And why a wealth tax will not work
Many Medium writers have written about wealth taxes as the means for the billionaire class to pay their fair share. While I will comment on this wealth tax later, I will start with two of my favorite taxes as the means to move money from the wealthy and into government coffers.
The Tobin Tax
This tax was suggested in the early 1970s by the economist James Tobin.
Basically for each international transaction of currency exchange, a very small percentage of the value of that exchange would go to a government. The buyers and sellers of that transaction would not find the tax a burden. Since then, the Tobin Tax has been suggested to all sorts of financial instruments, like trades on public stock exchanges.
I was an avid reader of The Economist circa 1990. And this neoliberal magazine was dead set against this tax. Its argument was that with the day traders trying to find an edge over each other, the exchange rate provides a more consistent value for real buyers and real sellers trying to conduct real international business with fair value. This smoothing process is called “arbitrage.”
In essence, the Tobin Tax would reduce the number of day traders, which would then make the exchange rate more volatile.
I have never bought into this logic. Foundationally, the value of any currency exchange is based on fundamentals of the two currencies, not on the day traders. While the Tobin tax might find fewer day traders, the currency trades would not be significantly more volatile than without the Tobin tax. I believe the Tobin Tax government revenues are an acceptable tradeoff than the benefits of a little smoother arbitrage.
The advantage of the Tobin Tax is the ease of collection and audit. Each financial marketplace already has a tight accounting process: payments can never be lost. So as each trade is recorded and money exchanges hands, the tax can be easily collected by the marketplace, similar to the commission taken by the broker or online trading platform. Each financial marketplace will then pass the collected money to the government.
Mr. Tobin suggested a tax rate of about 0.5%. I recommend 0.1%. This lower amount should not affect the market valuation of assets significantly. For example, if I sell $10,000 of stocks, I will pay the government $10! That $10 will not affect my buy/sell decision in a meaningful way. Money moves to government. That movement is to pay for the infrastructure that allows the financial marketplace to be a financial marketplace.
And the tax rate can be increased later — when we find the Tobin Tax is far less regressive than what the experts are claiming.
The Volek Tax
I invented this tax a few years ago. Someone else may have already invented a similar tax before me. But for the time being, I will take the credit.
In Canada and the USA, it is the provinces and states that keep a record of the official title deeds of all the many pieces of real estate. In Alberta, we call it “Alberta Land Titles.” Maybe “land registry” is a better term. Here is how this function of government can bring more tax.
If someone offers to sell you some swampland in Florida for a good price, you should hire a lawyer before money exchanges hands. The lawyer will check the Florida land registry to confirm if the swampland is indeed an official property and its owner is the person/corporation you are dealing with. The lawyer will also check if any creditors have a lien on the property. If the legal story of the swampland is different than the seller’s story, then the $300 you spent on legal fees will save you a lot more money later (if you take your lawyer’s advice).
When buyer and seller come to an agreement, they will be obligated to pay the Volek Tax on the property. I suggest 5% on any amount over $1,000,000. For example, if a property is sold for $3,000,000, the buyer and/or seller must hand over $100,000 [($3m — $1m) x 5%] to the government before the change on the title deed is made.
A house that sells for $500,000 will not be subject to this tax. The title changes ownership without this tax payment.
The beauty of this tax is that it does not matter who owns the property. It might be owned by a real person. Or maybe a legitimate corporation actually doing real business. Or even a holding corporation with unknown or nefarious purposes. It might even be an offshore corporation hiding wealthy money. If the Volek tax is not paid, the title deed does not change names. Without the formal transfer of ownership, the buyer should not give the seller any money. There will be incentive to pay this tax so both buyer and seller can move on with the transaction. They will take the Volek tax into consideration in their negotiations.
Similar to the Tobin Tax, the Volek Tax will be easy to implement and enforce. The traditional system for property transfer will be used. When an official property changes hands, the buyer’s and seller’s lawyers and their lenders’ lawyers have a little meeting to move the buyer’s money (and buyer’s lender’s money) into an escrow account. When the title is officially transferred to the buyer, the money is transferred from the escrow account to the seller (and the seller’s lenders). A small amount of that escrow money will go to the government to pay the Volek Tax.
If two parties that can come to a $3,000,000 agreement to exchange a property, they can also afford to pay the $100,000 tax.
Of course, the business and wealthy classes will object furiously to the Volek tax — and give us great reasons why it should never be implemented, like arbitrage for big real estate deals. But I see their objections as the main reason why we should implement the Tobin and Volek taxes. They can afford to pay these taxes. It will be hard for them to escape payment.
Why a Wealth Tax Will not Work
In my Medium comments over the years, I have offered both the Tobin Tax and Volek Tax as possible solutions to get the wealthy to pay more tax. And almost always, the Medium contributor spurns my suggestion. Such contributors usually want a wealth tax on all assets and want that tax now. The Tobin and Volek Taxes must wait for the asset to be sold. Too little, too late — in their minds.
In an ideal world, such a Medium contributor has a valid concern. But here is how the real world works.
Bob Billionaire says he owns Bob’s Shopping Mall in Toledo Ohio. But chances are that Bob is not the legal owner of that shopping mall. Rather, that mall is owned by 123456 Bermuda Inc., which is an offshore company. And 123456 Bermuda Inc. is owned by 456789 USA Ltd. And Bob is the owner of 456789 USA Ltd. In effect, Bob does and does not own Bob’s Shopping Mall, depending on the optics.
With a little corporate registry searching, the tax auditor might be able to figure out this simple ownership trail. But the problem is proving it in a court of law to get the tax. Yes, 123456 Bermuda Inc. owns the mall, and that information would already be in the Ohio land registry. But good luck to the tax auditor to get the courts in Bermuda to confirm the legal details about 123456 Bermuda Inc. A judge in Bermuda will likely be, by Bermuda law, unable to force these details in the open. They call Bermuda a tax haven for a reason.
But let’s assume, after three years of legal fighting, the Bermuda courts do provide the true owner of 123456 Bermuda Inc. as being 456789 USA Ltd. So who owns 456789? Scuttlebutt is Bob Billionaire. But getting that information into a courtroom will take another year.
So, after four years of legal wrangling, we have established that Bob Billionaire owns Bob’s Shopping Mall, in a roundabout way. He will now be subject to the wealth tax we had democratically implemented a decade ago. The tax auditor has a court order for Bob or 456789 or 123456 to pay the wealth tax. If that someone or something does not pay, then the tax auditor can start the litigation to seize Bob’s Shopping Mall from whichever, for non-payment of taxes. Another two years to get that verdict.
Or maybe, after four years of court battles, Bob agrees to pay the tax. We need only to multiply the market value of Bob’s Shopping Mall by the wealth tax rate, and Bob pays his tax. Right?
But what is the market value for that mall?
Unlike houses or condos, shopping malls do not trade that often. And each shopping mall is much different than other shopping malls that recently traded owners. The tax auditor might say $10,000,000 is the value for that mall. Bob says $5,000,000. Who is right? Another year in court as both parties hire their own real estate assessors to explain to the judge their assessment is more correct. If Bob’s lawyers convince the judge that $5,000,000 is a better investment, then Bob has invested his legal fees wisely to reduce the valuation — and pay less wealth tax. Bob has a bigger vested interest in reducing market value (and stalling) than the tax auditor has for claiming $10,000,000 is the fair market value.
But half way through this trial, 123456 Bermuda Inc. sells the mall to 987654 USA Ltd. for $2,000,000. So the true value of the mall is now actually lower than what both Bob and the tax auditor estimated. The tax will now be calculated on that amount.
The tax auditor hears rumors that Bob owns 987654 USA Ltd. Essentially Bob has sold Bob’s Shopping Mall to himself to get the lower value to pay lower wealth taxes. Yes, the tax auditor can chase down that rabbit trail to make sure Bob’s Shopping Mall somehow pays its legal and fair share of the wealth tax. But that will take another year in court to sort this out.
Hopefully there are laws in place to address this sell-to-myself scenario. If not, then $2,000,000 is the value of Bob’s Shopping Mall.
Bob Billionaire owns other assets, like a shopping mall in Ventura, California and another in Buenos Aires, Argentina. Each asset will take its own sweet time in the courtrooms. Bob’s tax lawyers and accountants know how to stall and resist. Bob pays his tax lawyers and accountants a lot of money, but these payments would be less than paying wealth taxes.
And here are another two forces at play. First, the tax auditor’s boss is responsible to ensure the tax auditor is working efficiently. After all, the tax auditor is paid a government salary and requires a government office to get those wealth taxes. As the tax auditor is chasing down Bob Billionaire for the next four years, hundreds of hours are invested in gathering evidence and attending court hearings. The tax’s auditor boss might say: “Settle to get something now. Then move on to other cases.” So the tax office settles for much less than the wealth tax law suggests.
The second force is actually moving the tax case to a judge’s verdict. If the verdict goes against the tax auditor, not only has the government lost a lot of money, it sets up a precedent for other tax lawyers and accountants to build their cases for other wealthy clients. This is called a “loophole.” So more billionaires can flout the wealth tax law, knowing the legal system for wealth taxes is weak. So sometimes the tax auditor’s boss will force a settlement just to not get that verdict.
And the Bob →456789 →123456 chain is a rather simple chain to follow. Imagine a bigger chain of real companies, holding companies, and offshore companies. Imagine multiple co-owners of these companies, like Bob’s wife, Bob’s son, and Bob’s business associate. Imagine the amount legal and accounting resources that tax auditor has to employ to show the judge that Bob’s Shopping Mall is effectively 41% owned by Bob, 26% by his wife, 17% by his son, and 16% by Bob’s associate. Bob is the only one wealthy enough to pay the wealth tax, so the wealth tax will be calculated on only 41% of the value of Bob’s Shopping Mall. Whatever that value is!
I am sorry to tell this to the advocates of the wealth tax. But there is no way to write tax laws on wealth and have the wealthy willingly pay those taxes. Tax lawyers and accountants can make the ownership trail so convoluted that the tax auditors spend more taxpayer money to get the tax than to get the tax. Getting wealth tax legislation might set off the serotonin and dopamine hormones to make the wealth tax advocates happy. But it will be a Pyrrhic Victory.
In 2024, I wrote a six-part series of how the wealthy avoid or evade paying taxes. The first article starts here.
Study these articles. Then tell me how the wealthy people will not find workarounds to not pay the wealth tax.
The Tobin and Volek Taxes can be implemented within a year after legislative approval. Wealthy money starts flowing into government coffers soon after. It would not be worth it for the wealthy to hire tax specialists to avoid or evade these taxes. The financial markets and land registries will collect these taxes for us.
Too little too late is better than none at all.
The Spolu: My Solution to this Mess
The Tobin and Volek taxes are, in my opinion, inadequate to reduce the wealth inequality that is breaking our societies. So I have a far-future solution. We need to change our model of commerce. I have invented “The Spolu.”
The Spolu is an advanced co-operative that distributes profits between investors, employees, customers, suppliers, and philanthropy.
But before it distributes those profits, it must pay some corporate tax in the jurisdiction it is operating in. I recommend this tax is about 20% of stated profits. The spolu will willingly pay this tax in exchange for the services the government provides like infrastructure and an educated workforce. Only after those taxes are paid will the profits be distributed to the stakeholders of the spolu.
With the spolu network, socially conscious consumers can assume that any spolu is paying those taxes. They need not do a thorough citizen’s investigation to prove that a spolu is socially responsible. They need only direct their patronage to a spolu rather than a corporation.
In time, more commerce will be conducted under the spolu network rather than the corporate model of business.
The spolus will be subject to audits of the spolu network. Here are two general rules:
1) Taxes based on profit must be paid before profit distribution.
2) Spolu ownership should be not convoluted, especially if the complexities seem mostly for for tax avoidance and evasion.
Spolus can be kicked out of the spolu network for not following these basic rules. If kicked out, the spolu becomes a corporation, with the investors taking total control. If that business does not survive this spolu-to-corporate reversion, I will not feel sorry for it.
Not all businesses are profitable to pay taxes and dividends. Likewise, not all spolus will be profitable to pay taxes and profit distributions. Spolus that only break even will still keep their place in the spolu network. But these spolus may not survive in the long term because they are not contributing to their stakeholders. Such failing spolus might be a good feature to maintain a vibrant economy.
Conclusion
The wealthy individuals and corporations should be paying more taxes.
The Tobin and Volek Taxes can be easily established and enforced to get some extra tax revenue from the wealthy.
It is naïve to assume a general wealth tax will be effective. The tax lawyers and accountants will figure out how to manipulate any new tax laws to the benefit of their wealthy clients.
The spolu model of commerce is a solution worthy of more consideration. It will move economic power from the wealthy to the people.
Published on Medium 2026
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