Could a COVID Wealth Tax Work?

You live in a village of 150 people with whom you’d lived your whole life. Suddenly, 50 of those people come down with a kidney disease. Doctors determine there are 10 villagers with donor kidneys that could be used for a new treatment. From each of these 10 donor kidneys, 5 new kidneys can be grown and implanted in sick patients. 

There is very little risk to the 10 donors. There is some risk for the sick — 10 of the 50 new kidney recipients might die within a few years.

We’re faced with a similar dilemma right now. 

Our economy is cratering as we try to deal with the pandemic. There is likely to be some rebound as states open up, but no one knows how long that will take and how quickly we’ll recover from the damage.

In the meantime, patients are dying. 

And donors have the metaphorical kidneys. 

Yale Law School professor, Daniel Markovits recently outlined his idea for a wealth tax to raise the estimated $2 trillion the government is now spending on relief programs they’re rightly enacting to help those in need. 

Markovits notes, “The effort to control the coronavirus is commonly analogized to war, but while the entire society is indeed at risk, it is very hard for people without medical training to join the fight. A wealth tax would fund the relief effort in a way that gives meaning to shared sacrifice [my emphasis] in the face of a universal threat.” 

Shared sacrifice. A way kidney donors can help the sick. 

I’d like to add a few ideas to the Markovits’ mix to make it more palatable and perhaps more effective.

Don’t call it a wealth tax. Call it the “COVID Coverage Fund” or something else more inspiring and less polarizing. This one-time tax should be presented as an opportunity for the more fortunate to help those in need due to circumstances beyond their control.

But my suggestion is more than semantics. Taxes and Americans go together like Kanye West and Taylor Swift. Though there’s no denying that this is a tax, giving it a name that might propagate virally without the word tax is sensible. Think Andrew Yang generating a legitimate discussion of redistribution — another hot-button topic — by calling his plan a “Freedom Dividend.” Words matter. It certainly sounded better than “Universal Basic Income or The Trucker Bailout Tax.” 

Economist Claudia Sam of Washington Center for Equitable Growth has researched past recessions. When asked what works to mitigate the pain of recession, she told NPR’s Planet Money, “…sending checks to people and having them be big checks.” [my emphasis]

She further argues that the government should consider guaranteeing periodic payments until unemployment falls below a certain threshold (she suggests 5%). Her proposal, made independently of Markovits’ call for a wealth tax, might require a larger COVID Coverage Fund — one increased in size and/or frequency depending on the final economic tally.

Putting money directly into people’s pockets also addresses complaints about the government’s handling of taxes, that it is a hive of inefficiency. This money wouldn’t be funneled through bureaucratic programs or provided indirectly through bailout money to corporations. It would go directly into people’s pockets via the US Treasury.

We are Americans, and if we can’t see ourselves as a village now, will we ever? At the risk of sounding like a Pollyanna, this could be just the kind of unifying moment this country needs. 

Though some percentage of those who receive their new kidneys will not respect their donated organs, ignore doctors’ orders and end up dead. But most won’t. They will be forever grateful to their donors. 

And the donors won’t even know they’re missing their kidneys within a year.

— John

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