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Thursday, May 22, 2008

Taxes, and Chelsea Clinton, in 2038

The financial magazine Research celebrated its 30th anniversary by running an issue filled with articles about what finance and the world will be like 30 years forward. Here's something from my piece "What Will Taxes Be Like?":

It was not until 2018 that the “Consumption Plus” tax was enacted. This system was reminiscent of the 20-20 plan [Lawrence] Lindsey had proposed, except its rates were higher, combining a 23 percent VAT with a 28 percent flat tax on income above an inflation-adjusted threshold. In addition, the legislative package increased the carbon tax that had been in place since 2015, while providing credits for vehicles fueled with carbon-negative algae biodiesel.

Now, in 2038, this basic system is still in place, although the VAT has been increased to 24.997 percent. (A constitutional amendment limits it to “below 25 percent.”) The flat tax on “premium income” and the carbon tax have also been hiked. However, some of the wealthy have become adept at using tax derivatives that let them exchange their tax exposure portfolios with those of foreign speculators. There are concerns that nobody really understands the systemic risks involved in this new market.

In any event, taxation will be a major issue in the upcoming 2040 presidential election. The octogenarian Republican incumbent, Bruce Willis, vows to hold the line against proposals for new taxes on space development, seabed mining, algae farming and cosmetic surgery. However, the likely Democratic nominee, Chelsea Clinton, has said “It’s time to balance the budget, and the lunar colonists should pay their fair share.”

Super-investor Ken Fisher also contributed an article, his being on "What Will World Markets Look Like?" and it so happens that Fisher, quite independently, had a vision of Chelsea Clinton as presidential contender:

Senator Chelsea Clinton (D-NJ) lost the 2036 presidential race to the incumbent, former Texas governor Barbara Bush. Clinton is deciding whether to mount another campaign to unseat the likely 2040 Republican nominee, current Vice President Jenna Bush. The Bushes ran in 2036 under the motto, “Get a Two-fer.”

Could Ken Fisher and I both be wrong?

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