Driving along the Dan Ryan on my way out of Chicago today, my eye was drawn to a billboard advertising a local talk radio station.
The big, bold headline read “TAX THE BILLIONAIRES.”
At first, my conservative, capitalist, free enterprise, work ethic, Republican gut growled with disapproval.
They’re at it again, I thought. The class warfare people, trying to divide America. Playing on the cupidity of the masses. The politics of envy. 99 % versus 1%.
But then I had a second thought. As crass as that billboard sounds, it is in fact expressing a policy that I believe makes sound economic sense.
Bear with me here, this is not so unreasonable.
First off, I firmly believe that the 16th amendment was a mistake, and should be repealed.
For those of you who don’t know, the 16th amendment was passed in 1913. It’s the amendment that empowers the federal government to levy income taxes.
The constitution as originally written provides that all federal taxes levied on the American people must be proportional to the population of the states.
Basically, that would only allow a ‘head’ tax, and not a tax that takes account of wealth or income.
The 16th amendment is the only exception to that rule. A tax on billionaires or trillionaires or millionaires would be unconstitutional if it taxes their wealth and not their income.
I would favor repealing the 16th amendment and replacing it with an amendment permitting the federal government to levy a wealth tax.
A wealth tax would be levied not on what you earn, but on what you own. All of the states already have real estate taxes, and some of them have intangibles taxes which are levied upon the value of investments.
Why tax wealth instead of income?
Very simply because income which is earned and spent stimulates the economy. That’s why everyone cheers when the stores report record Christmas spending. The faster money moves around from buyers to sellers, from earners to businesses and back again, the better it is for everyone.
The worst thing anyone can do with money is to hide it under the mattress.
The parable of the talents teaches us about the social obligation of wealth. Matthew 25: 14-30. The servants who put their talents to work were commended by the master. The guy who buried his talent was condemned as wicked and lazy.
The second worst thing you can do with wealth is to buy gold. Gold doesn’t employ anybody, doesn’t make anything, doesn’t stimulate the economy.
The third worst thing to do with money is to buy government bonds. Unless, of course, you think that the government knows best about how to run the economy.
The total wealth of the United States is around 60 trillion dollars. To replace our income tax would require an averge asset tax of about four percent.
A graduated wealth tax would assure that money would be invested in income producing assets as opposed to being gambled on speculative holdings.
It would have to permit and encourage household savings for retirement, education, and rainy days of course, but, if properly graduated, it would be levied on those with the ability to pay and the obligation to invest in the community.
Capitalism is not a system that can be abolished or amended. It is instinctive human behavior. Free enterprise is nothing more than free people making free choices.
There are winners and losers in the marketplace, just as there are in sandlot softball.
The one thing winners can’t do is take their bat and ball and go home.