Tuesday, January 24, 2012

Testing the Costs of Wealth

In discussions last week after a State House press conference, I proposed the hypothesis that, in consideration of the deleterious effects of wealth inequality, if the most wealthy Vermonters were to leave the state because taxes were made higher, we who remain would actually be better off.

I would like to know how this might be tested.

I can of course imagine a number of variables, including taxes which depend upon "residence". Of course, when the deleterious effects of wealth disparity are taken into account, I don't see why anyone choosing to live in Vermont part of the year but locate out of state, to avoid taxes, ought to be treated with any special consideration.

 Taxation is only one way to reduce wealth disparity. Taxes can be used to encourage companies and corporations to share more wealth with employees, to invest more in environmental remediation, to convert to worker ownership, and to convert to non-profit organization. Any of these alternate uses of wealth help to distribute wealth and in the course of lowering disparity increases the value of the incomes at the bottom of the scale.  My favorite idea: make the tax rate contingent on some socially relevant criteria, such as the ratio of highest and lowest incomes, the ratio of profit to total of wages, or the ratio of profit to capitalization. Lower corporate taxes could be realized by spending profits on wages, environmental remediation and other social goods.

 The key to prosperity under the regimen of low wealth disparity is that the quality of life is not dependent on actual income, but on the feelings of security and community we can sustain. As the top earners are less distant from the bottom earners, the quality of life goes up less because of increased incomes, and more because our interests in public education, safety, health, governance, and the solutions to these problems, all converge, because we tend to converge on shared solutions, and because the tendency toward a greater sense of a shared fate leads to greater shared well-being.

 This vision of prosperity of course deviates from that which has driven public policy for the last three decades. On the political right, "prosperity" is marked by "wealth creation", which, conveniently for the proponents of this definition, opportunely falls into the hands of the already wealthy. The alternate definition of prosperity is marked by attention to the well being of every member of society, of the health of the environment, and of the Earth. Wealth is a tool, not a goal. It isn't the size of the pie that matters, it is how fairly, with how much care, the wealth is made to work for everyone.