Another proof we need to tax the wealthy more: funds for investing in guitars & stamps

By Marc Jampole

 

The market for collectibles is booming.  Be it luxury race cars, paintings, stamps, coins, vintage wines or classic guitars, wealthy people are willing to pay a lot more money than they used to for possessions imbued with special value by society or certain elite groups in society.  And why not? They have more money to spend thanks to wage stagnation and a low tax regime.

The climb in what the rich are willing to pay for a 1957 Ferrari or a Cezanne landscape has been precipitous. The Economist, for example, has put together a super index of various indices of luxury valuables. While the stock markets of the developed world have increased by 147% in the past ten years, the Economist says its “valuables index” has shot up by 211% during the same time frame.

The Economist also reports that companies are creating funds that invest in stamps, classic guitars, wine and equine blood stock (racing horses). That’s right—instead of investing in initial start-ups of solar and wind technology companies, rich folk can invest in funds that buy stamps or classic guitars and hope for continued inflation in these “valuables.” 

Those who want to keep taxes on the wealthy at low levels always fall back on the old saw that wealthy people need all that money to create jobs.  But what jobs are created by bidding up the price of 50-year-old guitars or 75-year-old stamps?  None. It’s just an exchange of funds between wealthy folks who have nothing better to do with their money. They certainly aren’t investing it in creating jobs.

But the government would have a lot of things better to do with this money. It could increase unemployment and food stamp benefits, which would give money to people who would spend it immediately for goods and services, creating jobs to fill the additional demand. The government could spend it on fixing our highways and bridges and expanding mass transit, especially between suburbs and city centers, which would create jobs. It could subsidize research into alternative energy and more energy efficient technologies, which would create jobs. It could increase the number of government health, food, safety and environmental inspections, which would create jobs.

We’ve created jobs through government spending before. During the ‘50s and ‘60s when income taxes on the wealthy were much higher than today, federal and state government supported an expansion in higher education that made U.S. universities the envy of the world and a inexpensive bargain for students. During that high-tax era, we also built a wonderful interstate system of highways and improved public schools by reducing class size, hiring more specialist teachers and building state-of-the-art school buildings. As most readers will know, we now remember the ‘50s and ‘60s as an age of prosperity for most Americans. Taxes on the wealthy were not high then; they are too low now.

Thirty some odd years into the low-tax-on-wealthy regime started by Ronald Reagan, we have a crumbling transportation infrastructure, college education is becoming increasingly unaffordable, public pension plans are underfunded and states are throwing needy people off food stamp and unemployment insurance rolls. We have little money to invest in the technologies that will potentially save us from human-induced global warming and resource shortages. Public school districts are firing teachers everywhere. Mass transit systems are cutting routes and vehicles everywhere.

Was it worth destroying our social fabric so that the wealthy could have the money to pay more for an old painting? 

I must admit that the frequent record purchases of art work and other valuables have made gossip and lifestyle columns much more interesting in our age of plutocratic conspicuous consumption. But in most other ways the country was better off when the rich paid more taxes.