Unethical Tax for the Rich

Executive Summary

• How Wealth is Rationalized
• The Unethical Tax

It’s becoming increasingly difficult to tell the difference between wealthy Americans and movie gangsters. What separates Goldman Sachs from Tony Soprano?  Both are performing illegal activities with no consideration for the rest of society, and both have legitimate “covers” for their business interests.

How Wealth is Rationalized

There is a long history of this, but people show a very fast ability to rationalize an entitlement around wealth. There have been studies that doubled custodian’s salaries every few weeks, and when interviewed, within a few days the recipient had justified the increase in salary to their fine work. The rich are no different. However once one analyzes where the income of the rich comes from, it becomes apparent that very little of it is actually earned. Michael Hudson brings up a great point regarding how the study of economics has changed in terms of how income is viewed.

Unfortunately for us – and for reformers trying to rescue our post-bubble economy – the history of economic thought has been rewritten in infantile caricature,  to give an impression that today’s stripped-down, largely trivialized junk economics is the apex of Western social history. One would not realize from the present discussion that for the past few centuries a different canon of logic existed. Classical economists distinguished between earned income (wages and profits) and unearned income (land rent, monopoly rent and interest). The effect was to distinguish between wealth earned through capital and enterprise that reflects labor effort, and unearned wealth stemming from appropriation of land and other natural resources, monopoly privileges (including banking and money management) and inflationary asset-price “capital” gains. But even the Progressive Era did not go much beyond seeking to purify industrial capitalism from the carry-overs of feudalism: land rent and monopoly rent stemming from military conquest, and financial exploitation by banks and (in America) Wall Street as the “mother of trusts.” – Michael Hudson

So when one analyzes how the wealthy make their money, it is clear so much of it is stolen. Examples include:

1. Underpaying workers (domestically, but also international companies paying slave wages to women in sweat shops who receive around .3% of the retail price of the garments they sow.)
2. Cheating on taxes with offshore banking
3. Receiving money from monopolies (such as Bill Gates and Larry Ellison’s money, as well as all the income from the investment banking industry which is little more than a government-granted concession)
4. Landlords (collecting rent from an apartment complex gifted by your parents is not very hard or innovative work)
5. Extending patents on drugs through litigation or re-patenting old drugs (i.e. Prilosec vs. Nexium)
6. Resource extraction on public lands, which companies have bribed the Department of Interior not to provide agreed upon compensation.

Conclusion

There are so many of examples of non-value added income that is raked off by the ultra-wealthy it’s hard to make a complete list. The old statement is that the rich make the economy dynamic and therefore they must be compensated. However, an analysis of where the rich get their money shows that in fact the rich in most cases do very little for their money, and also reduce the efficiency and size of the economy through erecting barriers to change and cutting off areas of the commons to privatize it for themselves.

The Unethical Tax

There is much truth to the statement behind every great fortune is a great crime. Rich people are rich because of a combination of luck and because they value material wealth over all other things, and in addition to that, they cheat. The rich would have everyone believe that it is because of their immense talent that they accumulate so much money. However, Einstein was not rich and neither was Newton. I will let the reader decide whether Einstein’s contribution was more important than Bill Gates, Larry Ellison or Donald Trump. So the proposition by the rich simply does not square with the facts. Even if Bill Gates and Larry Ellison are immensely talented (which is a tough call as we have never heard either of them say anything remotely interesting, or even true. Larry Ellison habitually makes false statements about his software), they are far and away over compensated for their limited talent. For this reason, we propose that the rich should have their taxes doubled and that they should pay at least twice the proportional rate on their income that they do. This we call this the sleaze tax.  If anyone is opposed to the term “sleazy,” or unethical spend some time hanging around the rich, pretty much all they care about and all they talk about is money (although they throw in a few references to art and wine in order to appear cultured.). This is a bit like Genghis Khan taking about the latest ballet at the Met.