I created a micro-story below to dramatize the issues involved in setting a higher tax on billionaires. I would welcome your comments.
Title: Professor Harry Adam Smith and the Billionaires Tax Problem
A Short Drama in Six Scenes
Scene One: The Study in Evanston
Evening. A quiet study in a gracious old home in Evanston. Tall bookshelves line the walls. Papers are stacked in practiced disorder. Outside the window, bare branches move in the wind off Lake Michigan. A brass lamp casts warm light over a large oak desk.
At the desk sits Professor Harry Adam Smith, age 94, distinguished, restless-eyed, wearing a cardigan over an open-collared shirt. He studies figures on a laptop screen. Beside him: coffee gone cold, pencil in hand.
HARRY
(reading aloud slowly)
“Forbes estimates Elon Musk now possesses a fortune of six hundred billion dollars.”
Harry leans back. Removes his glasses. Rubs his eyes.
Six hundred billion.
A pause.
If a man spent one million Wars were fought over less. Nations have budgets smaller than the money now resting in private accounts.
He returns to the desk, scrolling.
Let us see the others. Jeff Bezos. Mark Zuckerberg. Warren Buffett. Bernard Arnault. Fortunes like mountain ranges.
He taps the desk with irritation.
And still cities decay, schools beg, bridges rust, hospitals ration care.
He notices another article and leans closer.
What is this?
(reading)
“Billionaire Craig Newmark says it is absurd for anyone to hold such levels of wealth. He urges government to raise his income tax and pass a wealth tax.”
Harry smiles faintly.
A billionaire asking to be taxed. There is novelty enough to wake the dead.
He stands straighter, energized.
Perhaps conscience has not entirely fled the upper floors.
He paces.
If one man says it, others may whisper it. If others whisper it, the public may hear it. If the public hears it, perhaps democracy remembers itself.
He stops. He thinks.
What is wealth for? To command? To display? To accumulate until numbers become mythology?
No. Wealth is stored social power. And power must answer to the common good.
He returns to the desk, pulls out a yellow legal pad, writes in bold strokes:
A LETTER TO THE PRESIDENT AND THE PEOPLE
He speaks as he writes.
Raise taxes on the highest incomes. Tax inherited dynasties. Add a fair annual tax on colossal fortunes. Use it for schools, science, housing, dignity.
He pauses, hearing the wind outside.
Will they listen?
He looks again at the glowing screen.
Six hundred billion dollars.
Then closes the laptop firmly.
Scene Two: The Arithmetic of Conscience
Morning light enters the study in Evanston. The desk is cluttered with newspapers, economic journals, and handwritten notes from the previous night. A fresh pot of coffee steams nearby.
Professor Harry Adam Smith sits before his computer, intent, alert, wearing the same cardigan but now fully awake to purpose.
HARRY
The billionaire Craig Newmark cannot be alone.
A man does not suddenly denounce excess wealth unless others have felt the same unease in silence.
He types rapidly.
Let us see… philanthropy among billionaires… voluntary wealth transfer… public pledges…
“The Giving Pledge, launched by Bill Gates and Warren Buffett, asks the world’s wealthiest individuals to commit the majority of their fortunes to philanthropy.”
He nods slowly.
Started in 2010. And now… over two hundred fifty signatories… from roughly thirty countries.
He leans back, pleased.
Good news. Better than cynicism predicted.
Then he turns back to the screen, searching another page.
He reads silently, then exhales sharply.
He rises and walks to a chalkboard near the shelves. He writes figures.
Forbes estimates that there are 3,428 billionaires living in 80 countries.
3,428 billionaires
250 pledges
He calculates.
Only 7% of the world’s billionaires contribute to the Giving Pledge.
He underlines the number hard.
So over ninety percent of billionaires remain outside of publicly volunteering to give away lots of their money to good causes. Among the world’s richest persons who have not joined the Giving Pledge are Bernard Arnault ($!57 billion net worth), Gautam Adani ($130 billion), Jeff Bezos ($116 billion), Larry Page ($88.7 billion), and Steve Ballmer ($86.3 billion). All of them have been approached but often say either they are giving away a lot of their wealth without joining the Giving Pledge or that they are not ready to pledge giving away more than 50% of their wealth to philanthropy. Signing the pledge involves only a moral commitment and is not legally binding.
Harry thought:
Civilization has reached a peculiar stage: abundance enough to end much suffering, yet hesitation enough to preserve that suffering.
He looks again at his screen.
The Giving Pledge is admirable. But most billionaires don’t join the Giving Pledge.
A pause.
He opens a folder marked “Economics 402.”
Today’s lecture was to be on trade cycles.
No longer.
He pulls out a fresh sheet and writes a new title.
WEALTH, DEMOCRACY, AND OBLIGATION
He thinks:
What should society permit?
What should society tax?
What is earned?
What is inherited?
When does private wealth become public concern?
He smiles faintly.
My students will have opinions. They always do.
He gathers his books into a leather satchel.
And perhaps among them sits a future senator… or a future billionaire with a conscience.
He pauses at the doorway, glancing once more at the number. Seven percent.
Scene Three: The Classroom Argument
Late morning. A tiered lecture hall at the University . Students settle comfortably into wooden seats with laptops, notebooks, coffee cups. At the front stands Professor Harry Adam Smith, sleeves rolled, chalk in hand. On the board is written in large letters:
WEALTH, DEMOCRACY, AND OBLIGATION
HARRY
Today we suspend graphs and formulas. We discuss power, fairness, and the meaning of economic success.
The world now contains over 3,000 billionaires. Some give generously. Some do not. Some create extraordinary value. Some merely inherit it.
So I ask a simple question:
Should society permit unlimited private wealth?
The room stirs. Hands rise. Harry points to a student in the third row.
HARRY
Joe
Joe is earnest, intense, dressed plainly, speaks without notes.
JOE
There should be no billionaires!!!
The room reacts — some laughter, some murmurs.
HARRY
Go on.
JOE
I grew up in a very poor family. My mother chose between rent and medicine. I know what poverty tastes like.
When one person has more money than entire towns, something is broken.
Nobody works six hundred thousand times harder than a teacher. Nobody deserves more wealth than millions of people combined.
There should be rich people, yes. Reward talent, reward effort. But billionaires? No. That level of wealth means the rules are rigged.
Several students nod. Others fold their arms skeptically.
HARRY
Thank you, Joe. A moral argument rooted in lived experience.
He turns and recognizes Laurence.
Laurence, confident, polished, wearing an expensive watch and speaking with practiced calm, leans forward.
LAURENCE
I respectfully disagree.
First, many billionaires give enormous sums to charity — schools, hospitals, medical research, climate initiatives. They often move faster than governments.
Second, most billionaires became wealthy by creating innovations people voluntarily chose to buy. Technology, logistics, medicine, software. These improve lives and expand the Common Good.
Why punish success that benefits millions?
Third, overtaxing billionaires pushes us away from capitalism toward socialism — perhaps eventually something worse. If government takes too much, incentives weaken. Innovation slows. Growth slows. Everyone becomes poorer.
Some applause from the back rows.
LAURENCE
Let me add more. Billionaires give many reasons for holding on to most of their wealth.
1. They earned the money. They didn’t rob anyone.
2. They need the money to keep growing their businesses and make still more money.
3. They have large families and need to share their wealth with many family members and friends.
4. They don’t trust the government to use additional tax money wisely.
5. They believe that there will always be poor people.
6. They face high-cost personal and lifestyle expectations that become embedded over time.
7. They like the power that their money gives them on influencing public policies and citizens.
LAURENCE
We should fix abuses, yes. But envy is not policy.
Joe stiffens.
JOE
It’s not envy to want children fed.
LAURENCE
And it’s not justice to confiscate achievement.
JOE
Achievement? Some inherit fortunes.
LAURENCE
Some do. Many build companies from nothing.
JOE
With roads, schools, workers, patents, courts — all paid for by society.
The room grows louder.
HARRY
Enough.
Silence falls instantly.
You have both spoken well.
He writes two columns on the board.
MORAL LIMITS
ECONOMIC INCENTIVES
Joe reminds us that extreme inequality can humiliate citizenship and waste human lives.
Laurence reminds us that wealth can arise from productive genius and risk-taking.
The question is not whether wealth is always evil or always good.
The question is:
At what point does private wealth become public power?
He underlines the phrase.
And when it becomes public power, what democratic guardrails are justified?L
Students begin writing.
HARRY
Next question: If billionaires are socially useful, should we thank them — or regulate them?
Hands shoot up across the room.
Harry smiles faintly. The debate has only begun.
Scene Four: Where Would the Money Go?
The next class meeting. On the board are the words:
TAXATION AND TRUST
Students settle in. The atmosphere is sharper than before. Hands are already raised.
HARRY
Last class we debated whether billionaires should pay more taxes. Today we ask the harder question:
If they do pay more — what happens to the money?
Laurence, you looked eager before I entered. Begin.
LAURENCE
Thank you, Professor.
My objection is simple. Everyone talks about taxing billionaires as though government automatically turns dollars into virtue.
But what if the money is wasted?
HARRY
Define wasted.
LAURENCE
Suppose it goes to expand the military budget when no urgent need exists.
Or to build vanity projects — another grand government complex, a huge ballroom attached to the White House, or a Great Pavillon rivaling the one in Paris, or some monument meant to flatter whoever is in power.
Or suppose tax money quietly slips toward the ruling party through contracts, allies, favors.
Why should billionaires trust that their money serves the Common Good?
JOE
Because it isn’t their money alone. Society helped create it.
LAURENCE
That avoids the question.
If you take more from productive people and hand it to wasteful institutions, everyone loses.
JOE
And if you let fortunes pile up while schools fail and people skip medicine, everyone loses too.
HARRY
Good. Keep going.
LAURENCE
I’m not defending every billionaire. I’m defending incentives and accountability.
Many wealthy people already give directly to charities they believe in. At least then they know where it goes.
With government, they cannot know.
STUDENT FROM BACK ROW
Private philanthropy isn’t democratic either.
LAURENCE
Maybe not, but it can be efficient.
JOE
Efficient for whom? The donor gets to choose society’s priorities.
Libraries instead of clinics. Museums instead of housing.
LAURENCE
And politicians choose better?
JOE
Sometimes yes — because voters can remove them.
HARRY
Sometimes no — because voters can be distracted.
Laughter.
HARRY
Laurence raises a serious issue: taxation requires legitimacy.
Citizens pay more willingly when they believe funds are honestly used.
The wealthy are no different.
LAURENCE
If billionaires and the public were assured the money truly advanced good causes, resistance might soften.
But where is that assurance?
JOE
Then build the assurance.
Audit everything. Publish everything. Let citizens track spending online.
LAURENCE
Now you’re admitting my point.
JOE
No — I’m improving your point.
The class laughs louder. Laurence smiles despite himself.
HARRY
Excellent distinction, Joe.
Harry writes on the board:
TRUST = TRANSPARENCY + RESULTS
HARRY
Tax policy is not only about rates.
It is about confidence.
If citizens believe revenues vanish into waste, they revolt.
If citizens see cleaner air, better schools, longer lives, safer streets — they consent.
LAURENCE
Then maybe the real issue is not tax rates but institutional design.
HARRY
Now you are thinking like an economist.
JOE
And maybe like a reformer.
HARRY
Next class, I will offer a model.
A way to connect wealth taxation directly to visible public goods.
Come prepared to attack it.
Students gather their things but continue arguing in clusters.
LAURENCE
(to Joe)
You still think there should be no billionaires?
JOE
I still think there should be no hungry kids.
LAURENCE
Fair answer.
Harry watches them with quiet satisfaction.
HARRY
(to himself)
When opponents keep talking after the bell, education has occurred.
Scene Five: Trust, but How?
Lecture 3. Top of Form
Bottom of Form
Students arrive early, sensing continuation rather than routine. On the board, written before class begins:
CAN TAXATION SERVE THE COMMON GOOD?
Professor Harry Adam Smith stands at the front, composed, carrying a folder thick with notes.
HARRY
Last session, Laurence asked the essential political question:
If the wealthy are taxed more heavily, how can anyone trust government to use the money wisely?
A just tax without a just use is only half a policy.
He writes three words across the board.
PUBLIC EDUCATION
HEALTH CARE
SOCIAL SECURITY
HARRY
My proposal is simple.
New revenues from higher taxes on extreme wealth would not disappear into the general treasury. They would enter three independent public trust funds:
Public Education Fund.
Health Care Fund.
Social Security Fund.
Each with legally restricted purposes.
Students lean forward.
HARRY
And further —
Those paying the additional taxes would have a right to indicate allocation preferences.
A billionaire might direct all incremental tax payments toward education. Another toward climate resilience. Another may divide equally among all three.
He draws a pie chart.
One-third, one-third, one-third.
Or one hundred percent to one cause.
Joe raises a hand.
JOE
So even the rich would get some say?
HARRY
Some say over designated new surtax revenues, yes. Not over ordinary taxes. Not over the whole budget.
Participation can increase legitimacy.
JOE
That’s smarter than I expected.
Laughter.
HARRY
Low standards are dangerous, Joe.
More laughter. Then Laurence raises his hand slowly.
LAURENCE
Professor, it sounds elegant. But institutions decay.
Today’s trust fund becomes tomorrow’s patronage machine.
Boards get stacked. Consultants get rich. Contracts go to friends. Audits become theater.
How can billionaires — or citizens — believe these funds won’t be corrupted?
The room quiets. Even Joe turns to listen.
LAURENCE
And another point: who decides whether projects actually serve the Common Good? Every politician uses that phrase.
What protects these funds ten years from now?
Harry studies him with approval.
HARRY
Excellent skepticism.
Never design a system for angels.
Design it for flawed human beings.
He closes the folder and steps away from the podium.
HARRY
Then let us add protections.
First: mandatory annual independent audits by rotating external firms selected through transparent lottery.
Second: all expenditures published online in searchable public detail.
Third: citizen oversight councils chosen partly by expertise, partly by civic lottery.
Fourth: outcome scorecards.
If the Education Fund spends billions, literacy, graduation, and opportunity must measurably improve.
If the Health Fund spends billions, preventable illness and access gaps must decline.
If the Climate Fund spends billions, emissions, resilience, and adaptation metrics must move.
He writes in large letters:
NO RESULTS = NO PRAISE
HARRY
Fifth: automatic sunset clauses.
Any program failing standards expires unless renewed publicly.
Laurence remains unconvinced.
LAURENCE
And if those measuring bodies are corrupted too?
HARRY
Then democracy itself is corrupted, and our problem is larger than trust funds.
A murmur moves through the room.
HARRY
No institution can guarantee purity forever.
But transparent design can raise the cost of corruption and lower the odds of theft.
Perfection is not available in politics.
Improvement is.
Joe nods vigorously.
JOE
Better audited schools than another yacht.
Scattered laughter and applause.
LAURENCE
I still distrust bureaucracy.
HARRY
Good. Keep distrusting it.
A free society needs critics as much as reformers.
He looks around the room.
HARRY
Your generation inherits two tasks:
To tame concentrated private wealth —
and to discipline public power.
Fail at either, and the Common Good becomes a slogan.
The students sit in thoughtful silence.
The bell rings, but no one moves.
Scene six: What are the best investment areas for improving the Common Good
HARRY ADAM SMITH is in his study in Evanston in the evening thinking about the last class tomorrow on the Billionaire Tax Problem.
Harry wants the class to start thinking concretely about to which good causes the billionaire surtaxed money should go.
He decides that he will distribute the following handout to the students tomorrow and let them debate on the merits of difference causes.
Need to Make Choices
Wealthy people that have an urge to help others to live a better life need guidance given the millions of social cause organizations. The most comprehensive classification of meaningful social causes is found in the United Nation’s 17 Sustainable Development Goals. Here are the 17 social causes:
1. No poverty
2. Zero hunger
3. Good health and well being
4. Quality education
5. Gender equality
6. Clean water and sanitation
7. Affordable and clean energy
8. Recent work and economic growth
9. Industry innovation and infrastructure
10. Reduced inequalities
11. Sustainable cities and communities
12. Responsible consumption and production
13. Climate action
14. Life below water
15. Life on land
16. Peace, justice and strong institutions
17. Partnerships for the goals
This list serves as a starting point. No billionaire will want to distribute his or her fortune to support all 17 social causes. Most billionaires will want to invest in one or two arenas. A wealthy woman such as Melinda French Gates may choose #6 clean water and sanitation because of her previous work with ex-husband Bill Gates in helping developing countries. Elon Musk would clearly favor investing in #9 industry innovation and infrastructure. Bill Gates might continue to focus on #4 quality education.
In choosing even one of these 17 sustainable development causes, a whole world of challenges and opportunities open up. A billionaire hoping to impact on #16, “peace, justice and strong institutions” would find a huge number of peace-seeking organizations, including Anti-conscription organizations, Carnegie Endowment for International Peace, Quaker organizations, Buddhist Peace Fellowship, Center for Global Nonviolence, Feminist Peace Network, International Confederation for Disarmament and Peace, International Peace Research Association, UNESC0, World Congress of Imams and Rabbis for Peace, and World Peace Congress. The task is to learn the leading “do-good” organizations and the leading “do-good” experts working in the area.
The key is to identify and support the organizations that have the lowest administrative costs. Ideally, 90% of the money should go to the people needing help and only 10% spent on administration and fundraising. The philanthropist needs to watch the supported organizations through time. There is always the danger that recipient organizations will expect the grants to continue through time even if their performance starts slipping.
HARRY seems satisfied with this assignment. Feeling tired, he rises for his desk and heads toward his bedroom. He e
