Joe Steel said:
Typically, debate of US national debt focuses on the proper mix of spending cuts and revenue increases and revenue increases almost always are discussed in terms of income taxes. Here's another perspective on the dichotomy.
IF you’d like to know where American political debates are headed, the data suggest a simple answer. The next major struggle — in economic terms at least — will be over whether taxes on personal wealth should rise — and by how much.
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While virtually every government could pay off its debts by taxing wealth, such taxes are often politically unacceptable. In other words, fiscal problems are best regarded as problems of dysfunctional governance.
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Higher wealth in a nation means that there is more to take, and growing inequality means there are more problems that its government might seek to remedy. At the same time, however, this new economic configuration will mean greater political influence for the holders of that wealth, and that will make higher wealth taxes harder to achieve.
Wealth Taxes: A Future Battleground
Taxing wealth is a great idea. One of the most frequently heard arguments against taxation is the disincentive to production it is said to create. That's the basis of the Laffer Curve. We don't have that problem with wealth taxes. Wealth taxes will be completely independent of work. They will reflect the community's fair share of wealth accumulated by any means whether productive effort or just good fortune. Wealth taxes are an idea whose time has come.
Whenever someone starts a thread like this it's easy for each poster to fall back on their politically ideological positions. Frankly, you're hearts are in the right place from your relative view points, but your solutions are misplaced.
After WWII, this country experienced an economic boom. Why?
Because innovation was unleashed along side public-private partnerships. But there was another element to our nation's economic rise that few are talking about: immigration.
Now, stay with me because it will all make sense in a moment. So, I urge you to keep reading...
From 1945 through 1972, the nation experienced an economic boom despite going through three armed conflicts: WWII, the Korean War and the Vietnam War. US Economic policy, foreign trade policy and two major changes in immigration reform helped this country stay atop of its economic might. Until the late 60's, corporation paid a higher tax rate than individual consumers, but since then and especially since the early 80's that trend in taxation has undergone a major shift. Our tax policies where shaped in a way that allowed financial leveraging as the basis of wealth accumulation. As such, the industrial age this nation once experience slowly began to disappear. Outsourcing became the name of the game. If a company could be more profitable by shifting jobs overseas by reducing their labor cost (paying lower wages) and less taxes (lower corporate tax rates in foreign lands) it didn't matter what affect this shift had on society as long as some consumer mechanism was designed to maintain a level of "consumption and debt" where the people believed their standard of living was well maintained, all was well. Fast forward to present day...
We're at a point now where the arguments are framed the wrong way, specifically, the OP to this thread. I've never believed that taxing the rich was the right thing to do. However, what I have said is it's the fair thing to do at this point short of any other reasonable solution. If you're read this far, I urge you to keep reading...
The only recourse most people have when faced with overwhelming debt is bankruptcy. But then what? If they've lost everything including their job and the nation's unemployment rate is high and there are no jobs available for which they are qualified for and retraining would take considerable time, how else are they to manage to met their survival needs? I want people to think about that for a moment.
The only recourse the poor and have are social services and soup kitchens. But when charitable organizations aren't received enough in donations to render assistance, churches are closing their food pantries and government is cutting back on spending on social programs, where do these people go for help in order to survive? Answer: The streets...your local retail business or worse YOUR HOUSE! The revert to their worse survival instincts. This is why we're seeing a rise in crime rates in some areas with high unemployment rates (even when viewed in pockets). Social programs do help, but they aren't meant to be "cradle to grave" support systems. People do need to be incentivized to find meaningful work for themselves. But when they can't acquire the tools they need through education or retraining, they fall back on getting whatever aid they can get...until they're forced to fall back on their basis survival instincts. But the rich can help!
The rich could take one of four approaches. They could:
- pay more in taxes either directly (marginal) or indirectly (eliminate tax credits); or,
- pay more taxes for the same services they receive as the common man (provisions within ObamaCare come immediately to mind here); or,
- pay a higher U.S. corporate tax rate OR pay taxes or repatriotized earnings that return to the U.S.; or;
- (best solution) pay higher wages.
Now, I know none of the above options set well with some people, particularly Conservatives, but of all the options listed above, the best one for a society that's based on free enterprise and consumption IS for those who have the wealth to pay more in the most direct way their money will help the economy grown AND improve their profits long-term. That is, pay your employees a higher wage so that they can be the consumers they are. Get the engine of consumption going again in earnest and corporation can do the things the tenants of Conservatism claims it should be doing:
- keep consumer prices low.
- ensure a robust national economy.
- take care of those in need via charitable giving.
- keep corporate taxes low.
- retain a vibrant industrial complex both in retail, services and military (defense).
- spur creativity and innovation.
This is how you unleash America's ingenuity - "shared sacrifice". The people - employees, laborers - are already paying a higher marginal tax rate than their employers - corporations. The only thing that makes sense as a viable solution to our nation's economic problem is for corporations to make a sacrifice. And that sacrifice can only come in one of two ways: pay more taxes or pay employees a "living wage". I know there is debate on this front, so let me just say this: A living wage IMO means paying your employees a wage rate that allows them to meet their survival needs while also maintain a standard of living expected of the greater societal need.
For example: Most people would agree that we all need food, water, clothing, shelter and transportation. Most socialist countries try to provide these things, but we all know how that works, right? It truly becomes unsustainable after a while. When China faced an explosion in its population growth their governmental structure couldn't afford to maintain, their government believed the answer to this problem was controlling family size. Rationing kids? Whodda thunk it!
Greece begrudgingly accepted austerity measures to control their failed economy.
America cannot afford to enact a never ending stream of social entitlement programs any more than it can keep in place strong austerity measures. Otherwise, we lose. All of us! But a plan that allows a shared sacrifice based on our socio-economic principles would work because no one side is seen as gaining an unfair advantage over the other. This is the current state of things in our nation today. This must change!!
I said from the day I became a member of this board that I came here to learn, to "listen" to various view points and grow. I've studied our nation's current social, political and economic problems with great interest trying very hard not to remain so steadfast in my political viewpoints. It's difficult, but I try to see the problems as each side sees them. And I believe I've heard enough to know that the solutions one side offers up with never work unless both sides are willing to work together. For me, the only option that works is "the rich will have to give up on some of their riches". And since they don't want to pay more in taxes fearing their tax dollars will only go towards "increasing the size of government" and giving more to the "social welfare state" (while ignoring the array of corporate welfare that takes place), the only solution is to pay higher wages. But consumption is the only benefit here. Public investments are also a plus. Think about it...
If America, both its politicians and its citizens, are so worried about foreign entities (be they governments or investment groups) are buying up so much of our debt (not to mention our land and our businesses), the only solution to this problem IS to make "Made AND invest in America" truly mean something again. Empower the people to take a stake in America's economic interest all around not only in living the American Dream (which is faltering as a result of the housing bubble bursting along with 401ks and pension funds going insolvent), but also in providing individuals to buy those Treasury securities foreign investors are buying. So of you may remember how America bought government war bonds during WWII. Why can't we do something similar to this again? You'd be amazed at how quickly American renewal would be once we all were in a position to participate in America's prosperity to ensure our posterity. But consumption is not the only benefit here.
Discuss...