In the old days Diogenes sometimes would talk with Rep. Jack Kemp, who railed against the injustice of the Death Tax. Kemp said that the Death Tax (he called it that in the 1970’s) stifled entrepreneurs.
He said that if we kept the tax, America would become a second class country. As it happens, Kemp got his wish, and the Death Tax was eliminated. The result was even more stifling of entrepreneurs by big business and big money than the government could ever have stifled.
The end of the Estate Tax was a gift to the people Kemp championed. He described them as hard working engines of prosperity. Diogenes thinks they are the least productive people in the world, the heirs of large family fortunes. The fact is that the majority of the wealth in the world is owned by a small percentage of the people. This wealth puts rich people on boards of companies, where they make the stupidest decisions. It is boards of directors who decided that all IT work done for big money firms should be done in India. The board of directors made the decisions that led to the bankruptcy of GM and Lehman, the loss of Bear and Merrill as stand-alone companies. The Real Estate and derivatives bubbles were not created by the Government, not matter what the Republicans say about it..They were created to cater to the idle very rich.
Adding insult to injury these rich people are able to use untaxed money to pay off politicians to give them further tax advantages. Take a look at the case of Joe Lieberman. He claims now that he has taken on the Insurance industry, and that is true if you look back pretty far. The managers of the health insurance companies claim not to be the villains, they have to do what The Market tells them to do, referring to the big shareholders. The insurance companies have to take a gross profit of 30% of premiums, or The Market will punish them. The managers who have to take these orders, are actually doing quite well, taking in hundreds of millions in income each, but they cannot allow the insured to get an even break, because the company could not survive that. Diogenes thinks this is all lies.
Diogenes suggests a solution: The Estate Tax is now permanently tarnished with that other name. And in any case, it is inefficient to collect a tax only at time of death. It was done that way in the past because of the difficulty in accounting for assets, which is most often done at death when estate is probated. A more effective means would be to replace the estate tax with a wealth tax, or as Diogenes would call it, a Fair Share for America Tax. Every person (including corporations) would pay a tax of one per cent of his/its wealth to the US Treasury. Every asset in this country or held by a US resident would be listed on a form, sent in to IRS, and taxed at one per cent per year. No exemptions for poor people, everybody should have to pay their fair share. A really poor person might have a thousand dollars in assets, and would have to chip in ten bucks. A middle class person might have half a million in assets, and would send in $5000. Mayor Bloomberg, whose fortune might be $3 Billion, would have to cough up $30 Million. It’s OK, he can afford it. Likewise the very rich who are using their money to finance the astroturf Tea Bags.
Assets not listed, but found by IRS, would be taxed at a higher rate, say 5 per cent, going back some number of years. And assets that are the result of criminal activity would be taxed at a higher rate, say 10% per year. Diogenes would like to see a Catch-22: Any asset that is hidden in such a way as to make it look like it is not an asset, would be taxed at a very high rate, maybe 50%, to discourage cheaters. The law could be written in one page that everyone could understand.
In the past, the level of information density would have been too great for the government to deal with. But now we should be able to handle this. We live in an age, for the last 8 years, where every phone call and every e-mail message is screened by a secret government agency, and there is no public outcry, so surely the right-wing cannot complain about intrusiveness of a one per cent tax.
Diogenes is sure that nobody has even the slightest clue as to how much money such a tax would bring in. If some economist or science fiction writer thinks there is a way to estimate the amount ofmoney that the Fair Share for America tax could produce, we will want to hear about it.
We suggest that we can use the proceeds, which in general terms is one helluva lot of money, to pay down the debt. The actual amount that actually comes in does not matter very much. Diogenes would like to think of details, like paying a bounty to turn in the one-per-cent tax cheaters. Also, Diogenes suggests that the taxpayers be, as they are now, protected by secrecy. But cheaters, they should be publicized. Diogenes would like to see what happens to organized crime figures who hide a billion dollars in cash in a warehouse, when Channel 7 broadcasts the location of the money.