Facebook co-founder: Tax the rich at 50% to give $500-a-month free cash and fix income inequality

Facebook co-founder Chris Hughes thinks the government should give cash handouts to people with the lowest incomes in order to fight income inequality. And he thinks the money should come from higher taxes on wealthy individuals and even big tech companies, like Facebook.

Hughes, 34, was one of Facebook’s co-founders, along with Mark Zuckerberg and three of their Harvard classmates, in 2004. He was Facebook’s spokesperson for the company’s first three years, before leaving to finish his Harvard degree and then to work on Barack Obama’s 2008 presidential campaign as a media strategist.

He says he’s made “half a billion dollars for three years of work” based on the value of his initial stock in Facebook, and his “lucky break” is exactly what’s wrong with America today.

“That is indicative of a fundamental unfairness in our economy. Income inequality in our country has not been this bad since the Great Depression. And even though we’re reading the headlines that unemployment is at 3.9 percent and the stock market is at record highs, what’s actually happening is that the median incomes in our country haven’t budged in nearly 40 years. At the same time stories like mine create an illusion of economic opportunity,” he told Techcrunch contributors Adriana Stan and Tom Goodwin on their “Interesting People in Interesting Times” podcast.

Hughes, author of “Fair Shot: Rethinking Inequality and How We Earn,” is not necessarily a believer in the idea of universal basic income (UBI) — championed by entrepreneur Andrew Yang and also supported by billionaires such as Richard Branson and even Facebook’s Zuckerberg — which would see a standard cash payment handed out to all citizens no matter their employment status. UBI “is infeasible in America today,” Hughes explained on the podcast, because making payments to everyone in the U.S. is an “unaffordable” proposition.

However, Hughes believes a reconfigured U.S. tax code could effectively transfer money from wealthy people like himself to those in need, from the unemployed to American workers struggling to make ends meet. He says on the podcast that the “most urgent thing we can do” is roll back tax code changes that lowered rates on corporations and the 1 percent and instead give a $500 monthly tax credit to every working American who currently earns less than $50,000 per year to create an “income floor” — a minimum amount of money that people earn.

The plan would cost roughly $290 billion a year in total, Hughes said in April. He proposed that the government pay for the handouts by imposing a 50 percent tax rate on both income and capital gains for any Americans who earn more than $250,000 per year. (Individuals who earn more than $200,000 per year currently have their income taxed at 35 percent, based on the latest tax overhaul.)

By giving low-income workers $500 a month, Hughes contends, you would guarantee they would not earn less than $6,000 per year. “That’s not enough money to live on. That’s not enough money to put up your feet and, like, watch video games — the fear of a lot of folks out there. But it is a massive amount of money in the lives of many working people in our country,” he said on the podcast.

Hughes also proposed further changes to the U.S. tax code that could generate enough money to guarantee an income floor for working Americans. “You could tax data and distribute a check to everybody,” he said, which would see the government tax companies on the data they collect from customers, which is often sold to third parties such as marketers and advertisers.

From social media platforms, like Facebook, to e-commerce giants, like Amazon, large companies collect reams of data on their users and customers that can be put to use in myriad ways — either sold to third parties or used to improve the companies’ own services. “We all create immense amounts of data,” Hughes said. “Not just your Facebook post, but your phones know where you are physically, your Fitbit knows your heart rate, your calendar knows where you’re going to be.”

If those companies are making billions of dollars in profits, in part thanks to data collection, Hughes argues, then “there is an opportunity to say: Our collective data is powering these profits, we should all share a little bit in the upside.”

“You could ask these companies to pay a small tax into a sovereign wealth fund and have that be distributed as a data dividend,” Hughes said on the podcast. “A check to every single citizen as a recognition of the value they’re creating.”

Source: https://www.cnbc.com/2018/07/03/facebooks-chris-hughes-tax-the-rich-to-fix-income-inequality.html?__source=Facebook%7Cmain

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