Should the US and the states create their own Sovereign Wealth Fund?
I think a Sovereign Fund is where Yang should move his focus to. Its a long-term approach that requires a focus. In 30 years the Norway fund has become the largest fund in the world
The Norway Fund has been the receiver of all of Norway's Gas Taxes and Profits but has not paid out anything, so its only grown. But its intend purpose is to supply a form of a UBI (or subsidize Gov't tax revenues if the taxes were to ever fall short enough)
To Fund it, in the US, we need the Gas tax to be quadrupled. Double ($1/gal) it to properly pay for road maintenance and to pay for properly funded and expanded metro development, Greener metro lines, bike lanes, double it again ($2) to pay for Wealth Funding
This gas tax funding of $1/gal would contribute 175Billion in investments
After 40 years the wealth Fund would provide $7 Trillion Annually to pay for a UBI for as long as the US were to want it. Without any additional tax revenue
I think we can look at other jobs and industries where there is a boom and bust cycle, casinos, and where future income should be considered
Mississippi Gambling Revenue and therefore taxes has fallen 31% in 2018 (tax revenue $234 million) vs 2008's (345 million) best year numbers.
If Mississippi had contributed it's taxes to a Sovereign Wealth Fund instead of using it as a Substitute to Government taxes what would the effect have been.
A year after gambling was Legalized in Mississippi, skipping the first years taxes, the state of Mississippi has received Gaming Taxes, Starting in 1994, a total of $6.3 Billion in tax revenues
If those same taxes had been invested in a Wealth Fund its current value would be ~$29.6 Billion
Of course this would have required Mississippi to create 6 Billion in alternate tax Revenues, and this is the stump speech Yang needs to create.
Because in 5 years when Gaming Revenues have dropped another 50% its time for Mississippi to be ready, and in this case you're sitting on a $50 Billion Wealth Fund. That can pay out $4 billion a year to its 2.9million residents or fund the government services instead of deep cuts
It may work in Norway but it would completely fail in the US. Raising gas prices would raise prices on everyday goods due to the trucking industry, and would hit the average person’s wallet due to the lack of public transit and the size of the US. This is not something an American politician can propose without killing their own campaign. A sovereign wealth fund works if you just discovered a new source of wealth, and the US has far too much of a deficit to qualify.
This whole comment is a great summary of why the planet is doomed. We're going to kill ourselves one election cycle at a time.
I'm afraid I think I'm rather down on the idea as well. A soverign wealth fund seems like a good way to avoid a resource curse, which as you point out has been very helpful for the Norwegians with north sea oil, and perhaps to a different extent to the Saudis.
The only US states that might really apply to would be Alaska, as even oil rich contiguous states have fairly diversified economies.
I am vaguely of the opinion that all social services would be best handled at the federal level, which is where national monetary policy is set. That way we can borrow in times of need to whatever degree is required, which states are incapable of doing.
This is, of course, shooting from the hip, and I appreciate the suggestion you described. It was interesting food for thought.
As it happens, Alaska already has a sovereign wealth fund for that reason, the Alaska permanent fund.
I think it could apply to other resource-rich states well though. Places like Texas, Colorado, Wyoming, or Oklahoma produce enough oil and gas to make directing at least some excise taxes to a SWF a good idea.
IIRC a chunk of ours in CO are directed towards education budgets, I wonder if a SWF with a defined beneficiary group/department (schools, transportation, maybe even renewal of disadvantaged areas/communities) might be more palatable to the public than something like a UBI from the start.
something like this would probably be spectacularly unpopular because most gas taxes are, and--if i'm understanding how gas taxes relate to the price of gallons of gasoline--almost totally gimp people's ability to get anywhere if you raised it even $1/gal, much less $2/gal or $4/gal. keep in mind, most places in america have almost no public transit or infrastructure facilitating the use of anything besides a car because a great deal of their expansion has come in the post-car, suburban era of cities. we're not like europe where there are almost always public transit options of one sort or the other so the need for a car to get anywhere you want to go is greatly reduced or outright a nonissue--if you don't have a car in most places in america, you're pretty fucked. we're one of the few places in the world where most people actually need cars to get places, both across the country and within it, so destroying their ability to do that (especially with no alternatives in place for a vast majority of people) can only go extremely poorly.
basically... no, you probably can't make a US sovereign wealth fund by raising gas taxes. it might be possible in other ways, but upping the gas tax like that would probably annihilate the fabric of modern life in the country.
I understand this but why are we in the US so against this? I know the reason and that's why the US is the most progressive country on taxes and will continue to be a low services country
Based on culture changes and city growth we easily should further increase federal gas taxes to $0.50 plus increase state taxes further
We drove ~2.25 trillion miles in 1993 while in 2017 its 3.18 trillion miles
Add in that people pay less in gas tax due to mpg improvements. In 1993 a f150 2wd would pay gas tax of $1.23 per 100 miles driven, now a 2017 f150 pays $0.88 per 100 miles driven*
Adjusted for inflation a F150 should be paying $2.12
*The f150 is the best selling vehicle for the past 40 years, by a lot. (Way more than fuel efficient cars)
The only thing it would do is create a slush fund where lobbyists get to have the government invest in their companies.
Basically, legalized insider trading.
The United States already has a sovereign "wealth" fund. The current balance is approximately -$22,500,000,000,000.