,000.00 per year. We could eliminate poverty!
How would we tax the rich? Just as there is a floor on the minimum amount of money an American tax filer would need, there would be a ceiling on the maximum amount of money an American tax filer could make. If you happened to make $11 million in a given year, and the maximum set by the Democrat Party is $10 million, then the extra $1 million would be the amount of your Excess Income Tax. Income in America would be bracketed, so that people would never earn more than a certain amount, and would never earn less than a certain amount. The gap could be narrowed until there is no more poverty and there is no more “obscene profit”. The Democrat Party could gradually move us toward a perfect society, and they could start with “baby steps”: Take only from the very rich, and give only to the very poor. Start small, but then continue onward, closing the income gap by reducing the extremes at either end.
What about the Excess Wealth side of the plan? Here I do think you’ve got to stand firm on the age threshold. We’ve got a model for the Excess Wealth Tax in the form of our Estate Tax, which kicks in upon the death of the taxpayer. But I’ve got to think it would be discouraging (to say the least) if you had to fill out, and be subject to, a wealth tax form every year of your taxpaying life. It would make sense to give the individual some time to achieve a state of wealth before taxing that wealth. Maybe the threshold date gets changed over time, but start at the age of sixty for the taxpayer.
What about the issue of frequency? How often to you assess the Excess Wealth Tax? It’s pretty hard to make multiple fortunes in a lifetime, and it would be discouraging if each time you finally get ahead, the Democrat Party takes your wealth away. For this reason, the Excess Wealth Tax should only be assessed once in a lifetime. This has the advantage of delivering a severe wound to the Golden Goose, but not necessarily killing it.
How much tax should apply to a wealthy individual? Let’s take as an example the wife of Senator John Kerry, Teresa Heinz. If she had the Excess Wealth Tax applied to her, what would be the appropriate assessment? Should it be a percentage of her wealth, or should her wealth be reduced to a certain threshold? Let’s say the goal is to make everyone in the United States have no more than $1 million in wealth. If Teresa starts with $500 million in assets, and that gets reduced to $1 million, that’s a $499 million hit and a 99.8% tax rate. That gets her to the level of everyone else, but is it fair to take away 99.8% of her wealth? If instead her wealth is reduced to $250 million, that’s still a $250 million hit and a 50% tax rate, but she keeps $250 million. Is that too much? She’s still rich! To most of us, these amounts are so large that they become abstract. To Teresa, though, this is real money! The way in which the Excess Wealth Tax is levied becomes a big deal!
The whole issue seems to be wrapped up in the concept of fairness. For the individual, probably the fair thing to do is to reduce each rich person’s wealth by the same percentage. For society, it might make sense to reduce everyone in the “rich” category to a certain level of wealth. The Democrat Party could proclaim that it has reduced the wealth of the rich so that, “There are no American billionaires!” Or maybe go all the way to where there are no American millionaires. It could be possible to change income and wealth in America to where there are no rich people and there is no poverty. It’s just a matter of getting the proper redistribution of wealth and income, and settling on definitions of “the rich” and “the poor”. The Democrat Party becomes the champion of “Robin Hood Politics”.
Like the White Male Draft, a system of income redistribution through an Excess Wealth and Income Tax is probably not going to happen in America. It’s not because the idea of Robin Hood Politics is unpopular, but rather because it’s a difficult system to implement. The fairness issue is the most problematic. Fairness between individuals and fairness within a society are often in conflict. Think about trying to apply it just within your own extended family. If you’ve got a deadbeat relative who is never going to get ahead, and a star performer who is the family favorite, how do you take money from one and give to the other with a sense of fairness? What if the family favorite became wealthy through lottery winnings? What if the winner was poor up until the winning ticket was drawn? What if the winner was already well-off prior to the winning ticket being drawn? Who in the family gets more and who gets less? Who gets to be the decision maker?
What if the family favorite earned the money by foregoing luxuries and making sacrifices all of his or her life? Now the favored one reaches age sixty and it is time to make the distribution. Because the excess wealth was obtained through sacrifice, does that impact the decision to take it away? What if the wealthy person sees the tax coming and decides to move to Canada to avoid the tax?
I think the fairness issue is what kills the concept. For whatever reason, we seem to be ok with the idea of having a wealth tax that gets applied upon the death of a person, but to have such a tax applied during life just seems to have a lot of problems. The Democrat Party will continue to accuse Republicans of favoring the rich and abandoning the poor, but it will keep the idea of wealth redistribution as an abstract concept. To actually put an Excess Wealth and Income Tax into practice would just cause too much brain damage for everyone.