Ecuador Puts Piketty Into Practice
Ecuador Puts Piketty Into Practice
Saturday, 20 June 2015 00:00
By Josh Hoxie, Foreign Policy in Focus | News Analysis
Few Americans could likely find Ecuador on a map or pick its president, Rafael Correa, out of a lineup. However, Correa recently announced an economic plan that should make us pay closer attention to this small South American nation.
Citing the corrosive impact of excess inherited wealth on democracy, Correa proposed a steeply progressive tax on large inheritances. Its like an estate tax, but with a twist: Revenue from the plan would be issued as dividends directly to workers, rather than going to the government.
The number of families paying the tax would be quite low, since just 3 in every 100,000 Ecuadorians receive an inheritance worth more than $50,000. On that $50,000 theyd pay just $350 in taxes, or 0.7 percent. The beneficiaries, on the other hand, include the entire population.
The plan speaks to a central problem of modern economies. As Thomas Piketty illustrated in his blockbuster Capital in the Twenty-First Century, wealth concentrates at the top when left to its own devices. When that happens, the only effective counterweight is a tax. ......................(more)
http://www.truth-out.org/news/item/31423-ecuador-puts-piketty-into-practice