RSF’s Policy Response to Coronavirus: An “Economic Vaccine” for the U.S. (version II)

The idea that the earth belongs to all people, and should provide for all people, lies at the heart of the Robert Schalkenbach Foundation’s mission.  As the U.S. finds itself in the grips of the COVID-19 pandemic, this foundational idea and a shared recognition of our inherent interconnectedness have taken center stage.  At RSF we understand that in order to address the widespread devastation resulting from the virus we must:

Embrace the idea of free trade and facilitate effective and efficient testing through all means available.

Countries hit early in the COVID-19 pandemic, particularly those that had previously grappled with SARS, have demonstrated the importance of widespread testing for the virus.  Despite dire warnings, the U.S. failed to put an emphasis on early testing, in part because of a reluctance to embrace the principles of international free trade in testing technology.  

Testing for active coronavirus infections continues to be critically important, but the importance of another test, an antibody test, in restarting the world’s economic engines cannot be overstated.  Researchers in the U.S. and abroad are already developing such tests, which can determine whether a healthy individual was previously infected and has since recovered, presumably with some degree of resulting immunity to the virus.  Given the number of confirmed cases, plus the likelihood that as many as 50% of those infected are asymptomatic, understanding who has such immunity will allow people to reenter the workforce as quickly as possible.  Clearly, antibody testing technology must be allowed to cross national boundaries unencumbered, to the benefit of the U.S. and the global economy.

Support economic recovery and avoid future inflation by funding federal stimulus through taxation of resource rents.

On March 27th, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), making available some $2.2T in federal funds to support the individuals, businesses, and other groups hardest hit by the outbreak.  A stimulus was clearly needed, but the question of “who pays?” for all this free money is a pressing concern.

Key to preventing an inflationary spiral in response to this infusion of new cash into the U.S. Economy will be its recapture through taxation, but not just any tax will do – the ideal tax for this purpose will be neutral, efficient, stable, easy to administer, progressive, and impossible to avoid.  And if it also deters environmental damage and recaptures some value of public goods for public use, all the better.  With these criteria in mind, therefore, it is imperative that the $2.2T made available through the CARES Act not simply be lumped in with the more than $23T in existing U.S. debt.  Instead, it should be paid for through resource rents on things like land, carbon (and other air pollution) emissions into our atmosphere, and use of the electromagnetic spectrum for things like TV broadcasts and private communications.  For too long, our government has enabled the generation of private profit by facilitating exclusive access to, and use of, these resources.  The time has come to bring the value of public goods to bear in direct support of the public good. 

By taking these actions now, RSF believes we can create a highly effective “economic vaccine” against many of the effects of coronavirus on the United States.

2 replies
  1. Loren Fixel
    Loren Fixel says:

    George theories, relies taxing land according to its value, instead of taxing income. Csn “value” be determined to be taxed ? Income can be taxed, but “value” is constantly changing and can be manipulated .

    Reply
  2. Bill Batt
    Bill Batt says:

    Taxing land value is actually easier than calculating taxable income. Figuring “bottom line” income, both business ind personal, make for huge differences between taxpayers’ obligations. CheckTed Gwartney on the ease of valuing land.

    Reply

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