On the Keynes thread, Arthur initiated a wealth tax discussion and provided some wikipedia links:
On the need for a positive program I would suggest a separate topic on “wealth tax”. Wikipedia has some good starting points which link to useful statistics:
Wealth_inequality_in_the_United_States
Unlike the usual Keynesian stuff, reformist proposals for wealth taxes have the benefit of actually providing a plausible solution to budgetary crises and sharply raising the property question since revolutionaries can propose steep progression from the insignificant rates currently contemplated to actual expropriation.
Major arguments against are:
1. High cost of administration (but this cost is necessary to facilitate future expropriation by having detailed records of ownership etc).
2. Capital flight, which leads directly to other “antiquated” demands from the Communist Manifesto like confiscation of the property of emigrants and rebels.
I suggest this represents a concrete political demand that could “take off” within the “99%” and “occupywallst” movements.
There are already appeals from “enlightened gentry” for their income tax to be as much as their employees. (Serious campaigns in Germany and France and Obama has taken up proposal from Warren Buffet in USA).
A few countries still have small wealth taxes (around 1%) but most have abandoned them as impractical due to capital flight.
I think there is potential for an international movement to address the issue of capital flight and to use proposals for a wealth tax to really focus attention on “we are 99%, they are 1%”.
A lot of detailed policy work would be needed on exactly where and how to draw the line, but a basic principle agreeable to both reformists and revolutionaries could be for a tax with a threshold that excludes 99% of the population with a sharply progressive rate affecting the most wealthy people in the 1% far more than those only just at the threshold.
A lot of groundwork has already been done by the financialization of most wealth and anti-money laundering measures affecting tax havens. Fiscal crisis will require some sort of wealth tax. Proposing that it be a confiscatory tax (reaching 100% above a certain cap) would sharply raise the “property question”. Fits nicely with the communist manifesto:
Point 4 is a necessary corollary to points 1 to 3 since the natural reaction of the rich is emigrate and rebel. Worth spelling out some detail of measures freezing and confiscating assets of people engaging in “capital flight” (and “capital fight”!). Point 2 just said “taxes” in the original German version. “Income taxes” was in the authorised English translation, but a wealth tax fits better with “use its political supremacy to wrest, by degree, all capital from the bourgeoisie”.
Still missing of course is the concept of establishing a workers state by forming councils etc as opposed to trying to simply take over the existing machinery. But that also flows naturally from both the “administrative difficulties” and the likely terrorist resistance to any serious proposals for actual expropriation.
Some closely related issues.
1. Proceeds of wealth tax could be paid into (multiple) wealth funds each owned by the nation. Income of wealth funds goes into national budget which allocates it between accumulation back via the wealth funds (with directions on priorities including investment in developing countries and shifts between labor and capital intensive depending on employment and between debt and equity depending on cycle), universal accumulation (R&D) and ordinary budget expenditures including public consumption and transfers.
2. Enforcement could be “privatized”. All tax records published and undervalued wealth can be compulsorily acquired at its declared value. (Also points toward abolition of commercial secrecy).
3. From the manifesto point 10 should be extended to tertiary level and oblige developed countries to subsidize free education in developing countries.
4. Manifesto points 1, 4, 5 and 6 should be applied at a world level. Resource rents go to world government responsible for assisting development of poorest countries and for universal R&D rather than to national governments of peoples that happen to have rich resources. Previously “nationalized” means of transport, communication and exchange (“credit”) that were “privatized” because they are now essentially multinational would now be socialized at that multinational level. Disputes as to who gets to confiscate capital flight resolved by proceeds of confiscation going to world level.
5. I don’t understand “industrial armies, especially for agriculture” in manifesto point 8. Am inclined to reject it as fully “antiquated”. Can anyone provide a link explaining the historical meaning and background?
Recent events in Spain illustrate the difficulty of political opposition to a wealth tax in countries undergoing economic crisis.
More detail here:
The extent of economic inequality is astonishing and underestimated by nearly everyone. PBS NewsHour’s Land of the Free, Home of the Poor with Paul Solman is brilliant and a must watch.
Over 90% of people interviewed underestimated the extent of wealth disparity picking the Swedish wealth profile as the one they thought represented America. Difference b/w Democrat and Republican voters were insignificant.
Reality:
Top 20% possess 84% of the wealth
Second 20% possess 11% of the wealth
Third 20% possess 4% of the wealth
Fourth 20% possess 0.2% of the wealth
Fifth 20% possess 0.1% of the wealth
In the last 10 years most of the change has been a dramatic increase in the wealth proportion of the top 0.1%
Warren Buffet:
Towards the end Richard Freeman points out that the extent of inequality in the USA matches that of China, still a mainly peasant society, and African countries.
Another reference which makes some similar points and also emphasises that across the political spectrum Americans desire a more equal society than the one they currently live in.
Building a Better America—One Wealth Quintile at a Time
This ACTU sponsored study from Empirica on Australian attitudes to wealth inequality seems to be inspired by the US unions and show similar results:
http://www.actu.org.au/Images/Dynamic/attachments/7282/ACTU-Report-Inequality-and-Minimum-%20Wage.pdf
Unions would seriously push a moderate wealth tax and it would be electorally popular anywhere (eg 64% supporting proposals for bigger taxes on rich in USA).
BTW the statistics seem to be based on household surveys. I would guess that seriously underestimates the real concentration at the very top as they just wouldn’t be surveyed.
One task should be to compile a collection of links to useful research data on wealth distribution, then analyse it.
I would suggest that in any discussion on wealth inequality in the US that the elephant in the room is well represented here:
http://www.project-syndicate.org/commentary/stiglitz142/English
Dalec
I AM NOT MOVING – & the imperial state ain’t either unless the people move ..
Short Film – Occupy Wall Street
http://www.youtube.com/watch?v=RGRXCgMdz9A&feature=player_embedded
John Paulson, the hedge fund titan who made billions in the financial crisis by betting against the subprime mortgage market, has defended Wall Street:
Are his figures accurate? How high should the wealth tax on the top 1% go?
Again this is not the issue for occupy wall st. They are their because they have no say and no money. They don’t want handouts from the top 1 percent, they want the money honey.
OccupyLA general assembly appears to be run by peacenicks who are wary of any more radical elements. they have taken to chanting over those they feel may be a threat. Chanting in some quarters has become a tool of control even in open meetings. Assume there is a gradual increase in those wanting to take a more positive and pro active position.
sorry about that can never get the captcha code to work so lost first part of that response will try again but don’t have the time to go into the detail again.
The top 1 percent pay 38 percent of income tax. (lost link with captcha) However this is irrelevant as they have around 25% of the wealth although this figure as with income is hard to determine because of havens like bermuda and also art gold etc.
They are paying 40 percent of total income tax so this is not 40 percent of their wealth or income.
the benfits of their contribution to welfare is also hard to determine. Developers etc benefit from government spending also holders of treasury securities etc. Perhaps they get it all back. sorry no time to do detail of original lost
Go to the just formed Occupy Melbourne Economics Discussion Group for fresh perspectives
steve provided a valuable link on another thread. I think it should belong here though so I’m repeating it on this thread:
CHARTS: Here’s What The Wall Street Protesters Are So Angry About…
or, http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1#ixzz1bUgcYj24
Thanks for this link steve (do you receive Alan Kohler’s weekly report?). I agree with you that these graphs should be studied closely. The graphs towards the bottom require more analysis. eg. are the Banks insolvent? The Bank graphs seem to suggest that they are NOT so for me there is a need for more analysis here.
Occupy movement will go on as long as the people are feeling aggrieved by MIKE STEKETEE (The Australian, October 22, 2011)
This article provides some recent statistics about Australian wealth distribution demonstrating how wealth disparities are far greater than income disparities:
Here is the link to the ABS report on which the above is based: 6554.0 – Household Wealth and Wealth Distribution, Australia, 2009-10
Some wealthy billionaires have already pledged to give away at least half of their wealth (Bill Gates setting the benchmark at 75%).
This creates a bit of a dilemma for the wealth tax on the top 1% demand. On the one hand it shows that billionaires have no need for their excess wealth so if a handful decide to give it away then the rest ought to be made to follow their lead.
On the other hand it shows that a very significant fraction of their wealth (up to 75%) can be given away without altering the operational mechanics of capitalism in the slightest. But then if the wealth tax is framed at a higher level than this, or at a level that makes Bill Gates concerned about his future, then it becomes hard to distinguish from a demand to overthrow the capitalist class immediately. But the purpose of a reform demand rather than revolution demand is that it is more realistic in terms of mobilising a broader range of people in an immediate united front. I can’t really see how a wealth tax demand which really bites when spelt out in detail will sound any different from a demand for revolution.
As well as all that it becomes harder to nail down the capitalist as “capital personified”.
Bill Gates first life: screw all competitors
Bill Gates second life: give away 75% of ill gotten gains from first life to help the wretched of the earth provided they buy MS and don’t use open source
Nothing is simple.
http://givingpledge.org/
Lists billionaires who have promised to give at least half of their wealth to charities.
http://www.reuters.com/article/2010/06/16/us-philanthropy-buffett-gates-idUSTRE65F5CC20100616
June 2010:
Wealth tax on top 1% spelled out as 0% for bottom 99% rising to 100% cap on wealth exceeding 99.9% would be opposed as communist by dominant forces in ruling class but would only be an initial step in the expropriation of capital by degrees.
Would still leave both wage labour and state capitalism and a significant bourgeoisie as well as allowing super rich to retire in comfort.
Presumably trusts worthy purposes like those setup by Gates and Buffet would be dealt with later, but there is no reason why they should retain 25% or be in charge of administering the income derived from the 75% they have put in worthy trusts. (The fact that they were reasonable and smart enough to do that may well result in them having some useful role to play in a new society, perhaps in the projects they have donated towards, unlike the vast majority of the super rich who have not responded to their pleas and who would just be retired).
In practice the proposal would mainly be an agitational response to demands for “austerity” as a result of current taxes leaving government budgets unable to afford dole etc as unemployment grows. Very likely to result only in “moderate” wealth taxes applied to middle class as well as top 1%. Positioning the movement to side with the middle against the top in pushing for further expropriation seems like a good idea to me.
The fact that some of the super rich are willing to give so much away tends to confirm that capitalism has long since ceased to make much sense even for the main beneficiaries. Hopefully some of them will actually swing over to the revolution when that does develop.
eg ABS figures show top 1% of households had more than $5M each in 2009-2010, top 0.3% more than $10M so proposed cap would still be well over $10M and top 1% of population would still be in a different social class from the large majority after tax.
The 99% would still include some smaller capitalists and rentiers in addition to the top 1% still remaining rentiers with substantially more than $10M per household.
Large slice of Australian wealth owned elsewhere.
arthur,
This shows wealth distribution in the sought after pyramid or rather triangular form:
http://rwer.wordpress.com/2011/10/28/the-global-wealth-pyramid/
Thanks. http://omeconomicdiscussion.wordpress.com/I assume that will also appear at omeconomicdiscussion
Based on those global figures I would suggest a good cap would be at $50 million affecting only 85,000 people who would each be reduced to the same wealth as the poorest among them.
Median household wealth in Australia is about $426,000 so I would not want to propose an “excess wealth tax” starting at $1 million here. Start with 0 excess wealth tax for 99% (households with less than $5 million) rising to 100% cap on excess over $50 million?
Visually, I prefer an upside down pyramid eg:
http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?mbid=ob_ppc_63
CHARLES HUGH SMITH’s 3 demands:
Think there is one certain way to finish it. Transparency!!!! Full transparency, but could start with all government. In the US a large percentage of the stimulus package went to companies (mainly financials that had been bailed) without any tender just given to them and was spent on bonuses and buying their own shares as well as repaying the government.
The Us spends more on welfare than we do and has little to show for it. An example is rates. They vary from 1% to 2% (ventura county in LA) or even higher. This means that a house in Box Hill (middle class Australian suburb) would cost about 15,000 a year. Along with this is that most of these cities are bankrupt and provide no more services than an Australian council. People are now starting to ask questions as they the cost of maintaining a house is just as much a killer as paying a mortgage. Corruption is a major issue.
People want answers but no confidence in current system to give them. They need to take responsibility themselves and without transparency they can’t.
Larry Ellison, the world’s fifth wealthiest person, wants to give away 95% of his wealth according to this report on the world’s 7 wealthiest people
read meritocracy
Many people prefer a meritocracy to their conception of socialism (formal equality, insufficient opportunity for the more able to shine) or the reality of capitalism (growing disparity of wealth coupled with economic crisis denies too many of the chance to progress). One aspect of both the OWS movement which celebrates difference as a principle (your right to be different transcends everything) and the wealth tax (wealth redistribution to either relieve enormous wealth disparities or taken further to expropriate the wealthy) is that they sidestep the meritocracy question. wrt to the wealth tax it may lack a visceral appeal to many of the 99%, those who do believe that hard work, frugality etc. ought to be rewarded somehow, those who have worked hard to build something within the world as they have found it. Needs discussion IMO.
I think 99% of the 99% have worked hard, some (the middle class) have been able to garnish some possessions and assumed wealth. A wealth tax is not going to affect them because they are not wealthy. They do have the threat of unemployment and losing their “wealth” and a wealth tax is the best way at the minute to avoid this or at least diminish the pain. At the minute they pay high taxes however under a wealth tax they would pay less or none at all so can’t see how they would be opposed.
sorry read the wrong article.
The meritocracy article seems to me to be saying that meritocracy is only viable if it is a (or perceived)level playing field. The occupy movement I think is saying it is not a level playing field and the support for that movement is because most people agree. some of the examples in the article point to people giving up on meritocracy when under threat and most feel under threat at the minute.