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About the proposed wealth transfer

   

Yes, Gold Party’s program involves a wealth-redistribution scheme. Yes, wealth would be redistributed to Gold Party members. However, it would not be a government takeover of business but a one-time transfer of wealth to compensate for the prior transfer of wealth to a plutocracy which has effectively bribed elected officials. The free-enterprise system would be largely preserved. Currently illegal, Gold Party’s program would become legal once it captures government and passes laws authorizing the transfer of wealth to its members.

Far fetched as it may seem in today’s political environment, the idea of confiscating wealth is attracting serious attention thanks to a book by a French economist, Thomas Piketty, titled “Capital in the Twenty-First Century.” Mr. Piketty proposed that governments get together in levying this tax on wealth which could be as high as 80 percent. The rationale is that the wealthy derived their wealth through inheritance to a greater extent than previously believed; it was not a reward for meritorious labor. On Sunday, April 20, 2014, the New York Times featured pro and con articles on the subject of Piketty’s proposal by columnists Paul Krugman and David Brooks.

This is a work in progress. Perhaps a moral distinction must be made between persons who became wealthy by creating or building up a business and those who inherited something already built. I would not begrudge Steve Jobs (if he were still alive) keeping all of his money invested in Apple. The same is true of mostly small business people who own stores, farms, manufacturing or professional firms, etc. which they have established themselves or inherited from parents. Warren Buffett, who made money through savvy investments, may also be a meritorious owner of wealth.

On the negative side would be the hedge-fund managers who reap huge financial rewards for taking risks with other people’s money, the stock traders who make money from advance knowledge of financial news, the bankers and investment bankers who profit from government bailouts and from low-cost access to money created by the Federal Reserve, the corporate lobbyists and others whose wealth is based on “who you know” in government, the owners and managers of firms whose businesses have received special tax breaks, and so on. These people’s wealth should be heavily taxed to compensate for preferential treatment in the present or past that allowed them to amass wealth.

I would also target taxation to those who might be called “bureaucratic peacocks” -- the good-looking boys and girls in the corporate, non-profit, or professional worlds who know how to climb bureaucratic ladders to top positions and earn huge amounts of compensation. These are the CEOs who command outrageous salaries for leading well-established businesses like Coca-Cola or the Walt Disney Corporation.

The CEO of Disney earned $34.3 million in 2013, down 13 percent from the previous year. My own father, whose annual salary was less than $40,000 as an executive with American Motors Corporation, probably made a greater contribution to Disney’s corporate success than this guy in recommending that AMC sponsor the original Disneyland television show and build an exhibit at the Disneyland park in California. Walt Disney had to hustle for money to realize his dreams; his successors have milked the enterprise for all it’s worth. The same is true of other large businesses. Such top-level managers, posing as a meritocracy, deserve now to be heavily taxed.

In short, if Gold Party assumes government power, it might be wise to tax wealth selectively. The true creators of wealth should be taxed more lightly than those who prospered by access to government or management of a going concern. Those whose wealth has been put into charitable foundations might be taxed more lightly.

It would be possible, of course, for government to reward Gold Party members simply by printing more money; but this would be inflationary. Currency inflation is a hidden tax distributed equally among those possessing money. If existing wealth is redistributed, the inflationary impact would be minimized.

The wealth redistribution needs to be just. Just as it must be fair with respect to the targets of wealth and income taxation, so, too, it must be fair on the side of the recipients. Gold Party members are rewarded because only through their collected and unified efforts can the existing plutocracy be replaced by a more humane system. As Gold Party is poised for victory, it may be advisable to freeze or restrict the points earned by dues paid to the party lest someone cash in on a last-minute donation converted soon into a larger sum of money. But these are details that can be worked out when the moment of assuming power approaches.

Because Gold Party proposes to give cash to its broad-based membership, the transfer of wealth would stimulate economic activity. Millions of people would have lots of new money to spend. This could not help but have a huge beneficial effect upon the economy. There may be less investment by those from whom money is taken, but the problem now is consumer demand rather than investment. This Gold Party “revolution” would also teach the wealthy class to be mindful of those less fortunate because possession of money is ephemeral. Being essentially fictitious, this commodity can quickly evaporate.

 

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