Re: FirstRateCrowd's EIRA

Posted: Fri Feb 01, 2019 12:13 am, #18
by Sterling Volunteer
Senator Elizabeth Warren wants a wealth tax on the rich. However, there are some major obstacles to implementing this program. If it does pass, a major concern is its sustain-ability over the long term due to the obscene amount of money in politics and poor-governance related to regulatory capture. I believe the policy would soon be eroded by the the rich, who would undoubtedly vehemently oppose this legislation.

My initial response to the idea is, I love it. But this exuberance is tempered with an uneasy anxiety about how long it can be maintained due to the power of the rich. (See my post #15 in this same topic regarding regulatory capture) As Jessica said:
Like Sisyphus of Greek mythology who was forced to roll an immense boulder up a hill only for it to roll down when it nears the top, repeating this action for eternity, it is the same with our political battle against the wealthy. For those of us who have lived many decades and have experienced this process first hand, we know the political process is a frustrating and demoralizing cyclic endeavor to control the power of the rich. It is said colloquially that power begets power, absolute power corrupts absolutely, and the rich get richer. So it has been forever.
and
Like the epic battle between hyenas and lions, this political fighting for economic control between the rich and those that have not is viscous and enduring. This is madness. Let us put an end to this nonsense by supporting the Economic Inequality Rating App. It creates a new environment not controlled by these politically generated forces and can stop economic inequality. The political process is ineffective in creating long term results on our behalf whereas the Economic Inequality Rating App (EIRA) bypasses the pitfalls of politics and directly solves the problem of inequality.
Here is the basic substance to Warren's proposal and some of the trepidation to its passing and long term survive-ability,

MSNBC news
Elizabeth Warren's plan to tax the super-rich has been tried before. Here's what happened.
Versions of a "wealth tax" proposed by the 2020 hopeful have been put in place in a number of countries. Most have gotten rid of them.
Jan. 29, 2019, By Benjy Sarlin https://www.nbcnews.com/politics/2020-e ... ed-n963971
Sen. Elizabeth Warren, D-Mass., has made a splash with her plan for a "wealth tax" on the super-rich, a major break from typical Democratic proposals that target income, investment gains and inheritances.

While wealth taxes aren't a new invention and a handful of developed nations currently have them in place, they are on the decline: The number nations that are members of the Organization for Economic Cooperation and Development with a wealth tax dropped from 12 to four from 1990 to 2017, according to a report by the organization last year.

With inequality hitting new heights, though, Democrats running for president have made finding new ways to tax the rich and distribute the benefits downward a key part of their economic message. Wealth taxes are making a comeback in policy discussions abroad as well, led by French economist Thomas Piketty's call for a global tax on the rich.
Under Warren's proposal, households with over $50 million in assets would pay a 2 percent tax on their net worth every year. The rate would rise to 3 percent on assets over $1 billion. Warren's plan would affect just 75,000 households total.
"When you tax people's wealth, they manage to somehow reduce their taxable wealth," Gruber told NBC News. "We don’t know if it's by saving less or by hiding it."

Critics point to these shifts as evidence that a wealth tax is an inefficient way to collect taxes. While the IRS can easily check the price of a publicly traded stock, it may be hard to value a privately held company or a rare art collection until it's sold, which is often a source of legal battles in calculating estate taxes. But unlike an estate, which is taxed once at death, the government would have to figure out the value every year.

"It's really difficult to enforce," said Alan Cole, a former adviser to House Republicans on tax policy. "That's why almost everyone goes the capital gains tax route and very few go the wealth tax route."
Gruber's study does cut against another top concern raised by critics of a wealth tax — that it will cause taxpayers to pack up and move. Even with lower-tax options inside the same country, their research found little sign of people moving to avoid higher rates.

The fear that the ultra-rich will not just lowball their fortunes, but pack up and take them to a rival country, is a significant reason the wealth tax has declined. In France, President Emmanuel Macron replaced the country's decades-old wealth tax with a narrower tax on real estate partly in response to data suggesting 60,000 millionaires had left the country since 2000.
Warren's plan would apply to Americans based on citizenship, not where they live or where their money is earned, so the ultra-rich couldn’t easily move to avoid it. If they renounced their citizenship, they’d have to pay a one-time 40 percent "exit tax" on their net worth.
With the Republicans currently controlling the Senate, no real progress will be made on Warren's policy project until the next election cycle. Even then, the Democrats would probably need to control all three branches of government to get this passed. Still, how long would this reprieve of abuse from the conservative elite realistically last should this legislation come to pass? Given the power of the rich, history has shown over and over again they will eventually unwind it in short order, just like they did to Obama Care, only worse. How many times do we need to experience this insanity over and over again where by we move forward only to have our gains stifled by them in the next election cycle? We are the progressive party but this political process seems more like stagnation to me. This is why I support the EIRA because I view it as the only realistic means I know of to take us out of this cycle of bondage by the rich.