This is a thought experiment into a possible solution for how we can improve the issue of wealth inequality. The idea takes the concept of wealth distribution and re-frames it into an inter-generational system.
So, how do we structure a better society so the ability to pursue a meaningful life is attainable for everyone? How do we bridge the gap between those that think hard work and an “every man for himself” attitude is the path to righteousness, and those that believe that the government should take care of our necessities and right every single injustice before we as individuals do our part? How do we stay true to our free market roots and embrace the benefits of capitalism, while being more compassionate and providing better care for our citizens? Its clear we need some kind of compromise between these perspective, an option that is going to allow for the pursuit of individual success while ensuring that all boats rise with the tide.
Right now the richest 20% of Americans own 60% of the wealth, and richest 1% own 40% of the wealth. 60% of the wealth in the United States is inherited, and that inherited money is most likely to come from the richest 5% of families. These figures first struck me in real life back when I was in college when I would hear about Rockefeller families that are still living with extravagant wealth in the 21st century. It just felt strange that there were still descendants of John D. Rockefeller that were able to live off of his success 6 generations and almost 100 years later. That lead me to think, how does winning the genetics lottery and being born into a certain family make you deserving of this great life? Now I don’t know that much about the particular Rockefeller families, and I am sure they are great people, but it still begs the question – how is this fair?
The next thing that caught my attention in the space of wealth inequality was the concept of the “Giving Pledge”. The “Giving Pledge” is a commitment from some of the world’s richest billionaires like Bill Gates and Warren Buffet to give away the majority of their money, totaling around $365 billion across 190 people. Assuming these people will follow through with their pledges, there is going to be a considerable transfer of wealth occurring in the near future. What struck me about this concept was that many of these people were self-made billionaires who, despite their drive to accumulate extraordinary wealth, decided to donate most of it to the causes they cared about instead of to their children or family. I thought this was a really beautiful expression of capitalism because these individuals were able to pursue their interests, create value for the world with their products and services, create wealth for themselves during their lifetime, and then have an equally great impact on the world whenever they give their money away.
With these two examples in mind, I considered how we could apply the same principle of the “Giving Pledge” to our tax structure. What would happen if everyone gave back the money they acquired over their life at the end when they could no longer use it? In the situation I am imagining, individuals would have to give back the sum of their wealth (over a certain limit) to the government for redistribution to different programs that focus on rebuilding our future. Alternatively, individuals could choose a non-profit on their own to contribute the money to if they do not trust the government to allocate accordingly. Education would be the primary target, so we can start working building a more solid foundation for our future, and getting closer to the goal of equal opportunity for all. Additional applications of funds might need to go towards the concept of Universal Basic Income, so we can relieve some of the financial stress for the families that are going to raising our future citizens.
There would certainly be a lot of unhappy children out there who have been banking on that pay-day once their parents pass, but the question is, what have they done to deserve that money? Their parents were the ones to sacrifice and work hard over their life-times to accumulate that wealth, so should the kids automatically inherit the fruits of their parents labor? I think its safe to say that sadly a lot of these children have had to sacrifice as well over their lifetime – the quality time and love that their parents poured into wealth accumulation instead of child-rearing. Do these kids then get screwed over when their pot of gold gets taken away that was supposed to make up for all their years of insufficient family time? But maybe this problem will work itself out. Without the excuse that “I’m just working hard so that I have enough money to leave to my kids”, maybe there will be greater incentive towards building a different type of wealth that we can pass down. A more important wealth would be the quality time spent as a family, where kids inherit wisdom, love & values from their parents their entire life instead of as a consolation prize at their parents death.
Coming from my own conservative background, I understand that another worry that this is too far of a swing towards socialism to work in our country. But maybe we could balance this new inheritance tax with a decrease or even repeal of income tax. We all have heard the stories of the CEO’s and wealthy business owners lowering their salaries to $1 yet taking millions in stock incentives that are taxed at a much lower rate. It seems like the middle classes are the ones being burdened the most by income tax since they do not have the same luxury of creative accounting. Plus, why are we taxing our citizens for being productive in the first place? Maybe this is a compromise that could gain traction among the working classes on both sides of the political spectrum. Conservatives would get a reduction in income tax, and liberals would get progress towards wealth equality.
I realize that I am not a economist and my logic in how I got to this potential solution is probably littered with holes. I also think this option would be near impossible to implement, as wealth can easily be passed down between generations through family companies, gifts during their life, etc., but maybe the technology will improve enough so one day this could be controlled? But then who would want to live in a world where the government is tracking you that closely? The sad truth is we are in a social hierarchy that is getting too top heavy. It is in everyone’s best interest to start thinking of solutions on how to even the playing field, even for the people at the top. For without a peaceful transition, the hierarchy will get so unstable that it will collapse all at once, and that usually leads to violent revolutions, often targeted towards the rich. There are a lot of questions that need to be answered, but we need to start considering even the most radical sounding ideas with a non-partisan lens, or else we will all soon be in a world of hurt.
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