About 25% of my Mastodon feed rants against the 1%, the uber-wealthy class. And Medium has its fair share of anti-rich articles. We want to beat up the rich so bad. It feels so good when we post. Yet they laugh in our face as we make these posts.
A general theme of all this noise is that the rich have somehow gamed democracy for their benefit. While I would agree that the rich have political leverage, they don’t always get what they want. But their few failures do not stop them from gaming the system as much as they can.
I also believe this game extends a little further down the class structure than just the 1%:
In my internet wanderings, I see a growing international consensus building that wealth inequality is a recipe for social instability. If we continue on the same path, the rich won’t be able to create more wealth and enjoy that wealth. I had written about a historical re-alignment of social/political power.
For sure, we need another re-alignment. Popular solutions include higher marginal tax rates, asset taxes, and inheritance taxes. Unfortunately, that’s the direction the rich want us to take. All these proposals can be easily deflected by the wealthy with their offshore banking, corporations, and tax havens. Any new laws written will have the tax lawyers and accountants finding ways to get around those laws. The rich still win even if they lose.
So when I see all the rants on how to tax the rich, I shake my head. How do these advocates expect their democracy to bring more wealth equality when our current democracies are about more wealth inequality? Can someone explain this to me?
In other words, we should stop putting our hopes that our elected representatives will find effective solutions to reducing the wealth inequality.
I have a solution:
Let’s build a new democracy
Tiered Democratic Governance (TDG) will put many average people into governance. Elected representatives cannot be bought and sold by the wealthy. The rich can not put their kind of person in place, neighborhood by neighborhood by neighborhood. And there’s no parachuting in the TDG: middle class neighborhoods would be electing middle class neighbors into governance, and working poor neighborhoods would be electing working poor neighbors. In other words, politics is no longer the playground of the wealthy and their minions.
Maybe the future TDG would be able to write tax laws so that the rich and their corporations do pay reasonable taxes in the jurisdictions they profit from: i.e. no more offshore trickery. But there are other tax tools the TDG can create:
1. The Tobin Tax: All trades on public stock exchanges would be subject to a small tax, say 0.1% of the total transaction. Computer software could be easily set up to monitor and collect this money.
2. Big Real Estate Tax: Imagine a 10% on all real estate transactions more than $1,000,000. This would not hurt the middle class. When a property changes hands, the “land titles” ministry of government would have instant knowledge of the exchange — and send a tax bill to the buyer or seller or both.
3. 25% VAT (value added tax): If a rich person wants a sports car, private jet, or 100-year-old whiskey, he or she pays 25% on top of the purchase price to get that luxury. Ideally, VATs should be universally applied, which will affect the purchasing power of the lower classes. But their VAT can be offset by providing a government entitlement to the lower classes. For example, a $40,000 annual income family could get $10,000 a year entitlement to offset the effect of a 25% VAT. Call this a part of a future UBI if you want. A $400,000 family gets the same $10,000 VAT entitlement. But, with the VAT in place, they will pay more than $10,000 in taxes. In fact, they will pay a lot more tax than they used to.
Of course, implementing such taxes would be more complex than these short paragraphs. But these kinds of taxes can move forward with TDG governance — whereas they are stalled with western democracy. Why are they stalled, you ask? Because the rich do not want these taxes. They want tax laws that can be evaded with offshore trickery.
Don’t expect our current milieu of politicians to carry anything like the three above tax suggestions for us. To get donations to be or stay elected, they have to appease the 1% to a significant degree. To get the votes from the 99%, the politicians can promise tax reform, especially after we make so much noise.
But the politicians — and the rich — and we — know this will be a broken promise.
So let’s build a new democracy that does not have the political formula of:
“campaign donations = political leverage”
There’s no campaign donations in the TDG. Zero. None. Nada. Zip. Zilch. After we build this democracy, we can put in taxes that the rich cannot evade.
The rich don’t want you to build this new democracy that has no political donations.
Can you understand why?
So why are you agreeing with the rich that this new democracy cannot be built?
Published on Medium 2023
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