Wealth has two lines of
accumulation, from transfer though design (gift, inheritance) and from the
market. As there is no constitutional right to inherit, it could be limited
there. In the past we have tried to limit the market accumulation by taxes, but
have largely abandoned that approach. Also we do not want to limit innovation,
ambition, the desire of some to exceed their neighbors where that serves to
inspire progress and wealth for all of us. We do not limit these drives
because, in the end we recognize that the true wealth of our society lies in
the condition, experience and motivation of all our people, their health, education
and opportunities, and they need to be supported. Thus we must consider,
through our democratic means, ways to limit wealth, political power and social
disparities, that tend to restrict or limit those drives.
We developed the theory of Profit as the basic tax of the market to ease bringing equalization factors into the market where they otherwise do not exist. Most people throughout the world do not have the equal standing to make the traditional fair market bazar. Modern distribution of eliminating bargaining, in establishing a set prices, severely limit this opportunity and deprive the consumer of the experience and knowledge to be good bargainers. The fair market price, as recently seen in considering drug prices, is much of a myth. Walk into a Target or a Walmart and try to bargain over the price of an orange, coat or roll of toilet paper or into Walgreen's and bargain over the price of insulin. The clerk does not even have the authority to do it even if he or she knew how. While many of the sellers can look at the broad market for general demand and establish their profits based upon this, only the giant corporations and businesses have that privilege to bargain over prices and even then, only to a limited extent. So treating profit as a tax is the equalizer in the market, and allowing the seller to share in that profit as the tax collector is fair.
In the United States one would hope this moves us beyond the arguments of Capitalism verses Socialism or Communism. In the Islamic world it solves a problem found in the Qur'an forbidding the payment of Riba (usury or interest), because interest could then be considered a tax, allowable under the Qur'an in Sharia (Islamic law). The "profiteer" loan company, bank, mortgage broker or other credit offering company would merely be paid an agreed tax and able to deduct its fee as the tax collector. This should add comfort to over a billion new customers to the credit side where the payments are no longer considered interest or Islamic usury (Riba).
Banks participate in and already facilitate the consumer's use of the modern market, with consumer loans, credit and debit cards, and accounts for managing many scheduled government payments. The idea fits well with existing modes of social interaction. Few citizens or corporations would be greatly impeded while many would be serviced as this is coupled with a fair basic income.
Current accounting practices would probably value all property at costs plus improvements less depreciation rather than fair market value because of the need to consider profit where the property is disposed of. By removing much Fair market value speculation, the overall market could well be a flattening of economic bubbles and more stability.
But could the country afford a fair basic income? We say yes and will explore in our next editorial some suggested means of doing so.