Many years ago I spent a few months sailing from island to island in the south pacific. I will never forget what happened on an island of Tarawa when we came back shopping large amounts of food for the next few weeks on sea. We were sitting in a van (the only public transport on the island), holding large cardboard boxes in our hands. Soon after the van had started to move, an older lady smiled at us, grabbed several bags of cookies from my box and started to distribute them among the people in the van. I wanted to protest, but our captain (who had spent a large part of his life in the south pacific) told me that it would be very impolite to do so. So we just smiled back and watched them happily eat our cookies.
I was told later, that people are very social on many pacific islands and that it was normal for those who have a lot to give to those who have little. For me, born in Switzerland, this was surprising. I was thinking about how this culture, enjoyable in many ways, could have evolved. Obviously people must have been fighting rather against nature than against each other (like in most other places). They could only survive by cooperating rather than competing: in the past, many were lost fishing every year. Navigation was difficult and storms frequent. I was told that to survive hurricanes, people would chain themselves to palm trees. Of course it made not much sense to accumulate material goods and build large houses when they were all blown away by a storm every few years.
From these experiences and thoughts I developed the idea of a new taxation system for developed countries, which I call ‘hurricane taxation’. Let me describe first how it works, then I will discuss the impact it could have on society.
Normal income tax means, that we have to give, let’s say around 10% of our income to the government. If citizens have on average assets (house, car, household, bank account and other savings etc.) with a value of ten times their annual income, the income tax corresponds to around 1% of the total wealth. Now the idea of ‘hurricane tax’ goes like this: Instead of taxing everybody 1% of their wealth every year, we tax 1% of the population with a tax of 100% of their wealth every year. Those who get taxed at 100% are picked randomly in some kind of national lottery. Now this sounds silly and very unfair but, as we will see, this is only the case if we assume that people will not adapt to the new rules. 100% should really mean 100%: those hit by the ‘hurricane’ would be left only with some modest clothes and really absolutely nothing else material. The only remaining possessions would be knowledge and social relations. To hide any possessions from hurricane taxation would be considered a punishable offense. It would also have to be illegal to sell or buy insurances against hurricane taxation. If we pick 1% of the population randomly, this means that everybody has to expect to be hit by the ‘hurricane’ about once in a lifetime (on average). Of course it can happen early in life or late or never or even three times. Now lets try to figure out how people would probably adapt to this taxation scheme (abbreviated ‘HT’ in the following) and what the impact on society could be:
- People could spend, save or invest more money (no income tax to pay)
- Knowing that they could be hit by HT, people would invest more into good social relations (friends and family). Because these people will help them when they get hit by HT. People would be much more willing to help each other. Under HT, you never know when you need your friends, even if you are rich.
- People would invest more into their education and personal growth, because what’s in your brain cannot be taken away by hurricane taxation. In fact a good education would be essential because it is the primary tool to become wealthy again fast after a HT hit. This should have a positive impact on the economy.
- People would rather rent than own. HT would bring a strong shift towards a more ecological sharing economy.
- Just accumulating goods (sports car collection, ten expensive handbags) would become less interesting. This could help to reduce wasting natural resources. People would prefer to spend their money on services.
- Saving small amounts of money over long time periods would be less interesting. But it is important to note that the system would not lead to a form of communism in the sense that it enforces equality: individuals are still allowed to be much richer than others. Creating wealth would still pay off (without it there cannot be a wealthy society). But just owning wealth would be risky and therefore less interesting. This means that people would become much more entrepreneurial: If you want to be wealthy or even rich, then you have to develop the skills to become rich relatively fast (even three times in a lifetime if necessary).
- People, and society as a whole, would become much more resilient to disasters. People would be used to cooperate and help each other rebuild things if necessary.
- The old would share their wealth with the young (and vice versa if possible). To reduce the risk of a HT hit, rich old parents would share their wealth with their children earlier. Everybody would make sure that there is always at least one other ‘rich’ person in the family.
- People would help their friends and family members to become wealthy because they know they might profit from their wealth one day.
- The accumulation of very large fortunes by individuals would be much more difficult. This could make democracy work better.
I believe that the implementation of HT might lead to a more enjoyable and less fearful life for everybody: under HT, social security is coming from skills and a healthy social network (instead of accumulated wealth). This fits our brain better, which has evolved over millions of years under conditions very similar to HT (frequent disasters). Of course in our modern society accumulated wealth can ensure social security. But it is well known that it does not make us feel safe. Having good friends who care for us on the other hand does make us feel safe.
Also HT might reduce the waste of natural resources by encouraging us to build a sharing economy and reduce the consumption of goods in general. Social status would not come from a sports car anymore but from showing on Facebook how much you could help your friend who was hit by the ‘hurricane’.
And last but not least HT would create a never ending stream of interesting stories about the lifes of those hit by HT (and how friends, family and strangers helped them back on their feet afterwards).
Image: Shutterstock / Ryan DeBerardinis
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