For the capitalist people, an idea whose time has come

If it is the American states, then as a former justice of the US Supreme Court Louis Brandeis Once called “Democracy Labs”, it’s worth watching what is happening in California right now.

The threat of tax increases քաղաքական The “rich” political climate has forced some of the wealthy residents of Golden State, including a number of tech entrepreneurs, to to leave for cheaper pastures such as Austin or Miami. This, in turn, raised concerns about greater migration, which will affect not only the state’s tax base but also the growth and innovation that have made California the world’s fifth largest economy.

This is an exclusively pregnant situation. While no one has much sympathy for wealthy individuals or companies these days (see the recent justified fury) Leak of ProPublica showing how little taxes the richest Americans pay) or really believe in the small economy, the threat of tax ավոր arbitration by other states is real.

The good news is that California has some creative thinking on the issue. What if there was another way to use the wealth of a company և citizen for the benefit of all?

One such popular idea is what is called “pre-distribution”. Unlike traditional methods of redistribution, where the state taxes existing wealth and then uses it to promote various projects and components, the redistribution refers to the use of capital as investors do and then to the use of capital gains (which, as we know, that are much higher than revenue growth) for public sector financing.

The idea of ​​getting more people to own a business actually works for a while. In: CalSavers app, established in 2016, allows individuals, such as band members or independent contractors who do not have access to private sector pension accounts, to participate in professionally managed funds in a state-run system.

Similarly, suggestion 24, the: California Privacy ActIt was adopted last year and will come into force in 2023. This actually creates a kind of secret sovereign wealth fund, in which 93 cents of every dollar is collected from the fees paid by companies for privacy violations (which, given the nature of control, capitalism is likely to be significant) can be invested by the treasury, any profits used to pay for government activities. “It’s a way to help us avoid taxes,” said Robert Herzberg, a Democrat in California.

He, along with many wealthy Californians, such as former Google CEO Eric Schmidt and Snap co-founder Evan Spiegel, have proposed expanding the idea into a so-called “common equity.” The idea is that companies or philanthropists could invest in a fund that would later be used by Californians for pension security, health care, and more.

Already in the 2021-2022 budget, California Gov. Gin Newsom has proposed using the state’s tax surplus this year, which, along with federal Covid relief, has added $ 100 million enter the public treasury. start college accounts for every low-income first grader in the state.

It is conceivable that they would go further and force the state to occupy a small amount of its own capital position, at least 3-5%, in start-ups, as countries like Israel or Finland Given that the current value of publicly traded companies in California is $ 13, that’s no change. If a few decades ago the state could have taken even a small stake in leading firms, now in California there could be far fewer “Occupy” Silicon Valley concussions.

In my opinion, pre-distribution should not replace taxation. It could not fill the gap, և taxes are in any case a way to strengthen the sense of civic duty և belonging. But it should be considered as a new revenue stream, which is especially well suited to the era when network effects և intangible assets Wealth is concentrated not only in fewer hands, but in fewer enterprises, which can have larger profits with more employees.

It can also help better balance state-private incentives and rewards. The vast wealth accumulated by leading companies depends in part on the strength of public communities: good schools, proper infrastructure, basic research, and so on. As economists like Mariana Matsukato I often wonder why taxpayers should take the bill to, say, put on high-speed fiber without getting any trade-offs.

Indeed, if pre-distribution is working in a California lab, I expect it to be somehow accepted at the federal level. The Obama administration actually tried to implement its country-wide version of the CalSavers program called myRA, but this was partially unsuccessful because the funds were only invested in extremely risky low-yield government bonds at a time when the market as a whole was growing much faster. :

Even in this politically charged moment, it is an idea whose time may come. Pre-distribution is supported by such incredible beds as the hedge funder Ray Dalion Joseph Left-wing economist Joseph Ozef StiglitzPerhaps it is that although it does not fundamentally change the market system, it does expand the ownership of the stock. A mixture of capitalism և socialism that is right for our time.

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