Tax, Gift, Redistribute, Or Reform?

Thanks in part to the popularity of Piketty’s book, the public better understands that in our current economic system income from stocks, bonds, and real estate is always higher than the income from wages alone. Those with inherited and acquired investment assets will therefore inevitably have an economic advantage over those without. Historically, the holdings of wealth-generating assets have divided along racial lines, enabled by public policy and private practices such as bank redlining of whole neighborhoods.

In his book, Piketty offers the solution of a global progressive tax on assets. By placing a tax on assets, rather than on income, a rebalancing occurs. Those with accumulated wealth pay the burden of taxes rather than those living on wages alone. But Piketty acknowledges the many problems with this approach. Among them, if the tax is not universal, assets and their owners would move to countries where such taxes do not exist, creating even greater wealth disparities. And a tax solution places governments, rather than the private sector, in the sole role of determining and distributing the benefits provided by such newly levied charges.

In his Aspen Institute keynote address in July of this year, author and New York Times reporter Anand Giridharadas discusses the long instituted practice by individuals and foundations of addressing income disparities through gifts to social service organizations. The plight of the poor is alleviated through paying for health care, housing, scholarships and other proscribed services. This system attempts to allieviate poverty by paying for health care, housing, scholarships and other proscribed services. Giridharadas recognizes the “generosity” of this practice but cautions that it falls short of “justice”. He recommends not only “giving more” but also “taking less.”

In fact, a closer examination of the “gifting industry” shows that the fees paid to investment firms for managing philanthropic funds and to administrators for distributing social services often exceeds the value of the services themselves. This has led some to a call for an outright redistribution of assets – taking from the rich and giving to the poor – as a matter of justice and reparation. But how?

In India in the 1950s Vinoba Bhave, the beloved “spiritual successor of Gandhi,” was concerned by the plight of the landless. He walked from village to village with his followers, calling for a voluntary redistribution of land. Out of respect for Vinoba, wealthy villagers signed over deeds of land to him and he reassigned it to those villagers without land. This was known as the Bhoodan or “Land Gift” movement.

But Vinoba witnessed that without tools to work the newly acquired land the poor soon sold the land back to the rich and moved to crowded urban areas, perpetuating the cycle of poverty. Vinoba then changed the Land Gift movement to the “Gramdan” or Village Gift movement. Instead of gifting land to individuals, land was given to the village which leased it to those who could work the land. If the land was abandoned, a new leaseholder was found.

Robert Swann, founder of the Schumacher Center for a New Economics, worked with Vinoba and was inspired by Gramdan. In 1967 Bob and other leaders of the civil rights movement created the first community land trust in this country in Albany, Georgia, as a way to hold land for African-American farmers who had been barred from land ownership in the segregated South.

Non-profit, place-based, democratically structured with open membership, a community land trust is a regional organization that can hold common assets and allocate their use. Lessees hold equity in the buildings and other improvements on the land but not in the land itself. After all, the value of land is created not by any individual but by the common need for access to land. The community land trust movement has generated a voluntary land reform movement by taking land out of the market and placing it in a regional commons.

LEFT: Slater King, Robert Swann, Marion King, Fay Bennett in Israel, 1968

Though community land trusts are most often identified with low income housing, the Community Land Trust in the Southern Berkshires, originally founded by Robert Swann, is creating the organizational structure to hold land for farms, workforce housing, retail, and manufacturing sites throughout Berkshire County, providing access to the sites via social contract for purposes identified by the regional community.

There is a growing willingness to voluntarily transfer wealth-generating assets in order to address economic disparities. Our task as concerned citizens is to create the new regional institutions that can accept, hold, and allocate those assets on behalf of present and future generations – a farmland commons to ensure a regional food supply, a Main Street commons for small locally owned businesses, an energy commons to hold sites for regional renewable energy generation, an import-replacement commons to encourage new small batch production.

Peter Barnes would charge corporations for using common assets (such as our atmosphere, financial infrastructure and intellectual property protection system) and distribute the revenue as equal dividends to everyone, much like the Alaska Permanent Fund. Shann Turnbull has called for “limited-time corporations” in which stock would be privately held for a limited time only, ensuring a fair return to investors, but not a perpetual return over generations. At the end of the designated period, the stock would be distributed in part to workers, in part to the benefit of the community in which resources are extracted for production, and in part to the general public.

The possibilities for reinventing “the institutions in which democracy and capitalism are embedded” are many. Now is the time to capture the opportunity for a voluntary reform shaped by common consensus and our highest ideals – before other forms of redistribution are imposed. Please join us in this work.