Should Wealth be Taxed?

Philip Kotler

I am slowly becoming a Limitarian. No, not a Libertarian.

I must blame Ingrid Robeyns, a Belgian philosopher. She is a professor at Utrecht University teaching contemporary political philosophy.

I blame her book Limitarianism: The Case Against Extreme Wealth.

Before reading Professor Robeyns book, I was half converted to taxing wealth. I passionately support progressive taxes, believing that the rich should pay higher tax rates.

Professor Robeyns goes much further. She doesn’t believe that anyone is entitled to be a billionaire. She doesn’t believe that anyone is entitled to even be a multiple millionaire! She wants to set an ethical limit. Any wealth above this limit is immoral.

Basically, she believes that everyone is entitled to earn or have enough money to lead a good life, but not much more. She believes that citizens in a democracy should put a cap or limit on how much wealth a person can have. She would prefer to put the cap at $1 million of wealth per person. Under pressure, she would accept at most a cap at 10 million a person. That would mean a family of four could all live a good life with a wealth of $40 million.

Her stand raises two interesting questions.

1. Why eliminate the superrich class?

2. What could be done with the confiscated excessive wealth?

Why Eliminate the Superrich Class?

Ingrid supplies three reasons why the superrich class is undesirable.

1. Those with super wealth contribute disproportionately to the warming of the planet.

The superrich creates more carbon than the average citizen. They fly their private small planes more often, polluting more air than the average citizen who flies in a large plane. The supervisor usually has several homes, most of them empty much of the time.

2. Those with super wealth destroy the operation of a democracy.

The superrich spend a disproportionate amount of money backing candidates who favor pro-business legislation and who vote against unions and labor rights.

3. Those with super wealth prolong the existence of global poverty and all of its economic and social ills.

The money of the superrich sits in banks and investments or in tax havens earning more wealth while governments lack enough money to improve the lives of the poor.

What Could Be Done with the Confiscated Excessive Wealth?

The confiscated wealth would presumably go to the government. If the government is responsible and dedicated to improving the lives of its citizens, the government would list and prioritize the neediest causes. The government might embrace:

1. Zero hunger. No citizen goes hungry.

2. Zero homelessness. No citizen goes without a place to live.

3. Zero inability to access health care. No citizen goes without medical and dental help.

4. Zero illiteracy. No citizen goes without a good education.

If the government is not dedicated to improving the lives of its citizens, the excessive money is likely to go into increasing the military budget or even worse, go into the pockets of corrupt government officials and a corrupt political party.

The Underlying Philosophy

Professor Robeyns devotes the 231 pages of her book to examine every issue that arises with excessive income and wealth inequality. She postulates:

1. Income and wealth inequality will continue to worsen, with the rich getting richer and poverty persisting.

2. The result will be diminishing equality of opportunity and lessend upward social mobility.

3. Climates will get hotter and increase the forced inflow of illegals into countries with cooler temperatures.

4. A substantial portion of created wealth consist of “dirty money,” money made from hard drugs, alcoholism, prostitution, slavery, political corruption, etc.

5. About 50% of the superrich got their money through inheritance, not earning it. Inherited wealth is undeserved. They had the luck of being born with richer parents. Many who inherit their wealth end up without useful skills and wasted lives. Andrew Carnegie said “…inheritance deadens the talents and energies of the son.”

6. The superrich hire advice from the “wealth defense industry” as to how to optimally use tax avoidance (legally preserve the money). The average citizen doesn’t have the money to hire help from the wealth defense industry to protect their earnings.

7. Growing wealth concentration actually reduces the rate of economic growth in society.

8. The “trickle down” theory that money made by the wealthy will trickle down to average citizens is fallacious.

9. The superrich, with the help of the wealth defense industry, pay lower taxes than average Americans.

10. A limit needs to be put on how much CEO pay can be as a multiple of the average employee’s wage. Peter Drucker, the father of moder management, suggested 20x. Others suggested 100x. Today the average CEO is getting 400X. Some CEOs get 1000X.

Conclusion

We are living at a time of great distress where governments are moving toward more authoritarian control and placing more limits on freedom of speech and assembly. Citizens are becoming more polarized and unwilling to talk to each other and compromise. The poor continue to earn a below poverty level of income and worry about being able to feed their kids and pay their weekly bills.

Hopefully enough people are interested in doing fresh thinking about the workings of their economy and their democracy. Is Capitalism serving the interests of most people? Is Democracy dealing with the issues facing most citizens? I believe that one can gain more insight by reading many on these subjects, including reading Limitarianism: The Case Against Extreme Wealth.