Something for your brain to explore:
Here are the problems: There isn’t enough work for a 40-hour work week, thanks to the progress of technology. Computers have taken over every kind of job, from labor to CEO. Too many people are poor or unemployed because of it. Nobody can survive on minimum wage, which hasn’t changed since 1972. Taxes are not equitably assessed. Wealth is grossly out of balance.
The work week must be redefined in light of the fact that technology has made the forty hour week obsolete, just as the sixty hour week became obsolete before it, and the 72-hour before that. We might define the work week as the gross number of hours needed to complete all work in the country divided by the number of able-bodied adults of working age. I have not tried to calculate the hours this way, but it is probably between twenty and thirty hours.
Here’s one picture of how things might look quite different. Suppose this was how it was:
Anyone working the defined number of hours weekly at any job would be paid at least a minimum wage sufficient to support two adults and two children without deprivation, but without luxuries of any kind. All basic needs would be covered, food, shelter, clothing, etc. At present this wage is probably in the range of $35/hr, yielding $1,050 weekly gross pay, $4,200 per month. This seems high because the shorter work week would still have to pay enough to live on. (Gross pay at the lowest rate is close to net pay because of the wealth tax, see below). Every hour worked beyond the defined full-time hours would be paid at 150% of base wage.
Salaried persons’ full time work would be the same number of hours as wage workers. Salaried persons’ pay would be based on their perceived or calculated worth to the employer.
All families would pay taxes based on their wealth, their net worth, not on income. The wealth tax would be a low percentage of net worth, most likely below 1%. Thus, the least wealthy would pay wealth tax based only on durable goods such as a car, washing machine, and kitchen range. The dollar amount would be low, but never below zero. With $5,000 net worth, the wealth tax would be about $40 for the first year. Nobody would have a negative tax, i.e., welfare; every family would be taxed.
There would be no deductions or exceptions to this tax, and no other federal tax would be collected from individuals or families. States are free to collect other taxes.
There would be very few exceptions to the work rule. Persons not required to work would include the retired and the disabled. Single persons with children would be required to work, and to cover the cost of childcare from wages.
This plan is radically different from what we have now, but notice that there is no class of poor people. The lowest paid are not poor, and would require no additional support from public funds. But their income is barely adequate to provide all essentials, with no luxuries.
The wealth tax, a specific percentage of wealth, would be naturally progressive, because richer people would pay the same percentage, but a greater dollar amount. The tax would probably be about 0.8% the first year. Those at the very bottom of the wealth scale would pay a low dollar amount, but the general trend would be for families with lower incomes to accumulate wealth over time, and thus their tax would increase. The tax, therefore, is a force for equality that solves the problem of finding the right degree of progression. It is notable that it is in the interest of the very wealthy to increase the wealth of families with lower income, because that would decrease their own tax.
The wealth tax percentage would be calculated regularly by the government as the gross wealth of the total of all citizens divided by an amount sufficient to cover all government expenses, including funds for retirement and health care for all citizens. An increased tax earmarked for national debt reduction or other use could be assessed if Congress so decided.
The government budget would be lower than at present because some budget items could be reduced or eliminated as being no longer necessary. The cost of poverty relief would be eliminated, so subsidies would be needed only for the disabled. Military costs, as the largest discretionary expense and the largest military budget in the world, by far, could easily be reduced by a third. The need for government workers would also be reduced. These things tend to lower the dollar amount of tax revenue needed, and thus the percentage of wealth tax.
Once the system was established, the trend for the wealth tax would be downward because the least wealthy and those with moderate income would accumulate wealth. Thus, within a few years it might be reduced to 0.4% or so. A net worth of $100M at 0.4% would come to $400,000, which is not much for someone with a net worth of a hundred million dollars.
These guesses do not include revenue collected from corporations. At present, corporations escape their fair share of tax in various ways. This would be ended by assessing an import duty for goods “imported” from companies headquartered overseas but sold in the US. This would increase revenue but decrease the nominal individual tax rate. There would be no exceptions to this duty, and no subsidies for corporations. They would also be subject to state taxes.
The nominal corporate tax would be lower than the present nominal tax rate, which is almost never paid, but which is a source of complaint by corporations.
Now, tell me all about why this would not work if we could suddenly drop it in our midst.
I’m not the only one thinking about this problem, obviously. Many in Sili Valley are acutely aware of it, and have been for decades. Farhad Manjoo, in a recent NYT piece, reviews another plan, to simply give everyone a monthly check for a minimal amount. The plus side is that it’s more readily achievable; the minus side is that Republicans would fight it tooth and nail, because they believe only lazy African-Americans receive welfare assistance. The plus of the above plan is that it’s a way to achieve greater equality, and it banishes poverty to history. The negative is that it is very difficult to get from here to there.