Thursday, August 26, 2004

Now is the time to consider instituting a wealth tax

National, state, and local governments are seeing tremendous budgetary shortfalls that trickle down to local communities and resulting in massive cutbacks in all areas of public spending. These cutbacks affect police, fire, schools, parks, sanitation, healthcare, housing, arts, transit, water, and many other areas. We are essentially seeing our community and its infrastructure being slowly dismantled.

Look around you. Take a drive around our fine city. What do you see? In addition to crumbling schools, unsafe playgrounds, homelessness, and dirty streets, you also see thousands of luxury cars, fancy houses, and upscale restaurants. This city does not have a shortage of money. What is has is a faulty way of collecting and allocating its resources.

I think it’s time to look at a wealth tax for the city. This is not such an unusual idea. While the U.S. does not currently have a tax on wealth, many other countries do, including Austria, Denmark, Finland, Germany, Luxembourg, the Netherlands, Norway, Spain, Sweden, and Switzerland.

A wealth tax is a highly progressive tax that applies to large holders of wealth, applied to things like stocks, bonds, trusts, business equity, and non-residence real estate (principle residence, life insurance, and bank deposits could be exempt).

The basic exclusion would begin at $100,000 -- only families with a net worth above $100,000 would be subject to the tax. The marginal tax structure would look as follows:

* $100,000 to $199,999: 0.03 percent
* $200,000 to $349,999: 0.07 percent
* $350,000 to $499,999: 0.11 percent
* $500,000 to $749,999: 0.15 percent
* $750,000 to $999,999: 0.20 percent
* $1,000,000 and above: 0.25 percent

I am not proposing a national wealth tax, although a national system was proposed by Edward N. Wolff in the Boston Review. What I am proposing is a strictly local system, paid for by San Francisco residents and directly benefiting the city of San Francisco.

The benefits would be tremendous. With this additional source of revenue, San Francisco would become even more of a world-class city. It could have the best parks, the best Symphony, the best opera, the best museums, the best schools, and the cleanest streets. By utilizing its personal wealth infrastructure we could enhance the city in unimaginable ways, greatly expanding its vital tourist trade.

Critics might scoff and say that a system like that is unworkable, that people could easily hide their wealth in tax shelters. Sure, that’s a possibility, but I feel that the wealthy residents of this city are also its biggest boosters. They love the city they live in. They love its culture, parks, and architecture. And they would be glad to pay their fair share in order to protect what they love. And everyone thinks this city is something worth protecting.

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