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A Proposed Solution to Almost Everything

I've had this concept bouncing around in my head for weeks now and I believe I have a rough draft of law that would solve most of the financial problems Americans face today, that we talk so much about on this sub. Before I introduce my idea, I'll make clear why the law would be such a good idea. FACTS: In any economy, the more money that is spent by the more people, the better. The best way to illustrate this is to imagine a small economy with only 100 members. Each member starts off with $100 that they can then trade with each other to get goods and services. If, over the course of a year, everyone is concerned about saving as much money as possible, each person will probably spend about $50. By extension, this also means that each person will earn an average of $50 back, because…


I've had this concept bouncing around in my head for weeks now and I believe I have a rough draft of law that would solve most of the financial problems Americans face today, that we talk so much about on this sub.

Before I introduce my idea, I'll make clear why the law would be such a good idea.

FACTS:

In any economy, the more money that is spent by the more people, the better. The best way to illustrate this is to imagine a small economy with only 100 members. Each member starts off with $100 that they can then trade with each other to get goods and services. If, over the course of a year, everyone is concerned about saving as much money as possible, each person will probably spend about $50. By extension, this also means that each person will earn an average of $50 back, because money cannot dissappear, and so the total amount of money in the economy cannot increase or descrease.

Overall, by the end of the year, each person has spent an average of $50, received $50 worth of goods and services, earned $50, and ended with an average $100. The crux is this, though: if each person had not worried so much about saving money, and had been willing to spend as much money as they could, we could imagine that each managed to spend an average of $200 in the next year.

This $200 does not dissappear though. It is spent and paid to others in the economy, and so it keeps travelling around. By the end of this year, each person ends with an average of $100 just like last year, but they managed to buy $200 worth of goods and services with it. The quality of life for everyone has gone way up, just because the flow-rate of money has gone up.

The problem, of course, is when an individual hoards money, restricting money flow, but I digress.

Secondly, once someone owns a lot of a particular resource, it becomes significantly easier for that person to accumulate more of that resource. Once someone has a lot of money, their ability to influence the world in their favor in order to gain an advantage increases, and this makes it easier to gain more resources.

This problem is exacerbated by the existence of money, because money acts as a sort of universal-resource. It can be traded for anything, and so whoever owns a lot of it can expect to be able to do whatever they want with it. If you only have a monopoly on lumber, you may hold a lot of sway over construction workers, but a person with a lot of money holds sway over EVERYONE.

The third fact is that the majority of wealth held by the ultra-wealthy is not in the form of cash. It's in appraised value. Society (or Wall Street) appraises the value of a company at many billions of dollars, and that becomes the net-worth of the owner of the company. It's the same as if you own a rare stamp worth a million dollars. Sure, you're technically worth a million dollars, but you can't really spend it until someone actually exchanges money for that stamp.

The core difference is that, like how money is more universally useful than lumber, stocks are far more universal than stamps. Not to mention that stocks also entitle you to the means of production. A person who's entire net worth is in stocks may not be as liquid as a person who's entire net worth is in money, but they are arguably equally as powerful.

OPINIONS:

Society should be allowed to restrict the “rights” of some in order to protect the citizens. We already do this all the time. We restrict the bodily autonomy of some so that they will not murder, for example. And yet, people take a particular problem with the idea that sometimes, people's possessions must be taken away to protect citizens. However, sometimes this too is necessary. The government seizes homemade nuclear equipment, the government has, in the past broken up trusts which threatened the ability of people to “vote with their dollars”, and I would argue that now is the time to do something similar again, in order to protect all of us.

THE IDEA:

Again, remember that this is only a rough draft, and I present it as an idea to be tinkered. Obviously it's not perfect yet, but I believe it is a fundamentally good idea. Anyways,

I propose that we eliminate the current taxation system and replace it with this one: ALL citizens of the United States be required to spend 50 cents per dollar they make within 2 years of making that dollar. If they fail to do so, this 50 cents (which they previously had the opportunity to spend themselves) is taken by the government, acting as that person's taxes.

After a dollar's 50 cents have been spent, that person is allowed to keep that 50 cents in their account indefinitely, to spend on whatever they want. UNTIL, that person's net worth (in terms of money and stock) surpasses some amount, let's say ten million or so.

At that point, for any dollar over ten million that a person owns, they must spend 50 cents every two years. Effectively, a person's net worth over ten million has a half-life of 2 years, after which half mudt be spent or taken as taxes.

In simple terms:

For every dollar earned in last 2 years: must spend 50 cents

For every dollar in bank account under ten million: must spend 0 cents

For every dollar in bank account (including stock value) over ten million: must spend 50 cents

Something else that's nice about this system is that people with lower incomes can avoid paying taxes altogether. You may think this means that the amount of tax revenue the government gets will dwindle, but not so. See, the 50% of your money you spend at Walmart is money that Walmart earns. Therefore, Walmart must now pay the taxes on that money. If they spend it, then someone else has to pay the taxes on that money. No matter what, someone pays the taxes on it.

BENEFITS:

The flow-rate of money increases drastically. Individuals are incentivized to spend at least half of the money they make which, as we have seen, is better for themselves in the long run.

Employers are also incentized to pay their employees more, because they can avoid paying taxes altogether if they spend half of their profits on paying employees.

It becomes exponentially harder for individuals to accumulate grotesque amounts of wealth. Sure, it's possible, but Elon Musk, for example, would have to earn like $150 billion in two years in order to keep his net worth stagnant. Otherwise, his net worth will quickly fall into the hundreds and tens of millions. This, of course, reduces the risk of money-monopolies.

There is a lot more I could say, but the point of this post is to generate conversation more than anything else.

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