If you want to feed a hungry person, you need to give them food, and if you want to solve inequality, you need to take money away from wealthy people and redistribute it to non-wealthy people. The Boston Globe Sunday Magazine recently ran 7 solutions to inequality from Brandeis University’s Thomas Shapiro, but six of the seven ideas are akin to trying to solve hunger by distrubuting cookbooks.
The list starts strong with “Baby Bonds” – giving each American child a certain amount of money in a savings account. There are flaws – restricting what the child could do with the money would inflate the program’s cost by adding administrative hurdles & costs, and income restrictions seem divisive & unnecessary. But the point is sound – wealthy people pay more in taxes (though often a lower share of their income) than the poor, so by redistributing tax revenue equally back to children, this solution would accomplish the goal of defeating inequality.
Sometimes centrists are just putting new names on old ideas, like “offer universal retirement accounts.” We already have a federal system of delivering cash to retirees – it’s called Social Security. Why not just raise benefits? If the goal is to nudge workers to save more, we already have 401ks and myriad similar schemes. Why aren’t those working? They’ve been a public policy disaster because they expect workers to save money they don’t have.
“Full employment”? Falling unemployment over the last five years has failed to raise wages. The invisible hand won’t save us.
The rest of the lists consists of giving out cookbooks – nice ideas that would not directly solve inequality. Leveling education funding, universal pre-K, capping mortgage write-offs – these are all really good ideas! But if you’re Sandy Guerrier, working your tail off but still falling behind, none of them put money in your pocket.
There are two problems with trying to fix inequality of opportunity (some have much worse education opportunities than others) instead of inequality of outcome (some have much less money than others). One is that you’re completely giving up on fixing inequality today. The other is that it ignores the impact of inherited wealth. A “family’s economic circumstances play an exceptionally large part in determining a child’s economic prospects later in life,” concluded a Stanford study funded by Pew. As Evan Horowitz wrote for the Globe in 2015, education can’t fix inequality.
Shapiro knows this as well as anyone because he literally wrote the book on it. Black Wealth/White Wealth talks about how black families have, on average, 10 cents of wealth for every dollar white families have. If your family is poor, if follows you throughout your life. You’re more likely to live in a high crime area, more likely to get into trouble, and less likely to have a wealthy family to bail you out of it. You’re more likely to have to pass up educational opportunties to take paying work, more likely to graduate from college with debt, and more likely to need to go much deeper into debt buying a car or a home.
Centrists ignore the single best idea for immediately, effectively curbing inequality: Basic income. Think of it as Social Security for all, regardless of age or work status. By taxing everyone & writing everyone a check, you provide immediate, direct relief of inequality. It could be done in place of or on top of existing programs.
As an added benefit, it would be a massive economic stimulus, moving money from sitting in the bank accounts of the wealthy to working people who’d use it immediately to pay off debts or buy essential goods or services. President George W. Bush knew this – he worked to send taxpayers a check as part of his 2001 tax cut and included a direct rebate in the 2008 stimulus bill, both essentially one-off Basic Income efforts.
There are plenty of other widely-beneficial, inequality-reducing programs the government could offer – single-payer health insurance, free or deeply subsidized child care, free college education – but Basic Income is the biggest, fastest, most effective solution.
But the Kochs would hate it, so centrists don’t talk about it.
I would love to have single payer health care and free public college, basically on the same logic as we have free public education. However, I think increasing opportunity is also important. I am mindful of the adage that says if you give a man a fish he eats for a day, but if you teach a man to fish he eats for a lifetime. I think we can and should do some of both. I’m not completely convinced yet that the math will add up regarding universal basic income. Has that been tried anyplace else?
Great overview on the idea from Vox’s Dylan Matthews: http://www.vox.com/2014/9/8/6003359/basic-income-negative-income-tax-questions-explain
As for budget, it depends on how much the Basic Income is & how many social programs you cut to offset it. https://www.forbes.com/sites/timworstall/2016/06/04/of-course-we-can-afford-a-universal-basic-income-do-we-want-one-though/#4c3f7e10323c
Very much put a UBI in the ‘teach a man how to fish’ category, because many use it for educational opportunities, starting small businesses, being able to have more time to take care of kids. Etc.
As for being able to afford it, I’ve seen economists debate the merits of the idea, but I’ve never seen any who say we couldn’t afford to do it. If we went the more conservative method of passing a UBI in return for getting rid of almost all other social programs, we could already afford to do it – without needing to raise taxes. If we made it in addition to some core social programs, then yes, we’d need to raise taxes, but maybe not as high as some would think.
Let’s not
Let’s not forget that Nixon almost passed a UBI. And that was one that would have been worth almost $7k/yr in today’s money.
Free college education – nice idea, but the reality is that our most liberal state in the union has larger state college tuition and fees than state colleges in less liberal states. Why? Because those other states attacked head on the runaway costs in their state college budgets. Our state can’t do that, because it would cause: layoffs among the tenured professors, the closing of some of the departments, shrinking of the administration, stopping capital projects, etc. Guess who would be dead set opposing that? Hint: they are liberal, too.
Single payer health care – also nice idea, but the reality is that it would bankrupt the hospital system, eventually cause salary decline among medical staff, etc. Guess who would be dead set opposing this? Hint 2: also very liberal people.
All these things are difficult not because people don’t want them… It’s because everybody wants them in the abstract, but not in practice – specifically, not when it hurts them in their personal pocket book.
The people in Hint 1 an Hint 2 how much we ought to pay the woman at the drive up window at the donut shop or the guy stocking the produce at the market of the person cleaning the hotel lobby, they will tell you “those people need to improve their education and/or job skills to earn a better wage.”…..in other words “they need to be like ME to make a living in Massachusetts”.
Opportunity to do what? I’m not trying to be obtuse here.
To go to college without finances being a factor.
To find gainful employment in your chosen field.
To do all within your own power to get ahead without regard to race, ethnicity, or zip code.
Especially the last point. And if you were given a baseline of support your whole life our your parents were-it would make it substantially easier to save money for college costs. Combining it with free college would be even better. And it ensures those without the desire or aptitude to go to college can find meaningful work elsewhere without being confined to poverty. It means anyone can choose the career they want-including fields like teaching, community service or social work that don’t always pay well. Or being a parent or mentor if that’s someone’s calling. Or a lifelong student always learning. Or a community athlete.
Automation is on the cusp of replacing several blue and white collar occupations entirely and a college degree no longer has the purchasing power it did. Steering students to those fields that won’t be automated and giving everyone this baseline will encourage more risk taking and entrepreneurship while also giving people the time and feeding to be better engaged citizens.
And by giving these payments to everyone it’s fairer than say focusing on fixing Appalachia at the expense of everywhere else or focused on fixing Detroit. Those communities need capital investment from their own residents and this enables that kind of job and wealth creation.
It’s more complicated. UBI is a nice idea, but the earned income tax credit is a better idea.
There’s a lot of problems with the EITC. Among them:
-It’s a tax rebate, not monthly checks put into someone’s hands.
-It doesn’t do anything to help people save.
-Doesn’t help those who have no income, which includes millions of Americans who live on less than $2.00 a day.
-Is mostly beneficial to those who have children, which is important, but does little to help those who are poor and don’t have children.
A UBI
-Would put money in people’s hands regularly, not just come tax time.
-Which would allow them to budget and save.
-Would *eliminate* extremely poverty in America, so no one would be living on less than $2 a day.
-Assists people whether they have children or not.
And, most importantly, by creating a system where everyone’s in and that benefits the entire middle class, a UBI — like Medicare and SS — would be defended by the vast majority of society, and be difficult for future politicians to get rid of or cut. ‘Everyone’s in’ programs have been the most successful ones the left have enacted in the US and abroad.
Not all people would budget and save… Some really have trouble managing their finances. Some have no job skills. Some are homeless, or have mental problems, and have difficulty i tegrating in the society. It’s a culture problem, and a public health problem, in addition to an income problem.
Whichever way the income problem is addressed, it has to directly help or nudge towards a way out for the societal problems causing poverty.
You write:
Um … the UBI is actual money delivered weekly or monthly. I have a hard time imagining anything more “direct” and more “helpful”. For tens of millions of Americans, such a payment will provide far more than a “nudge” towards a way out of crushing poverty.
It, frankly, doesn’t sound as though you have much first-hand experience with not having enough cash to eat.
So what? Most would, in fact, spend. But compare to now, where some have NO income, to UBI, where all have SOME income, which do you think is better? “Saving money” while all well and good, is not the point.
Again, so what? A priori skills are so not the point. And they are unlikely go gain the skills unless they have actual finances to manage.
And this will ease their difficulties without wholly eliminating them. Although I’m reluctant to pass off what seems like gossip and rumor, I’ll mention for the sake of demonstration that the running joke among the cognoscenti and the hoi polloi is that, but for his genes, Eric Trump would fit your above description… Yet, If true, the difference only is that he was given money. (I really have no idea if true or not in the particular case of Eric Trump, but I’ve attended school with the scions of the wealthy and can attest that they run the gamut from hard-hitting, mouth-breathing dumbasses to well-educated, and highly intelligent… just like the poor and everybody in between… that’s the bleak truth of income inequality: it’s not based upon any thing other than luck of birth. Yet you would apply those standards to the poor and not to the rich…)
You’ve got the cart on top of the horse and are trying to push the whole lot into a ditch. For many people a basic guaranteed income is a way out: if you actually give a man a home he, by definition, is no longer homeless. If you give a woman in poverty money she is, by definition, less poor than she was prior. Defining some standard of behaviour they must meet before qualifications is hypocrisy because you’re not holding the middle and the upper classes to the same standards….
If UBI can get me, Tom, Petr, Rye and johntmay on the same page, it’s truly an idea worth looking at. We are a pretty broad spectrum within the center left and I think working with the libertarians and conservatives attracted to it could be a potent coalition. This is a great way to put money in people’s
Pockets and frankly a great issue to use as a wedge against Trump-a classic example of the many rich kids born with a UBI far beyond our modest sized proposal here.
it’s not a culture problem of the poor.
It’s a culture problem of societies who vilify them.
Case in point: the fact that your post exists in a world in which one of the nation’s richest cities with a population under a million (Boston) has more homeless population greater than LA’s in real terms.
And the most damning part of that? A huge percentage of Boston’s population that have spent at least some time in a homeless shelter *have jobs.*
Poor people are not lazy. They may feel hopeless, but struggle for whatever they have far more than any of the Waltons have ever had to.
And people who are homeless who have mental health issues so not have a”culture problem” either. Again, in those cases, society does. We are rotten and awful as a society that we’d let people be homeless. We should be doing whatever it takes to provide them the support they need, not saying they have “culture problems.”
Since I’m in the midst of reading the JD Vance book and another book about a Rust Belt town torn apart by trade called The Glass House. Vance makes the cultural argument that somewhere along the line the wwc lost self responsibility and self reliance and has become too dependent on government and blames outsiders for its lot. On the one hand it’s comforting to see a center-right thinker excoriate Trump voters for blaming outsiders for their own problems, but his analysis is largely identical to the long time misreading of the Moynihan report regarding urban blacks.
Why do rural whites, Rust Belt whites and urban blacks have the same problems? Intergenerational poverty, high rates of crime and unemployment and out of wedlock births? Because they are poor! This has always been a symptom rather than the cause of poverty.
Social conservatives are correct that two family households are better, that stable marriages are better, and that dignified employment is better. But they don’t seem to make the leap to supporting a system of public and private investment that can actually cause that virtuous cycle to occur.
Glass House really illustrates that the writers hometown in Ohio-had a strong middle class that invested in its schools, parks and libraries. The factory managers went to the same churches, same Elks lodges, same bars and their kids went to the same schools as the factory workers. And the income spectrum was lower middle class-upper middle class. The workers drove Fords and Chevys while the managers drove Bucks and Mercury’s. And then the 70s came and outsourcing and automation took their toll-and the the single company in town got leveraged by Trump friend Carl Icahn and sold and resold
Several times.
It’s still there by the managers now live in McMansions in distant exurbs, drove BMWs and the workers-about a quarter of what was employed in the heyday-now subsist on Subway jobs or the dole while there is a huge opiod problem and any young person who gets a degree gets the fuck out and anyone who stays ends up in a dead end job or jail. And it was one of Trumps best towns despite being a Roosevelt-Kennedy-Clinton community. A lot of communities look like this in Massachusetts despite our high rankings.
Vance is right there is a culture of defeatism and blame shifting but we absolutely need a new political economy to encourage a culture of community.
Let’s put it another way: you won’t be able to buy your way out of this problem. More money helps, for sure, but other things are also needed: family, a roof over the head, education, feeling useful, a sense of belonging, the solidarity of others, and so on.
And I just want to trade my labor for a sustainable wage? Why must we all choose a “career”, a “box”?
n/t
Chosen fields, careers, and that lot all seem to be how some define themselves. “I am a lawyer”. “I am a sales manager”. “I am an engineer.”
It would be nice if we were not a nation that defined a life by where we worked.
Freakonomics has a podcast on the idea which really gave a great overview. GiveDirectly is another local non-profit/think tank developing a massive pilot in the developing world. And Mincome was the Canadian experiment. Alaska has a smaller one with its dividend.
I had a thread two months ago reminding Democrats that when you put money in people’s pockets-you run with it. Bush did this with his tax cuts, FDR and every Democrat who followed him until Carter did this with Social Security. A basic income or “social security for all” is a great way to go on offense on welfare and benefits while also advancing the ball forward.
Give Directly will be expanding its program to cover thousands, the Modi government is proposing it which could cover millions, and Swiss voters have another opportunity to mandate one. Alaska’s is still widely popular across the spectrum-even Palin defended it.
A UBI is great concept. Alaska is a great example. The wildly popular program in Alaska is funded by the wealth generated by oil in Alaska.
The political rub, today, is that the ENORMOUS wealth being generated in the US today is virtually all already concentrated in the wallats of the very wealthy. That means that in order to fund a national UBI, we need to take that wealth out of the wallets of the very wealthy.
Yes, we very much need to do that. We also need to be very clear about focus, determination, and communication. In the context of how we begin clawing back that wealth from the top 1% (by wealth), discussions about a $15/hour minimum wage, about “globalization”, and even about gender inequality in income are a distraction.
I think we need to say:
“We propose to tax the wealth of the very wealthy in order to create a universal basic income for the rest of us.”
Then I think we need to be very clear about who we mean by “the very wealthy”. I think we need to be very clear about the form the new taxes take.
Let me offer a case in point. We have often discussed a dramatic increase in the gift/estate tax. Each time that comes up, we hear the canard about the “burden” placed on small business and family farm owners. Various sources like this demonstrate that this affects a TINY number of estates (emphasis mine):
The objection is a red herring. We know how to do this. The wealth exists today. A UBI is both great politics and could make a huge difference in our culture.
The question is, again, whether we have the political will (and discipline) to actually make it happen.
…but I have to say this sounds like an extreme manifestation of Robin Hood. It just seems that in order to afford it we would have to take massive amounts from the very wealthy that I would have a hard time justifying. At what point does it become Communist?
Yeah, well, where do you think THEY got it from? Has Trump and his family worked that hard, for that many hours, breaking a sweat, growing callouses on their hands, and taking enormous risks? HELL no!
Reminds me of a tale:
A young man pull into the parking lot at work with his 2005 Camry that he just paid off. It’s got 150,000 miles on it and he bought it used. It was all he could afford working at the factory where he’d been for the past eight years.
As he walks to the gate, the owner drives in with his new 2017 Ferrari 488 GTB and parks in his reserved space. The young man is in awe, walks towards the car, jaw dropped and wide eyed. It’s the most incredible car he’s ever seen in his life. The factory owner sees this and calls the young man over for a closer look.
“You really like this car?”, he asks the young man.
“Oh, sure sir,’ the young man answers, “It’s amazing!”
The owner replies, “Well son, let me tell you something. If you work hard, play by the rules, get to work early, stay late, work through your breaks and give this company everything you’ve got…I’ll be able to buy another one of these next year.”
Since it takes from everyone who works and gives to the elderly who don’t-and arguably it takes more from the wealthier among us. I think this is a good synergy between those they favor globalization and those who recognize the devastating instability income inequality is already causing to our culture and body politic.
Automation and free trade are progressive ends-if either the means of production and/or the dividends from those innovations ends up being redistributed and reinvested to the wider community. So raising corporate tax rates to ensure the innovators put their investment back into Americas R&D (and infrastructure and health care systems).
A basic income is the most efficient market oriented solution to socialize capitalism. You could frankly eliminate most government agencies that currently deal with means testing welfare and enforcement if you adopted it.
In pilot programs it has enabled better child health care and education outcomes since parents have the time to take care of their kids, families have savings for catastrophes, and it increases home and business ownership by socializing a lot of the risks families take with those endeavors.
In Manitoba the divorce rate decreased, childhood poverty was eliminated, childhood health and education outcomes went up, and more small businesses created in the Mincome pilot towns then in the control towns. Y Combinator-a VC firm in the Valley-hardly Bolshevik-is funding a broad pilot in Oakland. I hope the results on a broader scale mimic the small scale results we already have so we can scale this nationally.
1. Communism actually is a word with a meaning. This is NOT that meaning. If you’re going to throw around the word communism, please know what it means.
2. As others have pointed out on this thread, a UBI could be done without even needing to raise taxes at all. Or it could be done raising taxes a little. Or a lot. That all depends on how people want the program to work and how generous they want it to be.
3. The wealthy have plundered from America’s labor class for 40 years. A UBI would essentially bring things back to where they were in the 50s and 60s, ensure everyone had a truly fair shot to improve their lives… and do so in a way that wouldn’t require anyone to jump through any hoops to get, and be administrated without any waste or burdensome restrictions (which is why a lot of conservative and libertarian academic types actually like it).
…but not UBI, and yes I know what communism is, thank you very much. In this sense I’m using it as a radical redistribution that I can’t imagine this happening without. I am NOT to be clear using it as a political bludgeon raising the specter of tyranny.
Communism means collective ownership and an end to class structure. A UBI is not collective ownership or the end of class structure.
If you want to use the word socialism, sure, great! Go ahead and use it. A UBI is socialism, just like Social Security, Medicare and K-12 education.
If you want to use the word communism, I will continue to point out that you’re engaging in #AlternativeFacts.
“Communism” means that the means of production are owned by the state. Nobody has suggested anything approaching that.
So it is “tyranny” to suggest that our gift and estate taxes be raised enough so that the top 1% or 0.1% by wealth are less able to make their progeny landed gentry through sheer inheritance? If so, then America has been through several periods of such “tyranny” before and survived.
It sounds to me as though you don’t appreciate just how much wealth the top 0.1% have accumulated. When the wealth owned by 325,000 out of a population of 325,000,000 is enough to keep all or nearly all of that 325 M out of abject poverty (and it is), then raising the specter of “communism” in response to proposal to alter that distribution is, well, not progressive.
Consider the following charts (from Inequality.org):
Wealth shares, United States, 1913-2012
Note the red “0.1” percent line on that graph — 325,000 people control more than TWENTY PERCENT of the nation’s wealth. Consider the line below that — 32,500 people control more than TEN PERCENT of the nation’s wealth.
The top 1% controls more than FORTY PERCENT of the nation’s wealth.
Or consider the following graphic,
The racial wealth divide
The four hundred individuals of the “Forbes 400” now have as much wealth as ALL African-American households combined, as well as a third of America’s Latino population.
Four hundred extremely wealthy individuals have as much wealth as TWENTY ONE MILLION minority households.
This obscene concentration of wealth is the source of much of the suffering in America today. It is preposterous to describe virtually any approach that changes that obscene concentration as “communist”.
There is a strain of communism whereby the means of production is simply owned collectively by everyone and the need for a state ceasss to be. Many monastic communities in western and eastern faith traditions are successful examples of communism, as do communities like the Shakers and Amish.
I’m pretty sure that Christopher wasn’t expressing a concern that America would become a monastic community or a nation of Shakers and Amish.
His claim is a dated cliche from the fifties.
I think UBI is a great way to socialize capitalism and give everyone a fighting chance at attaining the means to production. The Dylan Matthews article greenmiles linked to really shows how this creates a middle class and makes many entrepreneurs.
Chesterton is a Catholic thinker and I admire and he put it best: “the problem with capitalism is too few capitalists”. I think Marx would agree. In many ways UBI along with incentivizing cooperative firm organization will both lead to the ends of communism without the Leninist means of state monopoly over industry and one party politics.
…but I was using it in the sense of taking what sounds like huge amounts of wealth off the top of the assets of the very wealthy in order to deliberately equalize outcomes, or least come closer, which is a key goal of communism.
You don’t seem to grasp funding the UBI does not require taking “huge amount of wealth” from the very wealthy, and it doesn’t come close to equalizing the outcomes. “Communism” in this context, is a dated red herring.
Look at the data I posted above. We are talking about 400 people who, together, hold more wealth than twenty one MILLION minority households.
We can surely address this imbalance without summoning the ghosts of Lenin, Trotsky, Marx, and Stalin.
…and how do you justify it beyond a gut feeling that it’s not fair? If it can be shown that the gains were ill-gotten, then great, make them pay through the nose to give it back. If their money came legitimately then I have a hard time going to a zillionaire and saying sorry, you have no right to be that wealthy because some people are poor. I’m all for getting the tax code closer to the Eisenhower era, but I feel what’s being proposed is that we just grab the money of the wealthy.
When the zillionaires make the rules that decide what is legit and what is not.
Fix campaign finance, which greatly reduces their influence, then rewrite the rules. Just taking the money back that was made under rules valid at the time it was made sounds like the ethical equivalent of an ex post facto law or bill of attainder.
We can’t just “take the money”, we have to change the rules first. Well, we can “just take it”, but that will require a violent uprising. It’s happened before and if things continue to get worse, it will happen again. People with nothing to lose can be very dangerous to those who have it all.
I know I’ve already been slapped for using this term on this thread already, but that again sounds like the specter of communism to me.
French Revolution.
The Russian revolution was just, in my humble opinion, just a change of rulers, a system that still exists today after “communism” left.
Quite literally what we are proposing is taxing them closer to the Eisenhower because too many of our people are poor and too few of them are rich. It’s called socializing capitalism and it’s something America used to be very good at and countries in Northern Europe like Germany still know how to do. CEO pay used to be 10 to 1, now it’s 200 to 1. We gotta bring it back to a reasonable number.
There will always be classes, no one is proposing a classless society. We are proposing enabling interclass mobility within a single persons lifetime to become possible again as it was in the midcentury. We are proposing equality of opportunity, and that requires the wealthy being made to pay their fair share. Using your logic, there is no moral basis for an income tax at all since the money was fairly earned.
But Bill Gates didn’t build that-he got a great public education and his father was college educated due to the GI Bill. He was also a white male. And by taxing him more he is paying it forward back to society for investing in him and making it more likely the next Bill Gates can happen-even if he is black and from a poor zip code and even if he is a she. Everyone should have the opportunity to thrive in America. Right now fewer and fewer Americans do.
…since it seems we largely agree on the ends. I guess it felt to me like the proposal was an all at once very punitive money grab way above and beyond a reasonable income tax. You would probably get further if you described the tax end of the proposal the way you did above than the way you and others have elsewhere on this thread.
An income tax won’t work, because “income” is mostly irrelevant for the wealthiest Americans.
Instead, we need to return the gift/estate tax to the Eisenhower levels, as well as the capital gains and similar taxes on wealth.
I do not share the apparent relish of some for the French revolution. As far as I can tell, that was a disaster for pretty much all involved.
It’s time to get out of dodge
Why Democrats never ran with that always bothered me. Oh, I know why. The Democrats in power/office are/were neoliberals.
Modeled after the successful tax and dividend model Vancouver adoptes. Some progressives dislike that it’s revenue neutral, but I actually think the rebates are basically a UBI similar to Alaska’s and I’d rather folks in Lynn and Fall River have that money than Beacon Hill. It’s really an under appreciated byproduct of his policy. Porcupine and other conservatives should like putting money in ordinary people’s pockets instead of the governments and should support taxing the wealthy to do so. When he’s not being assaulted by coddled Middlebury students, Charles Murray is a very prominent UBI proponent on the right.
Neither a rebate on a carbon tax nor Social Security sounds like nearly the scale I’m thinking of for a basic income. If the idea is to keep every individual and family above the poverty line aren’t we talking into the five-figures per capita? We hear about people on SS still struggling to make ends meet. I thought the carbon tax rebate basically reimbursed you for your gas tax at the pump so as to ameliorate the regressive tendencies thereof. As for Alaska, the people own the oil reserves to begin with so of course it makes sense that people profit from it, so unless you are advocating nationalizing our oil resources…(maybe not the worst idea, but definitely prepare for some squawking).
A universal basic income by definition is just a direct cash transfer every citizen gets from their government. My use of those examples was to prove we already do it for the over 65, Alaska does it for all its citizens and that Vancouver and maybe Massachusetts can do it for a carbon rate. Whether this is enough income for a sustainable life is an open debate-but I was pointing out we already do this in some capacities and we can measure the result.
Social Security is a universal direct cash transfer and the most successful anti poverty program in history. There is an income floor for the elderly that there isn’t for any other demographic. The floor may be too low, but it’s there because of a direct cash transfer.
Similarly, the Alaska dividend is usually about 3-5k a year. It’s not an in one replacement but it’s definitely a basic income supplement that has helped Alaska have lower rates of infant mortality, childhood health problems, drug abuse and overall poverty than other places. This money has generated a lot of positive economic activity as well.
Lastly the Vancouver rebate theoretically pays for the carbon taxes affects on working people-but since they get it as a single rebate it’s a universal bonus and a benefit people there now rely on. Even the 1-2k a year makes a difference in decreasing consumer bankruptcies, increasing savings rates, and helping generate more small business activity.
But by all means a number closer to 24k would be reasonable for MA and I’ve seen 30k discussed for a federal program.
What on earth makes you think the wealthy will passively stay put when you redistribute their income?
Just like Kennedys all die in Florida to avoid MA estate tax, why do you think there will not be a sudden upsurge in Swiss citizenship?
As the kids say, Bye Felicia
… what on earth makes you think billionaire real estate developers from Manhattan are going to be happy anywhere else? Or that Wall Street hedge fund managers can make as much in London (especially know that England has kicked, to the curb, direct access to the third largest economy on the planet…
I don’t know that Steven Spielberg dreams of a second career in Bollywood…
Let all the wealthy people move to Florida and Switzerland. I’ll be able to buy a vacation home in Chatham for a workingman’s wages.
Another issue that has never been addressed by progressives when they are in power. I’d say get rid of the cap entirely and you could solve the entitlement funding “problem” and expand SSI into a UBI in one fell swoop. The Atlantic has a great piece on how the federal government could save money adopting this idea, by eliminating all means tested programs and the enforcement mechanisms they require.
Funny how readily you change words and therefore concepts. Nobody here has suggested that the INCOME of the very wealthy be redistributed. Wealth is not income.
An individual who transfers an infinitesimal portion (say 0.001%) of their portfolio from a cash instrument to, say, a three million dollar vacation property requires ZERO “income” to perform that feat. Should they choose, they can follow the example set by our fine Republican governor Bill Weld and take a mortgage on the resulting property (after first declaring it as their “principal residence”, a la fellow Republican Mitt Romney), use the resulting loan proceeds as they wish, and deduct the resulting interest payments from any tax obligation they might have.
Whether intentionally or not, comments like this count on, trade in, and exacerbate the ignorance of too many of us about how the wealthy avoid paying taxes.
Wealth is not income.
The proposal here is to redistribute WEALTH. The proposal is to clawback a small portion of the WEALTH of our wealthiest citizens (in my proposal, after they are dead) and use that to fund a guaranteed income for the rest of us.
If our wealthiest 1% are so greedy and selfish that they flee the country rather than pay a small portion of their WEALTH upon their death, then I say “good riddance”.
The last response was the most candid. It is your intention to seize the assets or wealth from those you deem too wealthy. You hope that that American citizenship will be valuable enough for them to submit to this process, and if not, then they should just leave.
They likely will.
And the ongoing globalization and lack of trade restraints will allow them to continue to continue to add to that wealth, just in a locale where they will not be subject to seizure.
Good luck with that.
Indeed, I do think that when those 400 wealthiest Americans die, we should in fact seize at least SOME of their obscene wealth. You seem perfectly content to write off the suffering of tens of millions of minorities and working-class Americans in order to avoid bruising the delicate feelings of uber-wealthy individuals like our own Abigail Johnson.
Your passionate defense of the feelings of our wealthiest handful of men and women is touching.
Turns out, by and large, they don’t. We don’t see them do that within states or internationally by any great measure.
Why? Moving fast away isn’t easy, for most it’s not worth it. I’s hard to move a business or get that on-par-or-better job far away from one’s contacts and network, other places may tax at similar enough rates, money isn’t always that transferable in ways that avoid the taxes one was paying – all resulting in moving being expensive enough to offset any money saved by a lower tax rate, even for the wealthy.
The fact is we’re not talking tax hikes that are all that giant. It could even be done without raising taxes at all. More realistically, something like removing the cap on SS, passing the Buffet rule and cutting corporate welfare would be enough. This is not the poor robbing the rich. It’s the poor reclaiming the income that has been taken from them by an ownership class that’s refused to share any of the gains of the past 40 years.
It’s about fairness, not theft. And, no, they’re not going to leave. Not if they like to keep making money with our labor and in the society that has allowed them to become wealthy in the first place. And by building a stronger society, they will continue to get richer – but in a way that doesn’t come at the cost of everyone else.
The basic facts, as this report explains, are as follows:
Migration is not common. Most people have strong ties to their current state.
The migration that’s occurring is much more likely to be driven by cheaper housing than by lower taxes.
Recent research shows income tax increases cause little or no interstate migration.
Low taxes can prevent a state from maintaining the kinds of high-quality public services that potential migrants value.
Recent Research Shows Income Tax Increases Cause Little or No Interstate Migration
It is apparently about income either.
It is about wealth. The seizure and redistribution if wealth and assets. That might be worth the hassle in a way that taxes and income is not.
I don’t see why asking for clarification of your goals is called a defense. I asked what you (not you personally, but the various proponents) meant an
d it became clear.
And as I said, what makes you think they will tolerate having wealth confiscated?
YOU asked the question:
That’s a straight cut-n-paste. I added nothing. I deleted nothing. … and — yet — when the question was answered… you made this statement:
There are people who are known as ‘tax exiles’ and they are, in the main, people like the Rolling Stones, Gerard Depardieu and Michael Caine, all of whom are engaged in essentially peripatetic pursuits. It doesn’t matter where they do what they do. In an earlier time, Hemingway left Idaho and James Joyce left Dublin, to write in Paris.
Donald Trump, for example, made his money exactly and precisely because of geography: Manhattan is the hinge upon which his fortune turns. If there were no Manhattan, there would be no Donald Trump. Manhattan is a wholly created structure: a completely and comprehensively artificial and manufactured space; every building, every road and every tree was placed there with deliberation and effort according to rules and strictures decided upon by the managers of the environment themselves. Donald Trumps riches, such as they are, are merely redistribution of the efforts of decades in creating this thing called Manhattan. Hedge fund managers, similarly, need Wall Street to make their fortunes as much, if not more, than Wall Street needs them.
We often speak of ‘re-distribution’ in the same perplexed tones we use to describe salmon swimming upstream: something that is at odds with the ‘path of least resistance’ or against the order of things as we expect them to be.. Capitalism, the understanding goes, is the method of ‘distribution’ and the ‘re-‘ gets attached, we like to assume, either because some pretentious goody-goody wants to impose their morals upon the world or, alternatively, mere power. But it’s ALL re-distribution. Donald Trump re-distributes the value created by Manhattan. If he were to go into ‘tax exile’ and become Swiss citizen today to avoid taxation, Manhattan would put forth three or four major real estate developers to replace him, tomorrow…
Seizure? No.
Taxes. Pure and simple. Increased taxes on wealth. For example, restoring the gift/estate tax to about 75% — its level from 1940 to 1976. That’s not “seizure”, it is a tax on wealth. America thrived during that time. Please see the following chart (from from a random Google search. Note the dotted blue line at the bottom. Notice how, starting in 1976, the estate tax rate on our wealthiest residents declined, while the estate tax rate on the less wealthy increased (bearing in mind that only estates in excess of about $5M pay any estate taxes at all).
Note the valley in 2007, when the GOP faithful eliminated the estate tax altogether — just before its policies produced the worst economic collapse since Black Friday of 1929.
The wealthiest 1% of America are not paying enough taxes on their wealth. The result is crushing economic suffering for the rest of us — because our wealthiest 1% are sucking so much economic blood that the rest of us are dying. That’s the problem.
The problem is the direct result of GOP ideology that has gripped America since the Reagan era, and the disastrous policies that have resulted. The solution is to restore tax equity.
I agree that there are likely to be a few greedy and self-centered reprobates who will flee America rather than fulfill the social and moral obligations that come with great wealth. I say “goodbye and good riddance”.
Florida is moving up the list, 3rd most populous state. Where is Mass? I know dozens of snowbirds (Illinois, Minn, Mass, Ohio) who now list Fla as their home. No state income tax.
Sometimes people get caught if they’re stupid about it (Todd Chrisley from Chrisley Knows best) but it’s more common than you think.
Did you ever wonder what legal residence the people who live on their boat or in their RV use? Most I know use South Dakota. No state income tax.
I know them too.
Funny how they are perfectly happy to reap the benefits of those awful taxes. They drive on public roads, fly safely because of publicly funded and subsidized air travel infrastructure, go to the worlds finest hospitals in downtown Boston when they are sick (I’m referring to MA snowbirds), and on and on and on.
I find it hugely ironic that you write so much about how awful things are in western MA, and then write so glowingly about the selfish and morally irresponsible attitudes and behaviors that create those problems.
Those snowbirds are parasites. They are blood-sucking vampires that are killing the rest of us.
I offered no judgement (sorry if I implied that), I just thought I would point out that it takes place. Johntmay wrote that “tax flight is a myth”. I know it happens and offered some examples.
n/m
1) Tom was referring to restoring federal tax rates
2) And so what? those other states suck
I want this state-ranked #1 for quality of life with good reason-to have it’s great opportunities more equitably shared. A UBI is possible nationwide by reallocating existing revenues in a more efficient way. I linked to two proposals that do that.
As for a progressive income tax in MA I would note we are right in the middle when it comes to tax burden. Moving back to IL I had to get used to more potholes and far higher sales taxes, regressively levied on food and clothing as well with the exemptions we enjoy in MA. The gas tax is higher. And still my sister in law has seen her college cut, tuition and fees rise while CPS is on the verge of bankruptcy and a teacher strike. It’s a broken state destroyed by borrowing and spending.
But go southwest down the I-57 and you eventually get to Kansas which has cut taxes so much that it can’t fund essential services. Or just go north to NH where my cousin still can’t find a permanent job, still can’t own a home due to high property taxes and his wife has to continue teaching in a parochial school to get a break on tuition so their kids get a dexenf education. He commutes to Maine for work and that states not particularly better manages. So we have extremes. Locally RI is a lot closer to IL on the fiscal stupidity list than KS or NH. But we want a balance. MA already has a good balance and we are just proposing a better one so our T and schools can function better and we don’t fall behind like those other states.
South Dakota is bleeding young people and losing population so badly some policy makers are proposing making towns under a certain pop go back to nature. Florida has the worst public school system in America. Fuck there-inwanna make here better.
Anecdotes do not disprove the findings of the study. Tax flight is a myth.
to retire. No state income tax….and awful schools.
My mother lives in Florida. She was born in Braintree. Long after she divorced my father she married a software exec who owned a yacht. He lived in Massachusetts for the proximity to the ocean, relative to where his company was situated.
They are both now retired and live in Florida. He likes the proximity to the ocean — though, being in his late 80’s, he no longer sails — and she likes the distinct lack of proximity to winter. I’ve known my mother all my life and her husband about 15 years now, and couldn’t tell you what either of them thinks about taxes… though I’m fairly certain they didn’t move to Florida because of taxes anywhere…
Because my father loved to play golf, not because of low taxes. I have two cousins who moved there for work and both moved back to New England within a few months. The wages in Florida were way too low and the quality of life just did not measure up to what they were accustomed to. Neither moved there over taxes.
I was just passing along what I hear from other snowbirds at the pool and the first tee. Why pay taxes if you don’t have to. I know a couple from Indiana where the wife uses Fla as her address (no tax on her pension), and the husband uses up north, they live together but for tax reasons they file separate federal returns.
Todd Crisley just got caught, you don’t think there are some people who are more under the radar than he is that are getting away with it? He had a TV show ABOUT living in Georgia, and claimed Fla as his residence.
The thread was about a UBI also. Any thoughts about why Switzerland just voted overwhelmingly against it? I hope to see that on a Mass ballot someday.
I encourage you to learn more about Switzerland — it’s demographics, it’s economy, and it’s government.
We are talking about America, not Switzerland.
You see, there are “laws” and there are “laws.” Certain laws are intended to promote Equality and Fairness and Goodness. If someone is already in favor of Equality and Fairness and Goodness, such as Ted Kennedy, then there’s no need to apply those laws to him. He doesn’t need to be punished into thinking Correctly; he already does.
That’s why, when his sister-in-law, Jacqueline Kennedy Onassis, died, her children fought like hell in court to get their legacy declared as “income” (taxed at 40%) and not “inheritance” (taxed at 55%).
And that’s why when Teddy’s mother, Rose Kennedy, died, her estate was probated in much more inheritance-friendly Florida, where she had a home, and not in Massachusetts. Petty concerns about such trivialities as the law that requires estates be probated where the person had their legal home were just shrugged aside. Never mind that one has to actually LIVE in a state to be a resident; even though Rose hadn’t left Massachusetts in about twelve years, her family insisted that in her heart, she just KNEW she was a Floridian and wanted her estate settled that way
… we never end up talking about what we started talking about…?
We started this thread talking about inequality and the UBI, we then jumped over to poverty for a lively jaunt and now, after a foray into tax avoidance we’re deep in the weeds about tax minimization and Rose Kennedy’s travel habits (which habits, by the by, were curtailed by a stroke in 1984 at the age of 94 leaving her frail and wheelchair bound for her remaining 11 years, and which had little to do with where or how her estate would be taxed…. those things having long been decided beforehand.)
Question: UBI… Good or bad? Do you like it? Oo you not like it?
I’m not interested in what you think about possible or potential side affects. I’m not interested in what you think other people will think about it. I’m not interested in whether or no you are acting for or against it based upon what actions you think others may or may not take. I’m not interested in second guessing wealthy people and their estate planning. I’m not very good at 11-dimensional chess and I don’t think you are either. I’m interested in what you think about the UBI as a deliberate strategy to lessen inequality.
For myself I think the UBI is a way to replace the horrific way that the arcane, special interest laden tax code and government welfare system has attempted to create a land of opportunity. The idea that legal citizens of “our” country can share in the enormous wealth that we have is a good one. One of my favorite fables is the Ant and the Grasshopper though, and the development of a new system will take a leap of faith in the honesty of our leaders (Dems and Republicans) which is going to be difficult. With baby steps and absolute transparency I’m on board.
So if you like the UBI and have doubts about our leaders, let me then pose a question.
Which party, and which leaders, is more likely to actually TAX the very wealthy and use the proceeds to fund the contemplated UBI? Which party has advanced tax proposals and changes that increase taxes on the very wealthy, and which party has resisted those proposals and changes?
After all of Donald Trump’s dishonest campaign rhetoric, what is the reality of his behavior and proposals? Does his tax plan increase or decrease taxes on the very wealthy? It appears that he didn’t pay any federal income taxes at all for much of the last decade. Which party is fine with that, and which party is appalled?
Which party mis-labels the gift/estate tax a “Death Tax” (it is not), and has spent decades striving to eliminate it? Which party has been driving down the capital gains tax rate (paid only by the very wealthy) for decades?
Each attempt to conflate Democrats and Republicans like this is just another lie. The two are NOT the same, no matter how many times you beat the “Ted Kennedy” dead horse.
Now we’re getting somewhere. Although I have a quibble with your phrasing “can share in the enormous wealth that we have” and invite you to examine it… We can’t offer each other shares in something we already have. D’ya see? The subtext of the first part, ‘can share in wealth,’ assumes an insider/outsider antipathy where as the subtext of the latter half, ‘that we have,’ is collectivist. Intro to dialectics…
The UBI presumes the collectivist part: it is ‘our’ wealth and government gets to direct its flows, whether that be ‘distribution’, ‘re-distribution’ or the elusive and rare ”re-re-distribution’…
Here’s a thought experiment, and is not intended as a policy proposal. to illustrate the collectivist approach: Tax all inheritance at 100%. Every last penny. All of it. The government, however, doesn’t get to do anything with that money other than to put it into the UBI fund and calculate a new UBI based upon the amount the fund holds…So instead of passing on a hundred billion dollars to one or two heirs, you pass the entire amount to 300 million or so heirs. Here’s the experiment part: whether you like this thought or not depends entirely upon where along the spectrum (from insider/outsider antipathy to collectivism) you reside…
Nobody trusts the Democrats because the only consistent message of the Republicans is “Democrats are untrustworthy” and nobody trusts the Republicans because their only other consistency is untrustworthiness. Rather than be the better politician, they have to define down the better politician and those who aspire to a better democracy have, so suddenly, that much more uphill to go…
It’s a very effective recipe for paralysis, call it the “Putin Doctrine” Vlad the blackmailer, foments chaos in the West and says to his fellow Russians, “look how chaotic democracy really is… best you stick to tyrants, like me.” And just like that, the wind is gone from the sails of the pro-democracy movement…
“Leap of faith”? Nah. We only have to apply the demonstrated untrustworthiness of the Republicans to what they say about Democrats.
like Flaherty, Dimasi? And it’s only because they haven’t had their turn that Republicans aren’t in the mix in this state.
Here’s my proposal. 1% national sales tax. Split evenly among all citizens (even the 1%). The check will mean more to those nearer poverty. The Hollywood elite can donate theirs to charity, but there is no tax deduction for doing so.
Taxing inheritance will be difficult. I can go buy gold, say I lost money at the casino, give my kids the gold. Many people I know do the equivalent now and as long as they get by the 6(?) year lookback by the IRS their parents get Medicare to pay for the nursing homes.
How many times do I have to repeat these? We are talking about FEDERAL taxes and federal politicians. We are not talking about Mr. Flaherty or Mr. DiMasi.
Abigail Johnson, recently promoted to Chairman of Fidelity upon her father’s retirement, has a net worth of $13.2 B (give or take a few tens of millions) according to this Forbes piece. She is ranked number 29 on the 2016 Forbes 400.
The current price of gold is $1,204.90 per ounce as I write this.
Ms. Johnson would therefore need to buy 10,955,266 ounces of gold to follow your guidance. That is just over 684,704 pounds, or about 342.36 tons (US). I’m ignoring the difference between regular and troy ounces.
I’m pretty sure that it will be pretty hard for Ms. Johnson to follow your advice.
In fact, I’m pretty sure that you’re blowing smoke when you say “many people I know do the equivalent now”. First of all, if they’re doing that with more than $5 M (the threshold for ANY estate tax exposure), then they’re committing felony fraud. Secondly, I think it’s pretty hard to move that much gold anywhere, never mind hide it under a bed or something.
Any sales tax is a tax on consumption. It will be very hard for Ms. Johnson to buy more than 10 or so times as many taxable goods as you or me. Your proposed national sales tax will, by construction, just add to the tax burden of the 99%. It will not come close to taxing Ms. Johnson as much as you or me.
I really don’t think I can say this often enough — our intuition about these amounts is almost certainly wrong. It is literally difficult to conceive of just how much more wealth the top 1% has in comparison to the rest of us.
I’m talking about people in general buying into a system because they think it’s fair and run honestly. My local example of crooks are mirrored all over the country by the people I talk to who tell me about their local leaders (Dems and Repub) who are dishonest. Total consumption in the country, taxed at 1%, everyone gets the same check. Easy to explain, cheating would be more difficult because what would be the point of faking consumption numbers? People closer to poverty would appreciate the help and I think they would feel the system was pretty simple.
My gold example was just that, one example. I didn’t think you’d take it so literally. I know your point about wealth/income, I just don’t think there is enough interest in going after the 1% like you want. Maybe on this blog but from what I hear, most people feel any “system” to get the 1% to pay more would have so many loopholes in it and politicians would have their fingers in the pie. Don’t blame me I’m just the messenger. The last national election showed people in Mass may be out of touch. Most people say why didn’t the Dems fix things when they had total control (state and federal level).
Don’t you know people who have transferred assets, spent down cash, opened joint accounts etc in anticipation of themselves or their parents going into a nursing home? It happens.
we’ll see what happens with the Mass progressive tax.
… I did not say that any given Democrat is trustworthy. I said Democrats are not trusted because Republicans hammer home the accusation. Doesn’t matter, for example, if you are not cheating on your wife… if she is convinced you are, you’re in deep yogurt whether you deserve it or not. The decision to trust Dems (overall or in particular) isn’t made on the merits of particular Dems but on the constancy of the accusations against them.
I specifically said it was thought experiment and not a policy proposal: the point was to identify, despite yourself, where you fall on the spectrum: if your reaction is violent opposition then you are on one end of that spectrum. If you reaction is positive you are on the other end…
And if I want to be rich, I can rob a bank. The question isn’t what *CAN* you do… the question is what *WILL* you do? I would like to be rich but I want to be able to sleep peaceably at night more than I would like to be rich, so I don’t rob banks.
Nor is there enough gold in all the world to satisfy your description of larceny: if every rich person in the world wanted to make this play, the relative abundance of gold (slight) against that demand would send the prices through the proverbial roof. Very well you say, I’ll do silver. Same problem. Pretty soon the expense of escaping taxation becomes greater than the taxation itself. The only thing that remains at that point is the dubious satisfaction of giving Uncle Sam the finger…
We are talking about federal, not state, taxes. We are talking about taxes, not Kennedy’s.
Various other participants have observed that fleeing America for, say, Dubai, is often less appealing for individuals than for corporations.
You’ve said elsewhere that you like the idea of a UBI. I wonder, then, why you bring up cliched canards in a discussion about how to fund it.
would add a 1% national sales tax.
I could not agree more with your evaluation of it. It reminded me of a Steve Martin joke: He said, “I wrote a book called How to be a Millionaire! Chapter One: Get a Million Dollars!
It was a feckless op/ed, ignoring the most obvious solution (tax reform: progressive income tax, progressive real estate tax, VAT instead of sales tax allowing higher tax rate for luxury products).
But going from there to apply tar & feather to centrists, and accusing them for being Koch shills… I have to say, you got me there!
UBI cannot “fix” inequality, but it can improve the lot of people at the lower end of the income scale. How much annual UBI are you thinking of? At what annual cost?
… to American business interests. Combine it with a repeal of the minimum wage. Right now, the cost of making sure people earn more money than their labor would be worth in the free market is borne by employers. The basic idea of UBI is to put that cost on society as a whole. So if you take that step, why not go all the way? We would increase the demand for American labor, which I think everyone agrees would be a good thing, so employment should go up, and our products would be cheaper and thus more competitive on the world market.
By the way, I’m not sure if this is an argument for UBI or a Swiftian “modest proposal” argument against it …
My wife and I have joined a Bible study that is focused on this very issue following a book called More than Enough written by a North Carolina based UCC pastor. And basically the belief is, Jesus doesn’t want anyone to be poor but he also has a real problem with opulent wealth that forgets the needs of the community. And as Christians we are called to live in our own lives as responsible stewards who pay our blessings forward to those less fortunate than us, who recognize our privileges and work to break them down to make a fairer system for all, and who are responsible stewards of creation and our community by supporting one another.
Having enough and being content with getting the basics (food, housing, education, health care) for ourselves and ensuring every one else has access to those same basics before we take more than we need (mcmansions, hummers, etc.). There will be compromises (most families still need a car or two) and even hypocrisy (we all have iphones, clothes, and candy made from unfair labor conditions)-but it is the striving that the Christian is called for. And I think this is a pretty universalist message regardless of creed or even without one.
I might add I first heard of a UBI three years ago during the last Lenten bible study we did and that book was called How Much is Enough? which is a far more political economy oriented read than the personal memoir/biblical exegesis model of the book we’re reading now. Both are accessible to non-Christian and Christian alike and both are incredibly important in this era of excess and inequality.
but a course I took in college taught by a former Jesuit (who left the priesthood and married a woman who left the convent!) called “Christianity and Marxism”. His basic thesis was that the primary message behind both is the same, only one has a god and the other does not. If you “love your neighbor” as is taught by Jesus, you give what you have to those in need, for that is love. On the other hand, if you believe in “to each according to their needs and from each according to their ability” is presents the same behaviors.
…many early Christian communities were in fact “communist” (in the generic sense) in their models and practices.
Acts 2:44-45
And all who believed were together and had all things in common. And they were selling their possessions and belongings and distributing the proceeds to all, as any had need.
Acts 4:32-35
Now the full number of those who believed were of one heart and soul, and no one said that any of the things that belonged to him was his own, but they had everything in common. And with great power the apostles were giving their testimony to the resurrection of the Lord Jesus, and great grace was upon them all. There was not a needy person among them, for as many as were owners of lands or houses sold them and brought the proceeds of what was sold and laid it at the apostles’ feet, and it was distributed to each as any had need.
for 10 years would eliminate the national debt. Just think what we could do with the interest savings.
Or so claimed Senator Eugene McCarthy during the 1968 presidential election.
Just a thought on creative tax policy.
Fred Rich LaRiccia
The national debt is held by the very wealthy.
So any attempt to pay down the national debt means paying the very wealthy. Better to take money from them than from the rest of us, but there is a least one different approach.
We could simply allow the inflation rate to rise to 6-7%. That accomplishes the same thing over time.
Our national obsession with keeping inflation at essentially zero is one of the ways that we in the 99% allow ourselves to be seduced into doing things that benefit the 1%.
Debt service on a fixed-rate loan instrument gets more and more affordable as inflation erodes the value of the currency. Modest inflation (4-7%?) is good for the 99% and bad for the very wealthy.
How in the world is inflation good for the 99%? That means that many of the necessities I pay for will see a price increase, which I for one will feel pinched on with my already very limited income.
The debt service (interest rate) on a fixed-rate loan will not change whether the inflation rate is 0.1% or 10.0%. The effect of the runaway inflation of the 1970s (caused by the OPEC embargo) was to reduce the effective interest rate homeowners of the time were paying on their mortgages, while simultaneously causing the value of their properties to increase (with inflation).
That worked very much to the benefit of those homeowners, and cause much wailing and gnashing of teeth among those mortgage holders.
Your wages are more likely to increase with inflation (even if it requires you to change jobs) than a fixed-rate debt instrument.
You can read more here: