First I would like to provide some context for my question. I live in a suburb in a “flyover state” and also see wealth inequality as the problem to solve for. For more information on why I feel this way, see just about any video by Gary Stevenson: https://youtube.com/playlist?list=PLXuOBKrmFYbKytq9mkcd62sJPb6w12vpU.
I think it is safe to assume that in the next 4 years, wealth inequality will not be addressed even verbally at the national level. I suspect most states will not attempt to address this issue either. I think suburban city councils are absolutely an option for near term changes and could even be a perfect place to start. I think the odds of a major company or billionaire showing up to protest any local changes in a smaller town are relatively small.
I propose that we as a society should be able to attend a city council meeting and suggest legislation similar to the following:
Any single family home owned by either a company or an individual who does not live in the same state should have a large property tax applied to it.
My thinking is that no company should ever own a single family home (if you’re a builder making a new home give them a window of like 1 year to sell it or something similar). If there are companies owning homes, they would be incentivized to sell the property. Large numbers of properties being dumped by businesses would lower housing costs locally. This would in turn lead to more locals having money to spend (hopefully locally, but you never know). I think the locality of their spending should probably be emphasized in a sales pitch to a city council. Businesses who refuse to sell will be paying large local taxes that the city could spend on the countless things that a city needs to operate but is currently underfunded. I guarantee you the local government has projects they want to do but can’t afford. Here is their solution. I do think that if businesses are refusing to sell, that means they are charging tenants the increased tax, and the property tax was set too low. The tax has to be high enough that businesses sell the property or else I don’t think this works.
The number of businesses or individuals affected by this new tax is probably really low for any given city. If you imagine a small town there are only going to be so many companies owning single property homes (less than 10?) same story with wealthy out of state home owners (less than 20?) The total number of homes in the area is going to be much larger though so there should be a sizeable and noticable impact. I use out of state as the qualifier for individuals as it is pretty easy to ask for a local driver’s license as proof you live in the state, and to my knowledge states don’t let you carry IDs from multiple states. You only live in 1, you only have 1 ID, and you always have it with you so it should be easy enough to enforce.
People/businesses who don’t comply could have their property foreclosed on, then auctioned off to a state resident with proceeds again going to the city. I think the pushback would be that this is anti business. To which I would agree and say yes, businesses have no business owning single family homes, that is what citizens do. These citizens will have more money to spend locally which will attract more businesses and pay more local taxes. Money from local citizens going to major businesses who pass earnings on to investors is how local money gets exported out of the community and is not business we want owning our homes. It also diminishes the ability of locals to spend at local businesses.
My hopes is that Lemmy can help poke holes in this plan and provide solutions to the holes. Perhaps you see a better way to present this idea. Perhaps better ideas are proposed. Perhaps you see a smarter solution. Something needs to change, and I want the best odds of successfully bringing about change for the better. I want my kids to be able to buy a house some day. At this rate, that won’t happen. We need a solution, and maybe this is a start.
Also I’m interested in solving wealth inequality. I’d prefer the 1940’s style income tax with the insanely high brackets at the extreme high end (90% tax was it?)
I have some followup questions your ideas.
Workers are getting an ownership stake. Are workers also liable when the company loses money? Today this only falls on the owner. If there is a negative cashflow situation, the owner has to inject more of their own money into the operation or the business will close. Many times this money comes from cash earned during fat times to be able to keep the company afloat during the lean times. If workers are taking a portion (above and beyond payroll of course) of the profits during fat years, will they also be liable for fronting cash to keep the business going in a lean year?
I support the end of lobbying. No notes.
Are you talking about loans from governmental organizations like the city/state/fed intending to spur development or are you talking loans issued by banks? I assume bank loans, correct me if I’m wrong. If that’s the case we’d be setting laws on how one private organization can lend to another. My understanding of regulations on loans to date have only enabled loans to classes wrongfully historically excluded (such a loans denied to minorities under Redlining rules). I’m not finance expert, but can’t think if any laws that disable a banks ability to lend. Sure there are rules around maintaining bank liquidity and nonusurious interest rates, but those are just qualifications instead of ourtight bans of loans. This would be a new precedent wouldn’t it?
"There is nothing stopping him from withdrawing 100,000 in contributions a year, and distributions are tax free with literally no oversight. " Wouldn’t that $100k be counted as income and the owner to pay income tax on that? Are you making an example of a way that corporate taxes are not being paid?
There’s tons of regulations like this attempting to combat money laundering or doing business with terrorist orgs, rogue nations, etc.
Thanks for reading through my post and with thoughtful followups.
I would say this would actually be up to the ‘owners’. I don’t want to restrict too much freedom of ownership, there is indeed a lot of risk when you are starting a business. So the owners would be able to select through a variety of business models. One model could be very similar with the stock market. So people’s ownership would go up and down with it, the dividends they receive would fluctuate depending on how well the biz is doing, etc. I have no specific plans on this, those details would need to be fleshed out at a later time. Right now I just want to make excuses and reasons to adopt this economic mindset. Because at the end of the day, as current events has shown, it really doesn’t matter how stupid/impractical ideas are, we can get them done if we really want to.
Yeah, I can’t imagine anyone disagreeing in good faith.
Yes, bank loans. You bring up a good point, another solution might be necessary. But I do want to solve the problem of already established business owners can EASILY receive a loan for a new business. I see this as a huge issue because this just means overtime, like what is happening right now, it will always be hard for entrepreneurs with no experience honestly just need to be lucky. There is only so much money that can go around, so of course banks will give it to those already established. This is not a bad thing in the short term, but I do see it as a problem in the long term. Just makes wealth inequality inevitable.
While distributions are not subject to payroll taxes, they are still subject to income tax at the individual level. The key difference is that distributions can be more tax-efficient than taking a salary, as they avoid payroll taxes. However, if an owner takes too little in salary and too much in distributions, they may attract IRS audit. We are starting to get into territory where only CPAs are really qualified/knowledgeable to talk about. I have been out of the industry for 2 years now so I am not confident my information is up to date anymore to provide additional detail.
I disagree, in good faith, with the end of lobbying. Emailing your congressperson is lobbying.
I totally agree with ending bribery, which is often thinly disguised as “lobbying” but is just honestly bribery.
I agree post war high marginal tax rates with large deductions for spending is the right way. We’ve solved this problem before. It’s the real “trickle down” because it’s forced spending.
Regarding #1, it can work the same way that company ownership works now (e.g. when you buy shares on the stock market). I don’t know how they inject money when times get tough but I’ve certainly never given them anything.
If you’re using the model publicly traded stock, when a company needs more money they issue more stock for sale the public. What this also does is devalue the existing stock in circulation. Assuming these suggestions go into law, that sounds like a massive loophole that owners could exploit.
As long as the price is fair, I don’t see why this should be a problem. It sounds like it should be mathematically equivalent to purchasing a percentage of everyone’s shares. So share value goes down because you’ve essentially “sold” some of it to someone else without changing the absolute number of shares you own.
Fair to whom? The owner, the workers, or the new non-worker stock buyer?
Fair in the sense that both the buyer and “sellers” agree on the price.