A novel idea is often born from thinking outside of the box. Let's start with charts on wealth inequality:
http://inequality.org/wealth-inequality/
I write this as an effort to bring our American Dream back. Once that Dream was gotten it never should have become lost!
This idea includes an added benefit: Elimination of IRS taxes! It also helps to assure money gets spent within our economy, and it also helps to eliminate offshore tax havens where billions of dollars (perhaps trillions) continually are hidden and unproductive to the American economy.
Most folks in general hate paying taxes, especially when complicated and everyone feels like they’ve being screwed. Ironically, this mindset actually inspires cheating or ignoring them all together.
So here's a unique proposal for running government with no taxation, except perhaps for only implementing service fees where or if appropriate.
The Inheritance Bank: How It Works
I propose this should happen once Heaven or Hell welcomes a deceased person. I envision the existence of an Inheritance Bank that would basically work as follows (note to economic doctoral students -- here's a perfect thesis -- just fine-tune details):
The net worth of an individual, by age 21, must be determined by professional actuaries and then continually updated (annually, bi-annually, every five years, however way determined) as life goes on. It’d sort of be like periodically renewing a driver’s license. The individual at this time assigns an executor.
When an individual dies, the Inheritance Bank then works with the appointed executor of the estate in order to determine the overall wealth of the deceased and an inheritance formula for distribution of the deceased’s assets.
The value of any individual’s worth is exempted up to $200,000 (amount actually to be determined). So any deceased with a value under $200,000 need not worry about anything, except the normal functions of an executor of a will -- when an individual dies and their total worth is $200,000 or under, they can bequeath the entirety of that amount to their designated heir(s).
What if the value, determined at death, is one million dollars and two children are designated heirs. The $200,000 waiver would ease any transitional needs (administrative, funeral costs, etc.). For example, nobody gets kicked out of their home. With an estate value of one million, the first $200,000 is exempt. Each heir automatically would receive $100,000 (cash or value option), minus transitional expenses. The remaining $800,000 goes directly into The Inheritance Bank. Once all legal matters of the deceased are settled, each designated heir then will receive their half of the remaining $800,000 (cash or value option). In effect, both heirs receive $500,000, $400,000 of which is accountable to the Inheritance Bank and $100,000 as a direct bequeathed gift.. They are free to do whatever they like with the $500,000.
If the heir recipient when they die wish to bequeath money to their children (the originally deceased’s grandchildren) the heir recipient must first repay the originally bequeathed $400,000 back into The Inheritance Bank (payments can be made over the heir’s lifetime until the full $400,000 is settled). If when the heir dies they’ve paid back nothing, then the first $400,000 of their settled estate value at the time of their death, goes directly into The Inheritance Bank. Any amount the original heir earned above the $400,000 will be distributed according to the Inheritance Bank guidelines (including the $200,000 exemption).
In other words, if you are originally bequeathed $400,000 and you fail to pay any of this amount back into The Bank and you die with a value of $700,000, the first $400,000 goes directly to The Bank as the payback. So $300,000 of value remains. $200,000 of that becomes normally exempted. This means there is $100,000 remaining which can be bequeathed to the next-in-line heirs. So if there are two next-in-line heirs each would get $100,000 (minus transitional expenses) from the exempted $200,000; and then each would receive $50,000 (from the bequeathed $100,000).
This means, before they die, the $50,000 recipient would be obligated to pay that amount back into The Bank. Any assets they hold in excess of that amount would be determined by the above formula. The process repeats and continues over the generations.
- If any money, for whatever reason, is held in an offshore bank account to avoid disclosure, at the time of death that money immediately becomes forfeited to The Inheritance Bank and it would become illegal for any heir to receive any of it. Upon presentation of a death certificate to the offshore bank the deceased’s money in that account would go directly into The Inheritance Bank.
Benefits Analysis:
Interest raised from money in The Inheritance Bank would be enormous and likely sufficient to run the needs of government without any need of an Internal Revenue Service system. Just imagine government running with a Walmart family member or the wealth of a Bill Gates or Jeff Bezos in the system.
This system only applies to those who hold wealth in excess of $200,000 at the time of their death. Poor folk and struggling working people, who can not afford bookkeepers or tax consultants, would function as they normally do under the current system, whereby an executor is appointed and the bequeathed monies assigned to heirs as they are today -- you still get to keep that signed Mickey Mantle bat--lol!
Because the amount of money inherited must be repaid by the end of a lifetime, a positive incentive is created for heir recipients to make productive use of their originally bequeathed money. This would help to churn a healthy and productive American economy as inherited money would become wisely spent, not hoarded and taken out of circulation as often happens today.
The option always exists to just take your inheritance money and run, pay nothing back. If you have no children or anyone to whom you wish to bequeath your fortune, this might become your best option. Indeed, live your life on a merry-go-round! But when you die, and you have no assigned heirs, ALL of your wealth and assets go into The Inheritance Bank.
Here is one of the gems of the plan. One no longer becomes born on third base or home plate. An Inheritance Bank has the potential to gradually wear down the “Silver Spoon” effect whereby famous family fortunes get passed on -- tucked into offshore tax havens -- to an heir who’ll only hoard the money. Horded money is counterproductive money and no help at all to the American economy, or for helping to improve the society in which we live.
The incentive to go out and create a fortune remains every bit as strong as The Inheritance Bank requires receiving only that which was originally given and it recycles that money back so everyone has a fair opportunity to do well. Think of it as recycling money rather than taking money.
The incentive to hide money in offshore banks accounts to avoid taxation becomes eliminated as any such money horded runs the full risk of becoming completely forfeited.
Conclusion
According to Wikipedia when this was written, half of the world's wealth belongs to the top 1%, the top 10% holds 85% while the bottom 90% hold the remaining 15% of the world's total wealth. The top 30% hold 97% of the total wealth. The combined wealth of President-elect Donald Trump’s 17 cabinet members, including the vice president and chief of staff, is 9.5 billion and greater than one-third of all American households.
I don’t know how the numbers ultimately work out. My theory is completely untested, unvetted and perhaps more instinctive than anything. I also know that statistics are like a bikini: What they reveal is interesting but what they conceal is crucial. Also, my baseball coach was my math teacher -- always got a near-automatic C-grade in math.
Nonetheless, I think I’ve developed a blueprint requiring deeper analysis, especially if it becomes possible we could run the United States government from an Inheritance Bank and not from IRS taxes. Call it my bid to make taxes disappear while at the same time addressing the serious problem of income inequality.
This could become a new system for a better-balanced society, one with less reliance on the economics of privilege and one that provides opportunity for everyone. Who knows, perhaps it would bring back The American Dream we’ve lost and so desperately want back. I’d love to see a doctoral student grab this ball and run with it -- see where the idea lands. The Inheritance Bank would certainly make for a great thesis for such any student of economics at any university anywhere.
http://www.newsweek.com/billionaires-money-end-poverty-report-786675