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Public opinion polls suggest that socialism, and similar ideas like imposing near confiscatory income or wealth taxes on high achievers, are more popular among the young than the old.  As it has been said, “If you are not a socialist at 20 you have no heart.”  The second half of that quote, of course, is that if you are still a socialist at 40 you have no head.  Thereby we often find ourselves at a political impasse in trying to resolve the very passionate feelings of the young and the old about economic and social policy. 

Anyone experienced in tax legislation, however, knows how to easily resolve such an impasse — generous transition rules.  When Congress changes the depreciation rules, for example, making it more expensive to build buildings or invest in businesses, it generally “grandfathers” existing investments.  When it eliminates special deductions viewed as loopholes, it often provides a grandfather rule exception, or phases them out over a multiple year period.  The same approach could be followed for a move to socialism. Continue the old, familiar rules of free enterprise and private property to those with existing investments in their educations, careers, businesses, and financial assets — while adopting more radical, egalitarian ideas for new entrants to the economy.  In a matter of 20 years, a capitalist society can be painlessly transformed into a mostly socialist utopia.  Today’s 40 or 50 or 60 year olds can continue to live under the old rules and ultimately retire and die, and today’s 20 year olds will be left to live in the society their new rules will have created.  It is not as impractical as it may sound. Let’s consider a few of the most popular ideas for making America into a more egalitarian place.

Free medical care, free child care, free college tuition for one’s children, guaranteed incomes for those unable or unwilling to work, generous retirement plans for those over 55, and other popular programs can be immediately guaranteed by a constitutional amendment —  but only for those, say, currently under the age of 30.  That is, only for anyone born after 1990.  To pay for the costs of such programs, anyone born after 1990 — anyone who is under 30 today if the program were enacted today — would be subject to a 95% tax rate on incomes above $500,000 a 75% tax rate on incomes above $250,000, and a 50% tax on incomes above $100,000.  In addition, any gifts or bequests they made to their children or grandchildren would be treated as taxable income to the recipient.  They also would be banned from making major gifts to private charities — giving the government a near monopoly on the provisions of social welfare services.  

Very few in the group of individuals now under 30 would have substantial amounts subject to the new rules when they were first enacted — and the rules would all sound very “fair” and “equitable” to someone under 30.  Thus, the political objections would be minimal. At the same time, the costs of the new programs — except possibly for child care — would be minimal in the early years for those who are under 30 today.  Their children would not be of college age, their medical expenses would be relatively low, they would not be anywhere near retirement age, etc. 

Those over 30 today could continue to work and invest under the old rules — currently a maximum tax rate of approximately 40% no matter how much income they make — producing a relatively progressive system, but certainly not producing enough revenue to provide all of the free governmental goods and services the younger generations seem to want to enjoy.  The older generation would thus have to continue to suffer the pangs of conscience of continuing income and wealth inequality, but all of the young people — and those in the older generation who are dedicated idealists — would know that the capitalist, free-market economy would be withering away in a matter of 20 to 40 years — as the older generation died off.  

The most difficult issue would be whether the older generation would be permitted to make gifts or bequests to their children or grandchildren.  That right was part of the “bargain” when they began to accumulate income and wealth, and it would seem unfair to take that away.  On the other hand, it would obviously contribute to a perpetuation of inequality that the new socialist rules were intended to eliminate.  There too, the answer would seem to be a generous transition rule.  Gifts and bequests from individuals over 30 when the program is enacted could be made fully taxable to the recipients — but that new rule would be phased in over, say, 50 years.  Even if that allowed much of the existing wealth of the older generation to passed on to many who are today under 30, the income earned on those assets — earned by people now under 30 — would be taxed at very high income tax rates.  Thus, it would gradually cease to be a significant economic factor.  Indeed, most of the money earned by the very rich in the United States comes from their own economic efforts, not from inherited wealth.  Under the new rules, that income would be largely taxed away, if it exceeded $250,000 or $500,000 per year.  

Of course, if such an idea were proposed, some would-be young socialists might begin to have second thoughts.  Are they truly willing to sign-on to a program that will so severely limit their upward mobility?  Do they think they will be among the future high-earners who will be paying the higher taxes?  Or do they imagine they will be among the “middling” workers (or non-workers) who will enjoy the benefits provided by the new economy?

If there is any doubt on that score, a test run could be provided by our leading universities.  Harvard, Yale, Princeton, Stanford, and other top colleges and professional schools could unilaterally and mandatorily adopt a new tuition program, requiring that their graduates pay the University nothing upfront, but agree to pay deferred tuition over the rest of their working lives equal to 95% of their annual incomes in excess of $500,000, 70% in excess of $250,000, etc., and placing all of their assets in trust for the university, after they die.  If the socialists are right in their economic productions, university endowments would explode with revenue, and the top universities would eventually own enough assets to control most of the economy.  That would enable the academic “experts” to run America, instead of politicians, voters, business people, or consumers — another ideal of progressives and socialists.

Whether it is done through our top universities adopting new tuition programs, or by the Federal government with new tax policies, those of us in the older generation could continue to live under the old rules, until we pass away.  For another 50 years or so, we could give gifts and bequests to our children, but for most of us the most important legacies will not be financial.  The important things, the intangibles, we could still pass -on to our children — the gift of culture, the love of beauty and knowledge, and the virtues of thrift and hard work — as long as they are not overly successful. After all, as one of our recent Presidents explained, at a certain point, you’ve made enough money.  

The above was submitted to The Market Ticker for publication by Ramin Oskoui, MD, of Washington DC; (sadly) it does not represent the work of the publisher but certainly does have some interesting ideas contained within.  I wonder how many millennials and beyond would support this..... or is their intent to impose it by force on (that is, they intend to steal from) other, older and presumably wealthier Americans?

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