In 1792, Thomas Paine Proposed a 100% Tax on Wealth Over $5 Million (in today’s dollars)

The Great Seth Cotlar, author of Tom Paine’s America, wrote a twitter thread explaining Thomas Paine’s taxation plan put forward in Rights of Man.

Thomas Paine’s progressive tax proposal on wealth was not meant to punish the wealthy, but to create a society that works for all:

The hearts of the humane will not be shocked by ragged and hungry children, and persons of seventy and eighty years of age, begging for bread. The dying poor will not be dragged from place to place to breathe their last, as a reprisal of parish upon parish. Widows will have a maintenance for their children, and not be carted away, on the death of their husbands, like culprits and criminals; and children will no longer be considered as increasing the distresses of their parents. The haunts of the wretched will be known, because it will be to their advantage; and the number of petty crimes, the offspring of distress and poverty, will be lessened. The poor, as well as the rich, will then be interested in the support of government, and the cause and apprehension of riots and tumults will cease.

While common to tax “luxuries,” the true luxury does not consist in goods, but in wealth:

When taxes are proposed, the country is amused by the plausible language of taxing luxuries. One thing is called a luxury at one time, and something else at another; but the real luxury does not consist in the article, but in the means of procuring it, and this is always kept out of sight.

I know not why any plant or herb of the field should be a greater luxury in one country than another; but an overgrown estate in either is a luxury at all times, and, as such, is the proper object of taxation. It is, therefore, right to take those kind tax-making gentlemen up on their own word, and argue on the principle themselves have laid down, that of taxing luxuries.

And as in life, wealth is used for oneself and their family, wealth in excess of what is needed to live a healthy life is a luxury, worthy of taxation:

Admitting that any annual sum, say, for instance, one thousand pounds, is necessary or sufficient for the support of a family, consequently the second thousand is of the nature of a luxury, the third still more so, and by proceeding on, we shall at last arrive at a sum that may not improperly be called a prohibitable luxury.

And as our progressive tax system works today, as the value of the estate grows, the rate of taxation increases. On the first £500 (after a land tax and £50 deduction), a 1.25% tax is levied. The next £500 of wealth is taxed at a 2.5% rate. Then the following £1000 pounds of wealth at a 3.75% rate. The third £1000 at a 5% rate, then a 7.5% rate, then 10%, 15%, 20%, until one’s wealth reached £23,000 (about $5 million in today’s dollar), when all further wealth would be taxed at 100%.

And while this raises revenue, revenue is not the sole purpose of this plan:

The object is not so much the produce of the tax as the justice of the measure. The aristocracy has screened itself too much, and this serves to restore a part of the lost equilibrium.

The most serious consequences of such wealth inequality are seen throughout society. With such wealth, an imbalance of power results:

But the chief object of this progressive tax (besides the justice of rendering taxes more equal than they are) is, as already stated, to extirpate the overgrown influence arising from the unnatural law of primogeniture, and which is one of the principal sources of corruption at elections.

Primogeniture is our modern equivalent of inherited wealth, though in those times, it was the first born who received the bulk of the estate.

As hereditary estates, the law has created the evil, and it ought also to provide the remedy. Primogeniture ought to be abolished, not only because it is unnatural and unjust, but because the country suffers by its operation. By cutting off (as before observed) the younger children from their proper portion of inheritance, the public is loaded with the expense of maintaining them; and the freedom of elections violated by the over bearing influence which this unjust monopoly of family property produces.

And while we do not have an aristocratic system enforced by law, great wealth produces a class of people with very similar levels of power. Paine goes on to explain why it is a concern for all society, as it wastes resources:

Nor is this all. It occasions a waste of national property. A considerable part of the land of the country is rendered unproductive, by the great extent of parks and chases which this law serves to keep up… In short, the evils of the aristocratical system are so great and numerous, so inconsistent with everything that is just, wise, natural, and beneficent, that when they are considered, there ought not to be a doubt that many, who are now classed under that description, will wish to see such a system abolished.

While this plan is not perfect, it demonstrates that taxation as means of created a more just society, by reigning in the excess wealth some acquire, has a history dating back centuries, supported by those who helped forge America. When we speak of a Wealth Tax, it is not some new fangled crazy idea, but based in the pursuit of a society that can truly be proud of its country:

When it shall be said in any country in the world, my poor are happy; neither ignorance nor distress is to be found among them; my jails are empty of prisoners, my streets of beggars; the aged are not in want, the taxes are not oppressive; the rational world is my friend, because I am the friend of its happiness: when these things can be said, then may that country boast its constitution and its government.

All above quotes are from Thomas Paine’s Rights of Man: Part 2, Applying Principle to Practice, Chapter 5 – Ways and Means of Improving the Condition of Europe Interspersed with Miscellaneous Observations.

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