Yes, let’s tax the rich!

Let’s say, for the sake of the argument, that Thomas Piketty is right, income inequality is rising beyond reason and we need to tax the richest among us. Let’s say, we install a worldwide super-tax for those who earn ten times more than the median income.

For those who don’t know what it is, the median income is what half of the population earn. In America, it is roughly $45,000 a year, meaning half of the US population earns more than $45,000 a year, and half earns less than $45,000 a year. So, if you earn more than ten times the median income, what is above $450,000 will be subject to this super-tax.

But wait! This is a worldwide tax! While the American median income is 45,000$ a year, the rest of the world doesn’t earn as much. In reality, half of the global population earns less than $1,225 a year. So, it means that the average American would see half of its income subject to this super-tax. An household earning more than $12,225 is ten times richer than the world average.

In many western countries, you would be considered a poor with $12,225 a year. But if you step outside of your (small) room and if you look at what is happening out there, you would be awfully rich. Not Bill-Gates-rich, but more than surgeon-rich.

Piketty makes here a big mistake — as most social justice advocates do — by considering the 1% to be rich beyond acceptable. Just keep those two numbers in mind: half of the world population earns $1,225 a year, and $34,000 is enough to be part of the 1% — namely the US median income. The gap between the average American and the average “earthling” is the same as between the average American and somebody who earns $1 million a year.

So, if you believe that nobody should be able to earn 10x more than the average worker, I would invite you — for the sake of consistency — to send oversea everything you earn above $1,000 every month. You would do much good to the world and would show how great redistributive social justice is.

The problem is, when you talk about the 99% vs the 1%, people usually forget to mention the scope. Worldwide, most of us are the 1% — or very close to.