Initially written 2020-12-06. - On GitHub here
This sounds questionable, right? At the very least at the scale that has taken place recently and now for the last 13 years since the financial crisis of 2007-2008 when the Lehman bank went under in the US and caused a major crisis in its wake.
The purpose of taxes, as I see it, is to distribute wealth according to needs that are defined by an elite. Sadly, the elite we have is what we call politicians, and these politicans are human, meaning a (negative) diversity arises, but let's stick to the basics of my interpretation. Offering free health care is one such need that is likely to be better handled by a "paternal/maternal/parental state", since it is in line with being kind and humane. Roads, military service, trains, power grids and food supply are other things I think are natural to include, but you can stretch it further (and we can, and should, do). A lot is needed, the world is complex. There are many laws. Not enough laws are accurate, logical, sensical and not to mention up to date.
Anyway, if you as a tax payer insure stocks through QE (quantitative ease), should you not be offered any rewards, then? Implicitly even the low paid workers in any job are contributing to insure stocks on the stock markets through their work, and subsequently taxes. What I suggest is completely logical: A reverse tax that pays back money to every single person that paid taxes (reduction in taxes or downright payouts), in line with how much the stock market rose in that fiscal year (time period for historical/practical reasons). If you think about it, is it really so strange that a tax payer who assumes stock market risk without owning stocks can also get benefits without owning stocks?
It's actually similar to how the tax system in Norway now rewards people who are invested in "80 % or more stocks papers", if I remember correctly. If you own 10,000 kroner worth of Equinor stocks, you will get a discount in taxes based on the value, that's again later countered by another tax. It has become complex, but what lies underneath it all is this: Uneven distribution is enhanced. People with "spare money" who can invest are given benefits over those who cannot.
Yet, how can this be logical if the tax payer from McDonald's also helps to insure the stock she has never heard of through her taxes? Should the tax payers then not be rewarded? My first thoughts were about linking the "reverse tax"/reward to stock market performance, but there might be thinking I'm not done with that says a fixed percentage is better. What that percentage would be is interesting; the reasoning better not be "random". See some thoughts below.
In short: Tax payers need to be rewarded monetarily for the risk they highly implicitly assume by even working to produce income that the state then claims to have rights to part of. If the average tax payer knew what their money was being spent on, they might be upset, such as by the 200 billion NOK down the Equinor "conquer the US stock market effort" drain. I read the amount downright "wasted" was closer to 19-20 billion NOK, but that's not small change either. And in total, the project lost over 200 billion NOK. Equinor was still not scared of linking oil with their reputation at the time, so they were called "Statoil", and wasted tens of thousands of dollars on things like turkeys at farm shows in Texas, to mention one popular extreme. It might have seemed like a good idea at the time by someone (apparently)...
How this is implemented I cannot determine or describe fully, but it desperately needs to happen if we are to stay within this QE reality.
My thoughts are not always front page news, but this one I wish they would listen to somewhere and bring up as a suggestion. It is not new thinking that tax payers insure the stock markets, but I'm simply suggesting something to counter-balance it. I'm sure many families with tight economies would love to get paid, say, 7-25,000 kroner back for the stock market risk they took through QE, as a percentage - be it fixed or relative to stock market performance - it might save the kid's school trip or get grandma her hearing aid - ideally (I know "the rational man" does not truly exist). In any case, it is fair in a way that it currently is not. Even if the government decides to make the amounts ridiculously low, it would be a start.
Somehow, it should be a mix of tax money spent on QE and the income (losses should not go below 0, maybe, not sure, but that seems more stable and predictable) from the stock markets in a percentage of maybe annualized over a period over years ... something ... something (adaptive and controlled by thought as well) to figure out an amount to reward tax payers with. Just an idea. Often it is said expected average returns from stocks is 5-7 % or close to that range, something similar could be used, or something specific to the actual development.
Crap, but what about the rich people who then get (potentially huge) tax breaks as well...? Figure it out. Ugh, maybe all I came up with was another reason for "uneven taxation". Bummer. Maybe a limit in income that you need to be below to get the breaks. Estimation for Norway, maybe ... 1-2 million per year, then you don't "need" the tax cuts. 800k? Something.
Thanks. Last day of the weekend and then back to the home office COVID hassle.Finance Finans Macro Economics QE Quantitative Ease Tax Politics All Categories
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