Productivity has skyrocketed in the past three decades, but all of the surplus has been captured by the top 1%. Wages have been flat. The workforce has lost a lot of leverage due to the cost savings of machines, labor competition with the third world and the migration of women into the workforce.
All of these extra workers are fighting for fewer and fewer jobs. The only solution is to create many more jobs or reduce the number of available workers. In the past that balance has been restored by things like disease, war, genocide and shipping people to Australia. Given our current sensibilities, we would probably do better to use the tax code.
Taxes are controversial. Conservatives argue against taxing income, saying that it is a disincentive to work. Liberals argue against taxing consumption as it disproportionately affects the net consumers – the poor and middle class. Libertarians argue against taxing anyone because they don’t understand math.
What if instead of taxing based strictly on income or consumption, we set tax rates based on age.
How it works:
From age 0 to 40 your tax rate is 10%.
Starting at 40, after a standard deduction at just above the poverty line, your tax rate is your age. ie. A 40 year old pays 40% of his income above the deduction, a 60 year old pays 60%.
Why Tax The Old?
Not taxing the young incentivizes them to work and to save. It’s the cheapest money you will ever get so it makes sense to sock it away now. It discourages the young from frittering away years in college. Instead they will want a degree or certification they can use now.
Taxing the old disincentivizes them to work. It encourages early retirement, except for the very highly skilled who can be compensated highly enough to offset their extraordinary tax burden.
It encourages job growth as it reduces the pool of workers, but reduces it at the top not the bottom. So young workers will be highly sought after as they are less expensive and more eager to work.
This also encourages older workers to leave the work force and spend their time creating value either by helping their working children with home life, volunteering or starting businesses that pay in equity and investment income, not salary.
If nothing else it will force the accumulation machines we call corporations to push profits back into the hands of the workers by tightening the labor market and raising the price of expertise closer to its true value to the employer.
Just so we’re clear: What is Satire?
