The Two Percent Solution: Warren and the Stochastic Jubilee

The Two Percent Solution: Warren and the Stochastic Jubilee

Wait long enough, and great ideas come back around, although not necessarily wearing the same garb.  Elizabeth Warren has just come out for a 2% wealth tax (above $50 million).*  But this is simply an annualized version of my lump sum stochastic jubilee.  What’s the advantage of redistributing the whole thing every 50 years (on average) vs a steady trickle?  A periodic reset would interrupt long run processes of wealth inequality more fully than a tax, so long as the rate of return on financial assets is high enough to compensate for the extra annual pinch, which it most likely would be, since wealth holders would demand a higher rate of return.  It would also be a lot more fun.  On the other hand, it would be more complicated to administer and might be resisted by force.

On balance, I’d go for the jubilee, but I’ll take Warren’s version as a close second.

*There’s also an extra 1% on wealth in excess of $1 billion, but this is largely symbolic.

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