A Country Awash in Money But Going Broke

The problem with predicting such break points in history is an intractable one, especially when one lives in the midst of it. However, the current situation in the U.S. is cause for at least a measure of concern. Vast amounts of wealth and power are currently vested in a relatively few people in the U.S. The political process which is allegedly free and open is largely determined by money, and a relatively few people currently have most of the wealth. They are not likely to give it up voluntarily, and it remains to be seen as time goes on how much tolerance will be shown by those who live from paycheck to paycheck, or worse. If the social fabric unravels it will likely do so with great speed, too fast for any rational response. We can imagine a scenario in which all are swept downstream, such as has occurred previously in history.

There is unimaginable wealth in this country. There are more than 400 billionaires and a great many more fabulously rich persons whose wealth amounts to something less than a billion.

It is not easy to wrap one's mind around a billion dollars. A billion is a thousand million. To grasp the difference between a million and a billion dollars, consider the following: If a millionaire spent or gave away a dollar a second, or sixty dollars a minute, continually around the clock, the million dollars would be exhausted in 13 days. On the other hand, if a billionaire were to do the same, the money would last for 32 years. This fact was pointed out in a New Yorker book review by John Lanchester, and it is so counterintuitive that I thought it a factoid. I had to stop reading in order to do my own multiplication before I could accept it, and continue reading. [John Lanchester, “Lords of Finance,” 2-2-09, p.70.]

There seems to be an unwritten sacred code in the U.S. that the possessions of the rich shall not be levied, only their income, and not much of that. Those who are not so rich, those whose wealth consists of little more than the home they live in - the majority of the population - are regularly taxed on their holdings, in the form of property tax. Why should not multi-millionaires and billionaires be similarly taxed on their financial holdings?

I propose that we levy a state or national “property tax” on all financial wealth above, say, three million dollars, and call it an “infrastructure fee” based on financial wealth. Of course it’s just another tax, but infrastructure fee sounds better. And it is eminently appropriate. People who become filthy rich in our economic system should feel as much pain in paying for the cost of running the country as those who live paycheck to paycheck.

Take the case of the State of Virginia, one of forty-four states now facing unprecedented budget shortfalls said likely to worsen as the economy remains weak. According to Governor Timothy M. Kaine, Virginia is facing a $2.9 billion shortfall over the next two years. In response he proposes to cut Medicaid funding, which provides health care for almost a million Virginians, reduce public school funding by 15%, cut school construction, release some number of prisoners early, cut 1500 state jobs, and borrow against the future.

This sounds like a prescription for remaking America into a third world country.

If the state of Virginia imposed a 15% infrastructure fee on its own Virginia billionaires, the state deficit would be entirely erased for the next two years, with money left over. The billionaires would hardly feel the pinch. And this does not include a possible similar levy on all those who are simply multi-millionaires.

New York State has about 50 billionaires who together hold about $115 billion. A fifteen percent infrastructure fee would close New York Governor Patterson’s $15 billion shortfall, with money left over.

States alone could not impose such a levy. The billionaires would flee across the state line and seek refuge elsewhere. Congress would have to impose the fee on all citizens, wherever they reside, and make the fee a condition of citizenship. Persons fleeing to the Bahamas without paying the fee should lose their citizenship and have their property attached.

If such an infrastructure fee were also imposed on the rest of the numerous very rich but not-quite-billionaires, say those with holdings of a paltry $10 million or more, government coffers would be awash in revenue. We could rebuild our highways and bridges, and perhaps even build a high-speed passenger rail system, one like other first world countries.

Too many people in this country feel like they have played Monopoly and lost. They are struggling to pass Go just to collect $200, without landing on Boardwalk or facing some other ruinous fee. More taxing of the moderately wealthy, and the middle and lower classes will not pull us out of the current crisis. Reducing essential services like health, education and transportation will spell further social upheaval. It is time to rope in the super wealthy and require them to assist in solving the current financial crisis. And they have the most to lose if the social fabric unravels.

None of this, of course, is likely to happen. The balance of power in Congress is in the hands of those possessing the most wealth. If the wealth of the super wealthy were levied, cries of socialism and communism would be long and loud in the media, frightening the public.

The economic playing field is thus not likely to be leveled even slightly anytime soon. More likely it will become even more uneven. History suggests it will take a convulsive event to bring about anything even remotely close to a reasonably equitable distribution of wealth. With the numbers and firepower of personal weapons readily available in this country, we should all sleep a little less easily unless the current political leaders have the wisdom and courage to tackle the ever-widening discrepancy in power and wealth in this country.