by Mitch Kokai
Senior Political Analyst, John Locke Foundation
[S]ome see the market’s gains accruing only to those who hold the assets. Their solution: confiscation and redistribution of some of that wealth.
In a New York Times op-ed piece titled “What if Everyone Benefited When Stocks Soared?” Matt Bruenig, a controversial left-leaning lawyer and blogger, suggested a “tried and tested way” of “giving everyone a share of the investment returns now hoarded by the wealthy.”
The federal government would create an investment fund and issue every adult citizen one share. “The fund would gradually come to own a substantial and diverse portfolio of stocks, bonds, and real estate. Investment returns that the fund generates would be paid out to each citizen in the form of a universal basic dividend,” he writes.
Bruenig compares this to Norway’s sovereign wealth fund or Alaska’s Permanent Fund, both of which began with public oil revenue. The little problem with his utopian dream is where to get the money. Simple, he declares, just tap “the enormous wealth …which now flows into just a few pockets.” Existing federal assets like land, buildings, and parts of the wireless spectrum could be transferred to the new fund.
Then comes the real mischief. Bruenig would increase “taxes on capital that affect mostly the wealthy, such as estate, dividend, and financial-transaction taxes, and the creation of a new type of corporate tax that requires companies to directly issue new shares to the social wealth fund on an annual basis and during certain corporate moves, such as initial public offerings, mergers and acquisitions.”
One can readily see the shrinkage of the number of public companies accelerate even more to escape this confiscation. Private equity then would become the dominant kind, leaving still fewer stocks for investors to buy.