Wealth and poverty - CReality

For the transfer of all assets over 5 million to third persons of choice and for limiting interest on capital gains to 5%.

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Theses on the current problems
1. As a result of the Corona pandemic, the rich have become even richer and the poor even poorer.
2. The effects and consequences of the pandemic have mainly affected the poor.
3. The extremely large fortunes continue to increase - and so do the debts.

Ideas for possible solutions
- Redistribution of assets of 5 million or more per person to third parties to be freely determined.
- Limitation of interest on earnings to 5%.
- Introduction of a capital transaction tax (Tobin Tax) of 1%.

Discussion
Wealth redistribution: Over time, many proposals have been made to redistribute wealth from the top down - but amazingly, for decades, the only effective redistribution of wealth has been in the opposite direction, from the bottom up. Unfortunately, most redistribution schemes have not worked, either because they were too radical - e.g. the Marxist ideas of abolition of private property, nationalization of industry, agriculture and land - or because they did not go far enough and only scratched the surface, such as higher and or more progressive wealth taxes, inheritance taxes, social security contributions on all wages, but benefit caps at the top - such as in Switzerland with the state pension scheme AHV. The proposed system - redistribution of all wealth above 5 million and, with a delay of 1 year after reaching the free wealth limit, a wealth skimming tax - is simple and superior to other systems that seek to redistribute from top to bottom via taxes - e.g. a progressive wealth tax. In our proposal, the power to act remains with the owner of the wealth. Those who do not trust the state distribute their wealth themselves to those they wish to support. However, those who trust the state and prefer to leave the redistribution of their excess wealth to the state pay the wealth tax.
Maximum interest rates: Adam Smith already suggested that the state should set a maximum interest rate for loans by law (cf. Sen 2003:154): "In countries which do not prohibit interest, the law generally fixes the maximum interest rate which is still permissible without penalty, in order to prevent extortion by usury. ...This legal rate, however, should not be too much above the usual market rate. If it were 8 or 10 percent in England, for example, the loan money would flow largely to spendthrifts and schemers, since only they would be willing to pay this high interest. Thus, sound merchants, who will not pay more for the loan than a part of what they are likely to earn with its help, would not be able to compete. Considerable capital of a country would thus be withdrawn from those who are most likely to use it with profit and advantage, and made available to those who are almost certain to waste or destroy it" (Smith 2005, quoted in Sen 2003:154). Many countries - including Switzerland, for example - have legal limits on interest rates. In Switzerland, for example, the punishable limit (usury) was 18% for a long time, but since 2003 it has been 15%. Since 2019, the maximum interest rate in Switzerland is 10% for cash loans and 12% for overdrafts (EJPD 2019).
Capital transaction tax: A short holding period of securities and other financial instruments does not serve to finance the real economy. Time advantages, knowledge advantages not available to the general public are used by a few insiders. Accelerated capital shifts repeatedly trigger price jumps, misalignments, market distortions. The capital market cannot fulfill its regulatory role in this way.

Forum

Cited Literature
- EJPD
2019: Höchstzinssatz für Konsumkredite bleibt unverändert. 22.11.2019. Bern EJPD: Link.
- Sen, Amartya
2003: Ökonomie für den Menschen. Wege zu Gerechtigkeit und Solidarität in der Marktwirtschaft. München: Deutscher Taschenbuch Verlag.
- Smith, Adam
2005: Der Wohlstand der Nationen: Eine Untersuchung seiner Natur und seiner Ursachen. München: Deutscher Taschenbuch Verlag.