Readers need to integrate this article because it describes the basic malaise of the American economy. Economic gains are not widely shared by the Population; the actual distribution of benefits is actually very narrow with probably less than 10 million Americans gaining from the new additions to Wealth. This would not be a Problem, except Product Pricing resets in reflection to the total aggregation of Wealth, whether there has actually been a expanded gain in aggregate Purchasing Power. Translation states that Static Incomes under such a Scenario holds loss of both Income and Purchasing Power. People can go broke simply working as hard as they did before. This brings on a multi-layered crisis where Work Incentives are lost, Living Standards are lost, and Households fail.
One method for handling the Decay in Place process comes in the form of artificial Government decrees–Prices Freezes, Minimum Wage limits, and Welfare assistance. Any Economist will tell of the hazards of such an approach: Price Freezes do not forestall Inflationary pressures, they simply destroy the Incentive of Retail to sell Product, and disturb the gradual Price adjustment process. Minimum Wage limits only affect the lowest spectrum of Labor, doing nothing for the equally affected static, higher-Income Labor, who also lose Purchasing Power without the present power of maintaining the Shelf Wage Scales. Welfare assistance becomes too expensive as the ranks of Enrollees grow under the programs, while such programs themselves propel inflationary Pricing.
The theoretical Problem facing this Country today can be stated as a Need to alter the economic incentives currently impacting different industries in the economy; most industries still hooked to the old economic incentives founded before the new Growth, and the growth industries possessing extremely high incentives based upon the rapid Gains in these industries. I personally feel any alteration in the Incentives granted across the spectrum of the economy can only be affected by sharper impact in real graduated Tax levels; this means that the Rich have to suffer a much deeper bite from the Tax. Higher Tax rates, though, stand as a real economic depressive force–destroying real Incentives to economic effort. I have not found the same retardation in the loss of Tax exemptions and breaks.
My real Proposal would place Income level limits on all Tax deductions, exemptions, Retirement Tax delays, etc. Personal Deductions would only apply if total Income was less than $100,000. Delayed Tax Payments would only apply if total Income was less than $200,000 per year, with half of effective Tax being due for all Incomes over $50,000 per year. Mortgage Tax deductibility will only apply to Housing of Value of less than $400,000. Individual Businesses, Partnerships, and Corporations must pay at least half of the face-value Tax, if their Income exceeds $2 million per year; no matter what concurrent Tax loopholes exist. The Goal of my Tax Package would be to place a higher premium on persistent, steady Income, with much less advantage to rapid expansion practices. lgl