Solutions to Rising Economic Inequality
House Budget, Solutions to Rising Economic Inequality, September 19, 2019 - 10:00am
Low marginal tax rates since 1982 concentrated income and wealth at the top. Anyone below the 90th percentile has lost ground. Immigrants, especially those without documents, have it the worst. We rely on their labor for a higher standard of living so we can make ends meet. See Attachment One containing our prior remarks on this issue.
Keeping up the same standard of living requires living off of credit, which wealthier people profit from. They also profit from interest on government bonds and financial speculation, particularly when capital gains taxes are lowered to stimulate the economy. When credit and speculation explode the economy, the rich are bailed out while everyone else faces possible foreclosure and bankruptcy (which is also rigged to favor the rich).
All of these benefits have the top 10% bringing home half the income. They also pay the same proportion of income taxes. The national debt is possible because of our income tax. It is why the dollar is the world's reserve currency. It is also why liability for the national debt must be considered a function of income tax owed. The current factor is $13 if debt for every dollar of income tax. Using tax distribution and debt levels from the last available year, the top 1% owe $7 Trillion. The next 9% owe $6T. The next 40% owe $5T. The bottom 50% owe $570 Billion. The top 1409 households owe more than half the nation at $610B. No wonder many of the rich give money to Americans for Tax Reform.
The answer cannot be shifting liability down or claiming it is a per capita debt. It is raising taxes enough so that the debt is reduced and incomes for most households are increased.
Job one is repealing the Tax Cut and Jobs Act (see our comments in Attachment Two), or at least extending recently enacted Bipartisan Budget Act of 2019, as well the Budget Control Act Spending Caps for as long as the TCJA is in force. Government spending grows the economy more than the tax cuts increase asset speculation. Such speculation has nothing to do with investment in plant and equipment, which is a function of both public and private consumption.
Repealing TCJA is not enough. An increase minimum wage is essential to wring CEO rent-seeking out of the system. Low wage labor is, by nature, monopsonist. The only solution, aside from cooperative socialism (see below), is to increase minimum wages. Those who cannot compete at the higher income are either disabled and deserving of at least the same minimum level of income or need education with stipends at similar levels.
Higher minimum wages lead to higher incomes for the remainder of the bottom 90% of families and less economic rent for the top 10%. This will lead to the recalculation of wage history levels for the retired and disabled. Any shortfall in the Trust Fund because of this will be made up with more payroll tax income with debt financing of immediate shortfalls.
Comprehensive tax reform is essential to deliver an adequate income to families with children. Attachment Three explains our approach. It directs increased revenue to debt repayment, which will especially help the children of wealthier parents avoid the huge dent liability explained above.
The child subsidy level suggested also dictates a minimum wage of $20 per hour. No one should work just for their child subsidy and both must be indexed for inflation.
Ultimately, a more cooperative economy is needed for real equality. See Attachment Four for a reminder of how this would work.
If the debt liability analysis above were more fully known, the top 10% of earners (or their grandchildren) would demand both higher taxes and a more even distribution of income. There is no reason not to start right now once this is understood. The proposals here are in the order they should be executed. Tax reform will take time to enact and implement. We need not wait for an election to start. We can end the use of tax policy as a political football. Only campaign professionals win if we don’t cooperate.
The creation of Personal Retirement Accounts will have to wait until employee cooperation in ownership, consumption and finance are given a try in existing ESOPs. The revolution will not happen in a weekend, but when it does, it will include governmental services as part of the cooperative rather than through the political system.
Attachment One – House Budget, Building A More Dynamic Economy: The Benefits of Immigration, June 26, 2019
Attachment Two – The Tax and Job Cuts Act
Low marginal tax rates since 1982 concentrated income and wealth at the top. Anyone below the 90th percentile has lost ground. Immigrants, especially those without documents, have it the worst. We rely on their labor for a higher standard of living so we can make ends meet. See Attachment One containing our prior remarks on this issue.
Keeping up the same standard of living requires living off of credit, which wealthier people profit from. They also profit from interest on government bonds and financial speculation, particularly when capital gains taxes are lowered to stimulate the economy. When credit and speculation explode the economy, the rich are bailed out while everyone else faces possible foreclosure and bankruptcy (which is also rigged to favor the rich).
All of these benefits have the top 10% bringing home half the income. They also pay the same proportion of income taxes. The national debt is possible because of our income tax. It is why the dollar is the world's reserve currency. It is also why liability for the national debt must be considered a function of income tax owed. The current factor is $13 if debt for every dollar of income tax. Using tax distribution and debt levels from the last available year, the top 1% owe $7 Trillion. The next 9% owe $6T. The next 40% owe $5T. The bottom 50% owe $570 Billion. The top 1409 households owe more than half the nation at $610B. No wonder many of the rich give money to Americans for Tax Reform.
The answer cannot be shifting liability down or claiming it is a per capita debt. It is raising taxes enough so that the debt is reduced and incomes for most households are increased.
Job one is repealing the Tax Cut and Jobs Act (see our comments in Attachment Two), or at least extending recently enacted Bipartisan Budget Act of 2019, as well the Budget Control Act Spending Caps for as long as the TCJA is in force. Government spending grows the economy more than the tax cuts increase asset speculation. Such speculation has nothing to do with investment in plant and equipment, which is a function of both public and private consumption.
Repealing TCJA is not enough. An increase minimum wage is essential to wring CEO rent-seeking out of the system. Low wage labor is, by nature, monopsonist. The only solution, aside from cooperative socialism (see below), is to increase minimum wages. Those who cannot compete at the higher income are either disabled and deserving of at least the same minimum level of income or need education with stipends at similar levels.
Higher minimum wages lead to higher incomes for the remainder of the bottom 90% of families and less economic rent for the top 10%. This will lead to the recalculation of wage history levels for the retired and disabled. Any shortfall in the Trust Fund because of this will be made up with more payroll tax income with debt financing of immediate shortfalls.
Comprehensive tax reform is essential to deliver an adequate income to families with children. Attachment Three explains our approach. It directs increased revenue to debt repayment, which will especially help the children of wealthier parents avoid the huge dent liability explained above.
The child subsidy level suggested also dictates a minimum wage of $20 per hour. No one should work just for their child subsidy and both must be indexed for inflation.
Ultimately, a more cooperative economy is needed for real equality. See Attachment Four for a reminder of how this would work.
If the debt liability analysis above were more fully known, the top 10% of earners (or their grandchildren) would demand both higher taxes and a more even distribution of income. There is no reason not to start right now once this is understood. The proposals here are in the order they should be executed. Tax reform will take time to enact and implement. We need not wait for an election to start. We can end the use of tax policy as a political football. Only campaign professionals win if we don’t cooperate.
The creation of Personal Retirement Accounts will have to wait until employee cooperation in ownership, consumption and finance are given a try in existing ESOPs. The revolution will not happen in a weekend, but when it does, it will include governmental services as part of the cooperative rather than through the political system.
Attachment One – House Budget, Building A More Dynamic Economy: The Benefits of Immigration, June 26, 2019
Attachment Two – The Tax and Job Cuts Act
Attachment Three - Tax Reform, Center for Fiscal Equity, September 13, 2019
Attachment Four Three
A. Employee-Ownership, March 7, 2019
B. From Hearing on the 2016 Social Security Trustees Report
posted by Michael Bindner at 10:00 AM
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