I found this via one of the Urban Evolution members, who posted some commentary on this today. His suggestion was that the 1% tax on the top 1% of households was (far more than) adequate to subsidize community food gardens for the bottom 50% — $171 billion would cover some huge scale.

This ties into one of our ongoing discussions about investment and infrastructure. My personal belief is that a permaculture installation is a far better investment than a bridge or an interstate — it scales better, it costs less to maintain, it's non-polluting, and it's indefinitely sustainable.

In this case, "progressive" has a technical meaning only semi-coincidentally related to the political orientation. When discussing taxes, "progressive taxes" are those that have a lower rate for lower-income/wealth tax payers and a higher rate for higher-income/wealth tax payers. That's the rough definition. In detailed policy discussions, you can get into arguments of whether a tax is truly progressive (technically speaking, still not with regard to political/ideological orientation) depending on the fraction of a person's income/wealth that they pay due to the tax.

Here are some examples. The current Federal income tax structure is "progressive" because lower-income tax payers pay lower rates. That doesn't mean political progressives like the current Federal income tax structure, though most political progressives will prefer it to a flat tax alternative.

A flat tax — that is, a tax with one rate that applies to everyone such as a sales tax — is "neutral" on its face, neither "progressive" or "regressive." However, in practice, a flat tax is often regarded as "regressive" because a lower-income/wealth person will pay a larger fraction of their total income/wealth towards this tax than will a higher-income/wealth person. The tax takes a bigger bite out of the lower-income/wealth person's economic resources. A person who makes $30,000 per year will spend pretty much all of it buying groceries, clothes, etc. A person making $300,000 per year probably will not spend all their income, but will save a lot. Because the first person is spending 100% of their money, the sales tax is being applied to a large fraction of their income. The second person, who might save 1/2 of their income, therefore is paying the same sales tax rate on only half their income. So the "effective tax rate" on the first, lower-income, person is higher than on the second, higher-income person.

An unquestionably "regressive" tax structure is one that has higher rates for low-income people than for high-income people, even on the face and ignoring the complicated situation of the ostensibly neutral flat tax. You might not realize that Social Security taxes are regressive. The tax is applied only to the first $106,800 of income (in 2009). The rate is flat up to that level of income (15.3% in 2009, split between the employee and employer), but falls to zero for income above that. So those high-paid bank executives? They pay a lower rate of Social Security tax than you (I'm guessing) or I do on their mega-gargantuan incomes. By the way, simply lifting the cap on taxable earnings for Social Security — while also increasing the benefits that are paid in equal proportion — would totally eliminate the supposed budget shortfall that Social Security (probably won't) be facing 40 years from now. That's right, all we'd have to do is turn Social Security from a regressive tax to a flat tax (which is still regressive in certain respects) and the issue would be even more nonexistent than it currently is.

Why is this called a "progressive" tax? Progressive is a curiously empty and flexible word. It automatically confers benevolence onto any proposal you add it to - a classic "weasel word," to use some Wiki nomenclature.

And even if someone could possibly "earn" a billion dollars and truly deserve it entirely as some measure of their own merit and hard work, that doesn't address other questions of how such a concentration of wealth works in the greater society. And so you have folks like William Gates Sr. wisely agreeing with people like "Theodore Roosevelt, Louis Brandeis, Herbert Hoover and scores of other wise observers in the early 1900s that it is not in the interest of this country to have large fortunes passed from generation to generation forming ever larger pools of money and accretion of power." It's why Brandeis said, "We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both."

And finally, you are certainly wrong that eliminating the allure of becoming wealthy would destroy the soul of American success. (First of all, my post clearly recommends a level of wealth tax that would allow the super wealthy to continue to grow their wealth to ever more super levels, albeit at a slightly slower pace.) The engineers at DuPont and 3M and Microsoft and Google and Toyota and elsewhere are, for the most part, salaried folks who invent new technologies and more efficient processes all in exchange for a steady paycheck and a good retirement fund. Employee stock options might give them the chance to become wealthy relative to the average schmo on the street, but won't put them in the stratosphere with the top 1%. (Yes, those lucky few who happened to have been hired early on the history of the tech companies sometimes became super duper rich, but that's just more evidence of what I said above. The 25 year old who is just starting at Microsoft today isn't necessarily any less brilliant than the 50 year old who started there in the '80s and isn't any less creative. But the 50 year old got stock options worth $100 million while the 25 year old will get options that might turn out to be worth maybe $1 million. Pure luck, not a reflection of incentives or "earnings" in a moral sense.) An even better proof that you are mistaken on this point is the case of Linux. Here you have many thousands of people producing top-quality computer code, and most of them can have no expectation at all that it will result in monetary earnings. They do it because it's fun, because they like the social status (in their peer groups) of having contributed something cool and creative, because they have insomnia and nothing else to do, etc. This happens all the time.

So we could be much more radical than I suggested here and really go after the rich, and frankly I think our society would be significantly better off as a result. But even a mild wealth tax that doesn't change the basic structure of our economy or society could have good benefits.

(Quotes taken from inequality.org.)