The Ministry for the Future

67

Taxes are interesting. They are one way governments guide a society and fund governmental activities, more the former than the latter. They are as old as civilization. An ancient manifestation of the power of the state. It’s possible that both debt and money were invented in the earliest cities, specifically in order to enable and regularize taxation. Both of them being forms of IOU.

Progressive taxation refers to the idea that the more citizens own, the higher their rate of taxation. A regressive tax takes more, proportionally to individual wealth, from the poorest.

Income taxes tax individual or corporate annual income, so these incomes are often manipulated by those earning them to appear lower than they really are. Various deferments and reinvestments and other methods slip money through tax loopholes, and tax havens are places where money, if it can be moved there before the annual accounting takes place, will not be taxed by the haven’s host, or will be taxed much less. So a progressive income tax can become quite ineffective as such. Vigilance in application is required.

At certain moments in history excess personal wealth was frowned on, and the scale of progressive taxation grew quite steep. In the early 1950s, a time when many people felt that wealthy individuals had helped to cause and then profit from World War Two, the top tax bracket in the United States had earners paying in income tax 91 percent of all earnings over $400,000 (current value, four million dollars). This rate was approved by a Republican Congress and a Republican president, Dwight D. Eisenhower, a man who had commanded the Allied forces in the war, and had seen the death and destruction first hand, including the concentration camps. Later these top rates were lowered, over and over, until in the neoliberal period top rates were more like 20 or 30 percent. In those decades the tax loopholes and dodges and deferments and havens also grew hugely, so these already low percentages are actually inflated compared to the real amounts collected. Income taxes thus were made much less progressive; this was a feature of the neoliberal period, part of the larger campaign favoring private over public, rich over poor.

Capital asset taxes, sometimes called Piketty taxes, tax the assessed value of whomever or whatever is being taxed. Usually these have been applied to corporations, but the same kind of tax can be applied to individuals. France taxed its corporations one percent of their assessed value per year, and if applied globally, the effects of such a tax could be very significant. These asset taxes too could be made progressive, such that the larger the corporation, or the assessed value of any asset, such as property, the higher the annual tax taken from it. If set steeply enough, a progressive tax of this sort would quickly cause big corporations to break up into smaller companies, to decrease their tax rate.

Land taxes, sometimes called Georgist taxes, after an economist named Henry George, are taxes on property, meaning in this case specifically land itself as an asset. Again, these land taxes could be set progressively such that larger properties, or more valuable properties by way of location, or land not lived on by its owner, got taxed at a higher rate. As a great deal of profit and liquid assets more generally get turned into real estate as soon as possible, usually to own something tangible, the value of which is likely to rise over time, or at least not disappear entirely in a bubble’s burst, a land tax properly designed could again swiftly redistribute land ownership more widely, while quickly swelling government coffers in order to pay for public work, thus reducing economic inequality.

A tax on burning fossil carbon, which could be called not a tax but rather paying the true cost, could be set progressively, or offset by feebates, to avoid harming the poorest who burn less carbon but also need to burn what they burn to live. A fossil carbon tax set high enough would create a strong incentive to quit burning it. It could be set quite high, and on a schedule to go even higher over time, which would increase the incentive to quit burning it. Tax rates on the largest uses could be made prohibitive, in the sense of blocking all chance of profits being made from any derivative effects of these burns.

If all fiat money everywhere went digital and got recorded in blockchains, so that its location and transaction history could be traced and seen by all, then illegal tax dodges could be driven into non-existence by sanction, embargo, seizure, and erasure.

Thus it will be seen that a fully considered and vigorous tax regime, using digital trackable currencies and instituted by all the nations on Earth by way of an international treaty brokered by the UN or the World Bank or some other international organization, could quickly stimulate rapid change in behavior and in wealth distribution. Some might even call it revolutionary change. And of course taxes are a legal instrument with a pedigree as long as civilization itself, its rates decided by legislatures and backed by the full force of the state, meaning ultimately the judiciary, police, and military. Taxes are legal, in other words, and accepted in principle and used by all modern societies. So, targeted changes to the tax laws—would that really be a revolution, if it were to happen?

It would be interesting to try it and see.