David Leonhardt attempts to explain the difference between Hillary Clinton and Barack Obama. There are differences, real differences, but they will never mean that much to most Americans. Why not? The Answer simply states that the differences will not make any real difference in the lives of Americans. I should someday comment on the fallacy of Marginal Tax Cuts, but here I will only say that such Tax Cuts are only absorbed by the institutional framework to which all American families are subject. Doctors, Dentists, Clinics, Discount Stores, Grocers, Utilities, Landlords, and local Tax authorities simply raise their Prices to absorb the excess funds. It does not matter how those Marginal Tax Cuts are granted; they will always be ineffectual to American households. Politicians are in favor of Marginal Tax Cuts solely because their Supporting businesses can increase their percentage Profits from these Cuts. A simple and clear Tax system (one which make Tax Preparers optional) of effective Tax percentage rates could make a difference, but We are not likely to see it in the near future.
There should only be 4 progressive Tax rates, and One of Those should apply only to businesses and Corporations. There should be no Tax exemptions, Credits, or Reductions of any type, except for a general purpose Exemption where 80% of the total Cost of accepted excess Expenses will be exempt from taxation. Accepted Expenses included in the general Exemption would be Child-Care Costs above $1000 per year, Medical Health Care Costs above $1000 per year (per individual insured for the Business tax rate), State and Local tax levies above $1000 per Taxpayer, Insurance Costs above $2500 per Individual, and Professional Service Costs above $5000 per Individual be year. Recognize there will be no personal Exemption organically granted, and actual Exemption status will be established by the IRS, not legislative action. No Tax Credits will be granted for Investment, whether for Retirement or Business growth. The boon to this program is a slashing of Tax rates by a probable half, with less chance for institutional parasites to absorb the reduced taxation.
Dean Baker expresses the hazards implicit in allowing Private sector interference in setting up Governmental programs without adequate boundaries. The splinterization of Payment systems at the local levels brings forth Cost charges like unto the Price Markups of Retail over Wholesale pricing. This adverse effect is worst at the Taxing authority level, where nominal Tax rates must be much higher than is functionally Progressive, simply to generate sufficient Tax revenues, while Tax Evaders are given free license to legalize Tax avoidance. There will never be a fair Tax system as long as Voters supercede their best interest by adopting personal bribes to gain their acquiescence to institutional Tax evasion. lgl
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I found this comment on www.lcurve.org regarding economic issues. I hope people find this as educational as I do!
Quoting from a recently-published book by political philosopher David Schweickart,
If we divided the income of the US into thirds, we find that the top ten percent of the population gets a third, the next thirty percent gets another third, and the bottom sixty percent get the last third. If we divide the wealth of the US into thirds, we find that the top one percent own a third, the next nine percent own another third, and the bottom ninety percent claim the rest. (Actually, these percentages, true a decade ago, are now out of date. The top one percent are now estimated to own between forty and fifty percent of the nation's wealth, more than the combined wealth of the bottom 95 %.)
There is a growing class of billionaires that collectively holds a substantial fraction of the wealth of the country. [In March 2006 Forbes reported 793 billionaires in the US with combined net worth of $2.6 trillion. In March 2007 Forbes reported 946 billionaires in the US with combined net worth of $3.5 trillion. That is a 1-year increase of 19% in the number of billionaires and an increase of $35% in their net worth during a time of increasing poverty. Severe poverty is at its highest point in three decades.]
Wealthy people can use their influence single-mindedly and very effectively. A single billionaire can get the undivided attention of any politician he wants, any time he wants. If he doesn't get what he wants he can, in fact, "fight city hall," the statehouse, and even the federal government. Poorer people must pool their limited individual power and organize to have any effect at all. This is a very difficult thing to manage, in practice.
There are two classes in this country. One class derives concentrated power from its concentrated wealth. The other class has power only in numbers. That power is effective only to the extent that it can be mobilized through organization.
We live in representative democratic society. That means that “we the people” vote for people to represent us to conduct the business of government for the people. Businesses can’t vote and the wealthy that control the businesses are too small in number to elect the representatives. So what do they do? They have money to influence government to their advantage legally. The tobacco companies spent billions to influence public opinion and therefore government regulations to make even more money and kill people. The oil companies spent billions to fight the fact that burning fossil fuels accelerates global warming. Why? Short term profits. Will they make money? Yes. Will they destroy the planet? Maybe. Will people die? Yes. The examples go on and on. Increasing copyright laws from the original 14 years to 70 +, chemical company clean-ups, strip mining, saving and loan, Enron, and so on.
The point is that wealthy people hire lobbyist, think tanks, government employees, and yes our representatives to persuade people that our representatives are voting in the best interest of people instead of allowing the wealthy to steal from society. The fair tax system is funded by millionaires and companies. The fair tax system benefits the wealthy and companies. Shouldn’t people take a critical look at their claims to see how the tax system will benefit them and society?
What should taxes be based on? Would you call someone making $50,000 a millionaire? If he has a net worth of $10 million, would you call him a millionaire? If someone has a net worth of $1,000.00, should he be required to pay $1 million in taxes?
Income is not a measure of being rich, net worth is. Taxes should be based on ones ability to pay.
When a poor person is taxed on 50 % of his net worth and a wealthy person is taxed on much less than 1 % on his net worth and a business is not taxed, that is not fair! The supporters of the consumption tax are trying to convince you to vote for the well being of the wealthy and businesses.
Until we come to terms with these issues, phrases such as, "We the people...," and, "of the people, by the people, and for the people," are hollow clichés. Every four years people get to exercise there power to vote for representatives. 2008 is one of those very important years. Please don’t make the same mistakes as the last years.
Reasons for a Net Worth Tax System
America should adopt a tax system based on net worth for the following reasons.
1. The net worth tax system has the broadest base of any tax system. The net worth of this country is larger than the income system, about $9 trillion, and the consumption system, less than the gross domestic product, (GDP) about $14 trillion. The individual assets of $55 trillion and business assets of about $60 trillion, $115 trillion, is more than 8 times the GDP of $14 trillion, a stack $100 bills that go around the moon and back: twice. Three percent of which is over $3 trillion. More than what our national budget is.
2. Income is not a measure of being rich, net worth is. George Will has said that the wealthiest 1-percent of households have more assets than the lowest 90%, $16 trillion. (The top one percent are now estimated to own between forty and fifty percent of the nation's wealth, more than the combined wealth of the bottom 95 %.) Since the total individual assets are $55 trillion. The wealthiest 10% own about 73% of the net worth in the USA. The biggest 1-percent of corporations own 80 % of the business net worth.
3. Taxes should be based on ones ability to pay. A tax on net worth is the fairest tax to all. Net Worth is the measure of ones ability to pay.
4. Taxes on net worth have the lowest percentage. America’s budget is about $3 trillion. A consumption system requires a sales tax of over 21%. A net worth tax would be less than 3%.
5. A tax on net worth is the most versatile. Besides a flat tax of 3% for individuals and businesses, there are other possibilities. Some people say we have double taxation. We could tax only people at 6% or only businesses at 6%. Since businesses can’t vote and they pass there cost on to their customer, this is the best way to go. Next is the progressive path. The first $1 million could be tax-free and increase by 0.1 % for each $1 million up to 5% after $50 million. The other methods could also start at above $1 million or higher.
6. A tax on net worth is the simplest to file. Take what you own minus what you owe. Our present tax system is 63,000 pages of loopholes. Example: a person leases a car. The lessee does not own the car, so no tax. The leasing company owns the $25,000 car, but has a $10,000 loan. The company is taxed on $15,000. ($25,000 minus $10,000) The loan entity has $10,000 of assets so it pays tax on $10,000.
7. A tax on net worth is the easiest to enforce. Since this is a property rights country, all assets are traceable. Taxing only the most prosperous 10 % of businesses and people is the most efficient tax system.
8. Like the consumption tax, all of our present taxes could be replaced, individual income tax, corporation income tax, employment taxes, gift tax, and estate tax. Plus the excise tax.
9. Guarantees funding for all budget items like social security and Medicare by eliminating use taxes. User fees or tolls are another way for the wealthy and businesses to avoid paying taxes. Budget items come out of general funds.
10. A tax on net worth promotes transparency. When a company shows an annual report with a book value of $1 billion and only $10 million in taxes, they aren’t paying their full taxes.
A tax on net worth promotes free trade. Money, inventory, buildings, etc. are all assets so everyone can move assets around for the best effect.
11. Eliminate inflation. Dr. Milton Friedman said to end inflation, stop printing money. By increasing the tax rate 1%, the national debt of $9 trillion could be paid off in 10 years.
12. We start collecting 100 percent of our earnings in every paycheck. We all get virtual raises, since payroll taxes are no longer siphoned from our checks.
13. Reducing taxes on the poorest 90% will raise revenue. When people have more money to spend, they buy more goods, which mean more profit for businesses and the wealthiest 10%. Money flows up, water trickles down.
14. A tax on net worth promotes jobs. Employees cost companies less since the employment taxes are repealed and therefore employees become more competitive in the global market.
15. A progressive tax on net worth levels the playing field. Small companies that create the most jobs become more competitive with large companies.
16. A tax on net worth removes some incentive to move plants overseas. Taxes are based on assets no matter where they are located. What you own minus what you owe.
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