How to achieve an avoidance-impervious, $10TR+/yr. global wealth tax

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How To Achieve An Avoidance-Impervious, $10TR+/yr. Global Wealth Tax

Consequences From Instituting An n%/yr. Tax With The Strange Feature The Taxed Pay (n/3)%/yr. If They Pay With A Bank Loan

Scott Solomon [1]

What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so. — Mark Twain

When I am working on a problem, I never think about beauty but when I have finished, if the solution is not beautiful, I know it is wrong . — Buckminster Fuller

Abstract

This paper speculates about the consequences of an odd, out-of-nowhere design for an n%/yr. tax — the taxed need only pay (n/3)%/yr. if they pay with a bank loan. Not quite arbitrarily, n is chosen to be 9, and ( not -arbitrarily) the tax is a global wealth tax imposed on the 0.1% of the wealthy and large corporations and foundations. Economics frequently produces charts of the near-monotonically increasing levels of (say) U.S. GDP over the last 150 years, less often charts of global GDP, but much less frequently is there discussion of the mechanism or magnitude of how much of global GDP accumulates and to whom it accumulates. The tiny circle to whom most wealth accumulates has facilitated/experienced the economy to develop such that their governments and the rest of us, in addition, OWE them scores of trillions of dollars. The tax described leads to those with all the wealth saving 600bps/yr. of their entire wealth paying with bank loans. The banks earn two sets of fees — Set 1, the fees charged to the wealthy for providing the loans; Set 2, the fees paid by the bond buyers when the loans are packaged into Global Wealth Tax Collateralized Loan Obligation Bonds . Backed by the gargantuan wealth of those who have accumulated all the wealth, these would be some of the safest bonds ever issued. A central authority regulating these activities would make the fee structure uniform among all the banks, and the banks could generate $600BN/yr. in revenues from $10TR+/yr. in wealth tax money (though only the banks, insurance companies, and the tax departments of elite law firms and corporations really know how much wealth is secreted-away). Thus constructed, the global wealth tax would be the most profitable event in the history of the global banking industry. The tax would result in the largest securitization ever to occur, creating a Global Wealth Tax Collateralized Loan Obligation Bonds fixed income market that would grow at $10TR+/yr… This paper speculates that within ten years the Global Wealth Tax CLO Bonds markets would largely replace the sovereign debt markets. Total 2018 profits for the 1,000 largest banks were $1TR — since the wealth tax would generate revenues amounting to 60% of total 2018 profits, the BANK LOBBY would be the most ferocious proponent for the tax, and the bank lobby is the most influential and powerful lobby in D.C. (and by extension the world). A new role for the global banking industry here is to become history’s most effective tax collection agency. The gearing of what is described is that 600bps is saved on total wealth, while the fees and interest paid are on the relatively MUCH more tiny loan amounts. Therefore, the interest on the loans could be set rather high and passed through to the bondholders. The bonds could be $1-notional denominated, not allowed to trade, and only available to the bottom 90% of wealth holders. Some portion of the bond issuances could be deposited into a Global Retirement Account for the 60% most indigent of the world. This possibility suggests Economics has known that it has known what INTEREST is, but has NOT known — interest, in what is described, is the mechanism to end poverty and calibrate wealth inequality DOWNWARD, not the rent for money (see Mark Twain quote above). A use for the wealth tax money might be to fund a $4TR/yr. not-for-profit that funds millions of not-for-profits around the world, removing enough workers from the for-profit sector that wages rise. Finally, the paper contends the global wealth tax would end business cycles, secular stagnation, unemployment and sovereign debt, boost global GDP growth to levels never seen before, and fund infrastructure projects and contend with climate change.

[1] scottpsolomon@gmail.com, 646 645 3443