Letter to President ObamaJuly 13, 2011
Dear President Obama:
After hearing about Mr. Cantor's bad behaviour, I want to say I support the way you handled him.
Also, I want to ask why we even have a debt limit if we are going to raise it every time we come close. Maybe the best thing is to accept it - it gives you immense power to determine what gets paid and what does not. Causing an asset price drop may not be the worst thing in the world, ordinary folk had only two ways to save - money and housing - while the well off could hide from inflation and price bubbles by buying all sorts of other assets. So if you can find a way to protect the majority of people I think you should go for deflation, and give those who hide their income and assets their comeuppance.
Once you have your crisis, you could probably abolish the income tax, and replace it with an 8% "asset" tax. The last published report on wealth distribution that I have seen (2009) says household net worth amounts to roughly $54T. If you went by controlled assets rather than net assets, computation would be a lot simpler, and the percentage a lot smaller. This would be appropriately progressive (or flat! if you want to say that), because government services used by a person or provided to a person tend to correlate with how much they control in assets. It would also discourage fallow assets that are simply stockpiled.
I hope you like the idea and can use it at least for a discussion.