On Inequality, Democracy and Taxing the Rich – A Modest Proposal

No doubt many raised in our capitalist society, where inequality rules and excessive incomes and wealth are seen as a right (and where even the NDP only proposes a measly 1% tax on excessive wealth), will consider this proposal to be radical but it is actually quite a modest proposal.

So what is excessive income and wealth. There are many ways to measure that, many statistical, but I propose a simpler definition – the amount of wealth and income where increases have no discernible effect on ones way of life or standard of living, where the increase is simply not noticeable in one's day to day life. Let's be generous to the wealthy in determining such levels. I propose an annual income of $1 million dollars and total assets of $100 million as the level that triggers “excessive income and wealth”. Above that no one notices without reading their financial statements.

The thing about excessive wealth is that it makes minuscule difference to the recipients but could make all the world of difference to the poor and underprivileged and to society as a whole if used for the common good. I will not even attempt to list what all that excessive wealth could do if devoted to the common good of society .

But there is another side to excessive income and wealth – it is highly undemocratic. The rich do not cling to their excessive wealth because it makes a difference to their daily lives. They cling to it because it gives them economic and political power. It is not just a matter of economic inequality, is a matter of political inequality.

Democracy is based on equality, one person one vote. Economic power is political power. Excessive wealth skews political power so that the wealthy have more of it. Excessive wealth is inherently undemocratic.

So what do we do with this excessive wealth so that it benefits society. We tax it away so that it can be used for the common good.

This sounds radical at first. But what do the wealthy lose in this proposal. Their standard of living and quality of life does not change. They only thing they lose is their excessive economic and political power, power that undermines our democracy.

Postscript

In taxing away excessive wealth we cannot just require it's conversion to cash to be paid as taxes. That would obviously be very disruptive to the economic system. Society (through the government) will take ownership of these resources in kind and in many cases maintain them while applying revenues from them to the common good. In some cases they may need to change the policies of entities that are not acting in the public interest or divest ownership of entities where that serves the public interest.

Also this proposal does not address all the problems with our tax system. For it to be truly progressive we need to raise the income level that triggers the payment of taxes and increase the higher marginal tax rates, including adding marginal tax rates at higher income levels (between $200,000 and $1 million).