Historians of money will tell you about the 16th Amendment ratified by Congress in 1909 and certified in 1913 provides for a federal tax on income and how quickly that led to the Federal Reserve System. It still is what it was but taxing people and corporations changed, and not in a good way.
Over the last century, most Americans have the bad taste of income tax complexity in their throats and a sense of general unfairness in their minds. Every American knows about the high concentrations of wealth in our society and how it includes a hedge on how civil it can remain and still retain the ability to control if not avoid federal tax strategies. The aggregate total of American wealth is running short of the funds demanded by the federal, state and local budgets. The easy explanation is that American multinational corporations and foreign countries laser-like strategies capturing our markets and evading taxes. It is more accurate to talk about size because it matters.
The American economy (GDP $19.3T) is larger than the second largest, China ($12T), and the third, Japan (or Germany, or the UK and so on) combined. This can be confirmed annually with online sources such as the World Bank and the CIA World Facts book (graphic below). The economies of free markets power based on the availability of value embedded in the ownership of the U. S. dollar. In 2010 the Americans held $10 billion of America’s debt but $6 billion was owned by other nations, mutual funds, and commercial banks. The world’s economy depends on a stable dollar. That should be worth far more than we realize. In 2020 over/under is $22 trillion. A lot of zeros my friends $22,000,000,000,000https://data.worldbank.org/share/widget?indicators=NY.GDP.MKTP.CD&locations=US
Here’s Crazy Idea
The complexity of these and many other machinations of the power to tax are likely to continue indefinitely and regressively. Instead of income, what would happen if there was a tax on the dollar by putting a time limit on its use and therefore its value. The depreciation of the dollar is well understood as an econometric exercise. For tax reduction purposes, large organizations can accelerate the depreciation of a long list of assets that continue to grow in value. What can be done?
The crazy people are those who want to change the world, but they are ones who do it. Changes in the world since the Sixteenth Amendment require a forceful effort in dealing with the income and tax problem. One of those changes most likely to contribute to a force for reform could come from new policies of the Green New Deal (GND – WIKI).
Following the passage of the federal power to tax and a lot of bumps along the way, the practice of keeping inflation controlled became a clear way to manage money in the economy. It stripped money of a trade value for gold or silver and replaced it with trust. It prevents old money from being worth less than new money by a percentage low enough to be overcome by other investments. What if that changed?
What if investments in all things not listed as certified GND investment becomes depreciating money? It will take some time to figure that out, and in this country, we are talking one to three decades. We may not have that much time. The tax on money transition would bring foreign reserves and dollar transactions capable of funding an entirely new U.S. economy. Instead of a tax on income, holding money alone in a non-GND stock or places will pay through planned periods of depreciation. Corporations and households that invest in GND directly or indirectly will not pay income tax on anything over, let’s give it a ballpark, of a half billion.
The GND and the Triple Bottom Line
All tax systems tend to stop working well and without attention to reforms will weaken if not destroy, large market economies. John Elkington announced his TBL in a June 2018 HBR article (here). One sentence sums it up, “Clearly, the Triple Bottom Line has failed to bury the single bottom line paradigm.”
Legislators, government agencies and the owners of great wealth routinely examine the growth of public deficits. All of them share one demand. Use of every known form of wealth protection available and if necessary, invent new ways. The only “new way” left to meet that demand is the dollar. The most important asset in the world is American currency and unless new ways are established to use its power better it will, in my opinion, be an asset lost to authoritarian purposes.
John Elkington continues to advance the idea of the TBL or 3BL as Chairman and Chief Pollinator at Volans. The Breakthrough Challenge: 10 ways to Connect Today’s Profits With Tomorrow’s Bottom Line is his most recent collaboration. The TBL is an accounting framework that measures social and environmental impacts as economic costs. His consulting company Volans survives but he admits to the failure of TBL to take hold. After 25 years and despite slow progress in its adaptation, he sees new leverage points that can advance its original effort at a system change.
The U.N. Sustainable Development Goals forecast outlines a conservative estimate of $12 trillion will enter the market for the singular purpose of protecting the health of the planet. The improving knowledge of global challenges in climate, fresh water, and food from the oceans, forests, and soils will not stop threats to the lives and well-being of billions of people.
We see the issue well because we have the Global Reporting Initiative (GRI) out of Amsterdam, Netherlands. A subtle but growing use of the Dow Jones Sustainability Indexes (DJSI), and many others. Despite clear trade-offs in things like lives saved, nations remaining stable it isn’t working. Innovation in renewable energy and reductions in war-like postures and armament spending is not working. The acceptance of catastrophic resolution by business and political leadership become “The Grace of God” policies as an excuse for inaction. Benchmark progress does not exist, if I want to conquer the world with a billion tons of PEZ with free plastic dispensers, I can thanks to the brilliant manipulations my CFO and her profit targets.
Getting to System Change in the GND
Altering capitalism away from income and toward the dollar could revitalize generously corrupted accounting systems. The GND and whatever other countries want to call it, will invest in breakthroughs, cause disruptions, followed by recognizing, punishing and sidelining unstainable sectors.
Putting a time value on the dollar could put GND and TBL innovation on the fast track as Elkington and many others are pleading. The lack of a pace and scale for change awaits the radical intent of public policy demand for an improved public good. Biosphere overshoot is unacceptable.