December 7, 2010
Today’s idea is totally impractical. Let’s get that out the way.
The idea is to change the tax code in the U.S. so that the so-called rich are the only taxpayers funding social services, while the taxes collected from the middle class go exclusively toward defense and the other nuts and bolts of running the government. For this discussion, imagine that these tax pools never mingle. (That’s just one of the many impractical parts.)
I think we can make the math work by jiggering with the level at which “rich” is defined. On day one of this new plan, the government gets the same amount of tax revenue as it would from the old system. The interesting part comes in future years.
Once you give the rich the full burden of social services for the poor, the rich have a deeper interest in solving those problems to put a lid on their own future taxes. In twenty years, if the rich have figured out a clever way to reduce poverty, their taxes would drop.
In our current system, reducing poverty doesn’t help the rich in a direct way. For the most part, the rich don’t even know any poor people. And with today’s system, if half of the poor suddenly got good jobs tomorrow, the taxes paid by the rich would just be diverted to some other black hole. Our current system gives the rich no financial incentive to go after the root causes of poverty. The rich are primarily incented to lobby their own government to cut services for the poor. That’s a perverse incentive.
In this new imagined system, the middle class would be responsible for funding the basic operation of the government. They too would have a new financial incentive to make government smaller and more efficient. If successful, they wouldn’t need to worry that their tax dollars would simply transfer to the poor, since the rich are funding that group. If the middle class finds a way to reduce military spending, they get to keep that gain in the form of lower taxes.
I’m thinking along these lines because we need a radically different approach to funding the future. I doubt we can ever raise taxes enough to pay for a world that is rapidly filling up with old people who have no savings, while the climate is ravaging the world, and North Korea is selling nuclear-tipped drones to terrorists. Put another way, any version of our current approach leads to certain doom.
But I’m an optimist. I think we can find a way to reduce the cost of living by 60%, at least for the poor and the elderly, while making life more meaningful at the same time. That has to be the solution for a future where there will be only one worker for every five retired people. There’s no practical way to tax the workforce of the future enough to keep the world out of a death spiral. You can’t get there from here. Society needs to change its…well, just about everything.
And so I imagine that the rich people of the future will pursue their own best interests by designing and funding entire new cities that are relatively protected from global warming, powered by clean energy, absurdly inexpensive for the inhabitants, and optimized for a satisfying and social lifestyle. While these cities (or suburbs) are being constructed, maybe on the oceans or in deserts, many jobs will be created. The new cities will be designed so that even an 80-year old can have a part time job if his mind still works. The cities will be operated for profit, with the main benefit being a lid on what would otherwise be terminal tax rates or a crushing national debt.
As I said, this isn’t a practical idea. But it’s worth noting that no one has a practical idea for avoiding economic collapse in your lifetime. The triple threat of global warming, an aging population, and spiraling debt pretty much guarantees doom. (It’s called math, bitch!) The solution, if one exists, will appear impractical when it is first introduced. Impractical is the antidote to doomed.