David Azerrad:
Potential presidential candidates looking to make a splash should consider the following bold proposal to solve our inequality problem once and for all: exile the top 0.1% of income earners. Round up all 136,080 taxpayers who make more than $2.16 million a year and ship ’em off to whatever country will accept them. Presto. Problem solved.
We’d still, of course, have inequality in America. But we’d at least have brought it back to the healthy 1960s’ levels that Paul Krugman and Elizabeth Warren nostalgically pine for. The 0.1 percenters, whose growing incomes have been fueling the rise in inequality over the past several decades, will have vanished overnight.
This proposal will surely strike many as extreme. But drastic times call for drastic measures. President Obama, after all, has called growing inequality “the defining challenge of our time.” Krugman agrees andnotes that “the increase in U.S. inequality has no counterpart anywhere else in the advanced world.”
Never mind that, according to surveys, most Americans couldn’t care less about an abstract statistical trend stretching over decades. In a Politico poll in the lead-up to the last election, only 1 percent of voters thought inequality was the most important issue. But, as Obamacare architect Jonathan Gruber might say, we should not let “the stupidity of the American voter” get in the way of advancing progressive policies.
While exiling the wealthy will do wonders for inequality in America, it will put a serious dent in the government’s finances. Almost one in every five tax dollars that the government collects comes from the 0.1 percent. To make up for the shortfall, we should probably also confiscate all their assets before exiling them.
What about the jobs the 0.1 percenters create and the value they add to the economy? After all, we’d be losing all but twelve of the CEOs from the 300 largest companies in the country. The show business industry would collapse overnight with all the star talent in exile. Gone too would be the best investment bankers, financial consultants, surgeons and lawyers. One third of the NFL’s roster and well over half of the NBA’s roster would also be culled.
Since the confiscated wealth of the 0.1 percent won’t be enough to make up for the ensuing economic shortfall over the years, we will need to generate more revenue. That could be done rather easily by auctioning off the top-earning Americans to the highest foreign bidder.
One man’s 0.1 percenter is another man’s business maven, job-creator or international superstar. We should be able to fetch top dollar for our economic elite. Heck, we could even get bidding wars started between ambitious third-world countries for our best CEOs.
Alas, dispossessing, exiling and auctioning off the richest of the rich won’t settle the matter once and for all. Insofar as much of their income gains have been driven by forces beyond our control, like globalization and technological change, a whole new class of 0.1 percenters will inevitably reconstitute itself.
Some are self-exiling.
In 2014 there were 3,415 Americans who renounced their citizenship.
The IRS’ Foreign Account Tax Compliance Act was the main reason.
Foreign financial firms don’t want the administrative hassles that FATCA causes so they refuse to let Americans get bank accounts, mortgages, even pensions.
And to make matters worse, this Act seems to be enforced retroactively (illegal according to the US Constitution) so that Americans living outside the USA can suddenly be faced with gigantic tax bills for decades’ old income!
That’s a pretty stupid “solution”.