That's the famous question. Last week I proved by simple research of widely and easily available data that since around 1970, the common man and woman has been screwed by the hegemonic class and their bureaucratic allies. The screwing occurred under administrations of both parties insidiously and slowly. For 40 years ALL the productivity gains of technology has been slurped down by those hogs. But ... What is to be Done?
(A) The new system must increase the demand for labor ... employees .... in the US economy, and concurrently permit entrepreneurs to prosper. We need reforms to do this WITHOUT increasing governmental power. Increased government is part of the problem; that permits the bureaucratic classes to slurp MORE from the trough; it gives the hegemonic classes a place to buy protection and gain tools to grab more wealth and power.
Increased demand for labor and freedom for entrepreneurs would increase the pay and share of profits for the common man and woman.
(B) The costs of the social safety net must be borne by those who have benefited from the existence of the nation. Notice I wrote that past tense of the verb, benefited. Not the present tense. The current income tax system takes mostly from those trying to become wealthy, not those who are wealthy.
One single change will not do the job; we must identify an entire panoply of changes, each designed to accomplish either A or B or both.
Here are some changes.
1. Eliminate all accelerated depreciation - that subsidizes machines over people. Go back to the old system of the 1960s - straight line depreciation over the useful life.
2. Eliminate the R&D tax credit - a corporate tax subsidy used to replace people.
3. Eliminate the corporate deduction for interest except to the extent of interest income from loans (not securities income) made by banks. Capital is capital - tax it equally: No more subsidies for debt.
4. Eliminate the deduction for charitable contributions in the estate tax. Make the wealthy spend or give away the money while alive.
5. Make the estate tax iron clad - no loopholes for any trusts, etc. The recent changes for exemptions, rates are fair and fine. Encourage the wealthy to spend or give away the money while alive.
6. Implement the other tax reforms the I wrote about a few weeks ago, viz., the low rates & large exemptions for the income tax, the value added tax, the new rules for foundation spending, etc.
7. Seal the borders, but permit immigration from entrepreneurs and the very talented: we need them and they would prosper here. No more use of visas by US corporations to keep US pay down for engineers, etc.
8. Put luxury taxes on many, many goods the wealthy covet (mansions, extravagant travel, old art, etc.). The rate would be equal to the value added tax (i. e., these pay double).
9. Put an excise tax on corporate pay over the President's salary - let's call it the Hog Tax; this is paid at the corporate level and would equal the income tax rate (as modified by my other reforms): high income pays double; NO deferring compensation unless subject to clawbacks. Two moderately paid people suddenly become more economical than one hog.
10. Apply the Hog Tax to any pay over the President's salary for any service (actors, big mouth media, sports hogs, lawyer hogs, etc.), BUT permit them and all entrepreneurs and sole proprietors to income average over 10 years: they should not pay those extra taxes for one time gains.
11. Gut and scrap ALL tax loopholes the hedge funds and money managers: compensation is pay and gets taxed the same as for the common man and woman. Hedge funds pay the Hog Tax on manager pay (see item 9).
12. Invigorate an inspector general to investigate government contracts for overpayment and any indicia of inside dealings.
13. Put a 10% annual excise tax on the licenses of electromagnetic spectrum - all of it - to pay for the safety net. The big mouth media need to pay. The money goes to support and improve the systems nationally.
14. Require truly independent compensation committees for all corporations to be made up from small shareholders (whether by lottery or by some fair system). The Street, hedge funds, mutual funds, etc. are part of the problem.
15. Reform government pensions at all levels to be no better than available to the common man and woman; no one retires before 65 unless they do it on their own savings.
16. Tax ALL income equally - no special buckets - over a sizable exemption (see prior tax reforms).
17. Put an excise tax on sports franchises and on the top 1/2 of player compensation; the money goes to provide access to the common man. The sports owners & player hogs pay for the stadiums and access; no more blackouts. Permit ALL sports betting: the people want it. More freedom for the people.
18. Eliminate taxes on employers for unemployment benefits, but keep worker's compensation taxes (that promotes safely). Unemployment taxes should be paid out of an add-on special Hog Tax: the bosses lay people off to make more money for themselves, let them pay the costs.
19. Use money from the Hog Taxes to keep rates low for the common man and woman. This will make it easier for them to save and lead a happier life. The Hogs pay and aristocracies are prevented. The unlucky and unendowed have a secure, reasonable safety net.
20. Apply the value added tax to all services engaged overseas: outsourcing pays that tax.
Using the principles of Free Fraternalism, finding innumerable small reforms is rather easy. One can see ways to implement these changes almost everywhere. The crucial factor is to embrace the principles of Free Fraternalism and apply them fairly and uniformly.
Combined with the other reforms I wrote about a few weeks ago (which eliminate all taxes on jobs), you can see this new system is consistent with Free Fraternalism. The economics of common people increase; the economics of Hogs decrease; the economics of machines decrease. That's what we want.
Word of the Day
"Latifundium" - noun [$100]; plural latifundia.
Latifundium means 1. a great estate; 2. a great landed estate, especially of the ancient Romans.
Sentence: It's time to break up the latifundia of the hegemonic classes; too much wealth is held unproductively. Put it back to work.