Who Owns the National Wealth?

You’ve seen these things.

GenProgInd

the great upward income shift

low-wage

Screen Shot 2011-10-26 at 7.04.09 PM  

They are endless, dozens of them, and what they all show is that inequality is out of control. It is weakening our country in many ways.

This has come about because people with power, which means money, believe in two falsehoods. The falsehoods are that they, the capitalist rich, are the naturally superior leaders, and that the more money they have, the better off the country will be. On the first point they overestimate their wonderfulness by a whole lot. On the second they are flat-out wrong, which is what all those charts above show.

Now, capitalism beats tyranny easily enough, and pure socialism as well, and is beneficial for democratic countries in a general way. But capitalism has very serious flaws that must be controlled, and one of them is at present creating havoc with people’s lives in the US. The flaw is that capitalism tends toward control by the few very wealthy, and worsening fortunes for all the rest, as you can see.

Capitalism has very serious flaws
that must be controlled.

Our dilemma, should we decide to do anything about it, is to find ways to bring the blessings of living in history’s richest nation to all those millions who aren’t able to earn a decent living no matter how hard they work, and to do this without making excessive demands on capitalists, who do in fact contribute something worthwhile.

In actual fact, solving the entire difficulty is simple, and it requires only two things.

First, we must have a rational wage. Arguing about our pathetic $7.25 minimum wage will get us nowhere. What we need is a Living Wage, like that in most of the advanced nations. People can live on a Living Wage. Nobody can live on minimum wage.

At a stroke, Living Wage ends most poverty and the welfare cost that goes with it. People earning a Living Wage will bring prosperity to the country because they will spend the majority of their earnings, and the added demand will create additional jobs. And they will pay taxes.

At a stroke,
Living Wage ends most poverty
and the welfare cost that goes with it.

Living Wage does not make people wealthy, but it does away with the dangers and hopelessness of poverty. People do not need great wealth to live a good life. When you can buy food and pay the rent, and where a health problem can no longer ruin your life, many other elements of the good life are available. Things like family gatherings, entertainment, travel, good food, community events, and so on. You can relax and enjoy life. You don’t need a second home or a yacht.

Now for the other end of the economic scale.

It is clear that the only feasible way to collect money for our national needs is progressive taxation. The rich live far, far above the point where additional income means anything at all. They can’t even spend it. So progressive taxes, even fairly steep ones, would be equitable.

We need to eliminate a lot of tax loopholes
and define moderately progressive taxation.

Notice that it is not necessary for the highest tax to be extreme, because even the lowest earners of Living Wage pay tax. The welfare payments necessary when people can’t make ends meet turn into taxes paid. Therefore, a reasonably progressive tax treats everyone fairly, and makes possible a number of fiscal improvements such as equal public funding for every student from pre-kindergarten through college.

So it turns out that fixing the mess we have made from maldistribution of the national wealth is not the impossible problem we have supposed it to be. All we need is a wise Living Wage, equitable progressive taxation, and an end of unfair tax loopholes.

Of course it’s not quite that simple, because capitalism and capitalists have managed to contrive many ways for both individuals and corporations to avoid paying their share of taxes. Individuals have a large number of tax-avoidance schemes, most of which they have arranged by simply purchasing legislative influence. Not many have shown any indication they think equality is worth bothering about.

The latest  among many schemes for corporations is to pretend they are now headquartered in some low-tax country such as Ireland. There are many other ways, and many of the very richest corporations in the country don’t pay a dime in taxes.

The nominal corporate tax rate is too high, but no one pays the top rate. Still, it should be lowered to make it realistic, and these avoidance schemes done away with at the same time. With few exceptions, every worker and every business should pay tax, because every person and every business uses the benefits that taxes provide.

No formal study I know of is available at present that would tell how this plan would pan out, but I believe that those changes would improve our national economics a lot.

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2 CommentsLeave a comment

  1. Reblogged this on Citizens, not serfs.

    Like

  2. How about requiring all foreign corporations to form a daughter company, incorporated in the US, and therefore subject to US taxes, in order to do business in the States?

    Liked by 1 person


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