Monday, August 24, 2020

My Big Idea: Radical Capital Gains Tax Increase And Restructuring

 I'm going to refer my Catholic readers first of all to CCC, 2406 as the ethical basis for this idea. I did some digging to find out just what the capital gains tax rates were. To say that what I found surprised me is a bit of an understatement. Here's your summary moral judgment: the rates are too low, and the thresholds are too high.

I am not certain that a Christian society would entertain any sort of economic instrument whereupon people could make money for doing nothing, but let us suppose that we can tolerate the stock market as it is, for the sake of argument.

Capital gains are profits or dividends, if you like, from stocks and similar products. In the United States right now, capital gains are taxed at three rates: zero, 15%, and 20%. I will leave the policy wonks to handle single versus married, in these calculations. But my idea is to have four tax brackets for capital gains: zero, 15%, 35%, and 70%. The zero bracket ought to go from zero-$30,000. (If we want to give married people more of a break even in my new scheme, we can exempt them up to $40,000.) The 15% bracket will go from $30,000-$60,000. The 35% bracket goes from $60,000-$99,999. Everything beyond that would be taxed at 70%. We give middle class and poor people a break, because we recognize that investing in the stock market over the long term can be a way to save for the future, and to transfer wealth to the next generation.

Remember, capital gains are profits from other people's hard work. I think a person would be well within his rights to argue that it would not be immoral to tax capital gains at 100%. However, because we live in a country where every public expenditure that is increased is treated as though the Iron Curtain is descending again, we may well at least concede that the possession of modest wealth is not as such immoral.

Yet we ought to be aware that a certain number of our own citizens and guests are not able to be economically productive. Illness, injury, and disability are expensive. Any purported belief in the dignity of all persons in principle calls forth a commitment to significant public expenditures on their behalf. I do not believe that this rules out private expenditures on behalf of such people, but it is the state who is ultimately responsible for the common good.

None of this presupposes as such that a fantastically rich person is guilty of some moral crime. Taxation is not punishment, but the instrument by which we secure the well-being of those--for whatever reason--who are unable to secure their own well-being.

It also is something of a mystery, as to why "tax-and-spend" was ever an effective epithet against so-called "liberals." "Borrow-and-spend" is arguably worse, because significant debt passed down through generations is a sin against our children and grandchildren.

I am not a philosopher, to be able to take you through an account of why our present system is structurally disordered, or "intrinsically disordered." My task is simply to identify critical needs, and possible avenues for finding the revenue to address them.

The debate about public expenditures in the United States rarely has anything to do with tangible realities; rather, it seems that some people prefer to make rash judgments about those in need, while simultaneously, it becomes harder and harder to escape the cycle of poverty by just means. This untenable situation cannot endure. People of goodwill ought to be able to identify problems and challenges unique to particular individuals, and try to work together to address them.

The purpose is not to take from the rich because they are rich; it is because that's where the money is. To live in a disabled body, for instance, is absurdly expensive. Not to live well mind you, but simply to live. Not many of us are able to generate large amounts of wealth, which in some minds justifies a person's existence. In any case, we ought to do better than an ethical system which tells people that their value is tied to their economic production for someone else. People are not instruments; they are people.