If we want to bring prosperity back to our middle class, we need a new tool, and the tool I think does the job best is what I call the Economic Participation Property Tax. This would be a tax paid by any property that is allowed to interact with, and extract value from an economy. Taxed items would include any patents, copyrighted content, or automation equipment, regardless of the location of it or it's owner. The tax could be entirely optional, but if you don't pay, you can't sell in our economy.
This tax would remove part of the profit that these types of things make for their owners. How much to recapture would be a balancing act. Remove too much profit, and businesses won't have any motivation expand or to serve your market. Remove too little, and your country suffers. Taxing foreign institutions would likely be controversial and may require altering trade deals, but this tax would require it and as each country has the power to remove an asset's ability to make money from it's economy, the tax is naturally enforceable.
By shifting taxes towards a geographically neutral tax, you remove the motivation for companies to move production to dodge taxes allowing them to instead focus on locating wherever the workforce is most appropriate. By shifting the tax burden away from income and workers, you remove a huge obstacle to specialization, and enrich your population driving up efficiency, purchasing power, and demand. Additionally, by not taxing assets used for creating exports, you encourage international manufacturing to locate in your country.
The dynamics of this type of a tax are clearly different from any of the mechanisms we currently use to rebalance our economies, and these tools would be invaluable in solving some of the world's most stubborn economic problems (Greece, India, China.) It should even allow third world countries to who adopt it to bring middle class wealth and persistent rapid economic growth spreading stability and prosperity to places where, even with all the advancement modern economies can bring, they have failed to thrive due to extractive foreign trade. It would dramatically change many markets, encouraging competition in places where it otherwise wouldn't exist by driving up costs for incumbent businesses. Eventually, as automation levels rise to allow it, it would also make for an appropriate mechanism for funding a basic income system. The more in-demand an automated system is, the more value it has, the more tax revenue it generates and the more money can flow back to the people. Everyone wins.
The cost of this change would be large, and mostly borne by investors. This is inevitable, as much of the value of investments exists because of their ability to extract money from the rest of us based on ownership. The alternative is continually languishing economies which aren't particularly friendly to investors either, so while losses will be initially large, and investors cut of prosperity will remain permanently smaller, they will be getting a smaller cut of a larger healthier, less risky pie.
By shifting taxes towards a geographically neutral tax, you remove the motivation for companies to move production to dodge taxes allowing them to instead focus on locating wherever the workforce is most appropriate. By shifting the tax burden away from income and workers, you remove a huge obstacle to specialization, and enrich your population driving up efficiency, purchasing power, and demand. Additionally, by not taxing assets used for creating exports, you encourage international manufacturing to locate in your country.
The dynamics of this type of a tax are clearly different from any of the mechanisms we currently use to rebalance our economies, and these tools would be invaluable in solving some of the world's most stubborn economic problems (Greece, India, China.) It should even allow third world countries to who adopt it to bring middle class wealth and persistent rapid economic growth spreading stability and prosperity to places where, even with all the advancement modern economies can bring, they have failed to thrive due to extractive foreign trade. It would dramatically change many markets, encouraging competition in places where it otherwise wouldn't exist by driving up costs for incumbent businesses. Eventually, as automation levels rise to allow it, it would also make for an appropriate mechanism for funding a basic income system. The more in-demand an automated system is, the more value it has, the more tax revenue it generates and the more money can flow back to the people. Everyone wins.
The cost of this change would be large, and mostly borne by investors. This is inevitable, as much of the value of investments exists because of their ability to extract money from the rest of us based on ownership. The alternative is continually languishing economies which aren't particularly friendly to investors either, so while losses will be initially large, and investors cut of prosperity will remain permanently smaller, they will be getting a smaller cut of a larger healthier, less risky pie.
This change would require assessing the value of everything to be taxed, and pro-rating that based on where it earns money from, which would be a lot of work, but less work than assessing and tax nearly every home in world, and we already do that. We can do this, and as we begin to enter the era of full automation where customers consume products without any human labor required, I feel like the question isn't if we will implement this, but how bad will we let things get before we do.
