If you did not see the candidacy announcement, it’s here.
Taxes come in many forms and from many directions. Federal income tax appears to be the main drain, because the highest tax rate is 35%. For most of us, though, our actual income tax load is 10 – 15% at the national level. Social Security and Medicare taxes take 7.65% (or 15.3%, if you deem the “company contribution” to be essentially your money, too). Property taxes (pass-through, if you rent) are typically 2 – 3% on an income basis for the majority of us. State and local sales tax (almost universal) represent 2 – 4% of income. Excise taxes in the price of almost every manufactured item add a highly variable, but very substantial tax bite on consumers. State income taxes, where applicable, can add another 5% or more to the bill for “middle-class” taxpayers.
If you earn more than $130,000 per year, the 35% federal income tax bracket sounds like a big hit against your income over the $130,000 threshold. However, if your income is primarily profit on investment – stocks, real estate, dividends – the Capital Gains tax rate is now 15%. If you have non-corporate business income, you have “cost” categories to hide income (profit) – primarily depreciation. Social Security-type taxes have a ceiling, above which the taxpayer makes no further contributions. So, effectively, the higher your income, the lower the SSI tax impact. Also, as a percentage of income, property taxes, sales taxes, excise taxes will have less impact, because you can only buy and use so much, plus you’re smart enough to be reinvesting. There are even ways to avoid showing any profit on an investment by reinvesting under certain tax rules, such as the 1031 program.
The majority of U.S. citizens pay between 40 – 60% of our income back out in total taxes, though that may not be obvious from the percentages described above. (The excise taxes and the income taxes paid in increments to the producers of the goods that we consume all add up to a fairly large chunk. Gasoline, for instance, is taxed on a number of levels. Just the federal and state gasoline taxes at the pump average more than 40 cents per gallon.) Overall, the rich and super-rich pay a substantially lower percentage of income in taxes within the U.S.A. Of course, they pay a small additional “tax” in political donations to assure that they maintain, if not grow, their relative advantages.
We have had federal income tax brackets of 91% (94% in World War II) for high income, plus Capital Gains (profit) tax rates of 30%, within memory of most of us. Somehow the economy didn’t falter due to such a burden, nor did the rich lack advantage. Since the Reagan era, we operate under a “trickle-down” economic theory that has increased unemployment, suppressed reinvestment in infrastructure, and, now, placed us in an insupportable financial position within the world economy. The underlying assumption is that large corporations – and by association, the super-rich who control the corporations – are capable of making, and willing to make, business decisions that will ultimately benefit all of us.
Although this is a silly theory and has now been disproved in practice, the current tax system (and federal budget) supports Reaganomics. The practical solution is actually fairly simple: Tax the rich to a high degree to pay for processes and developments that do benefit all of us.
OK – what does benefit all of us? Actually, that is fairly easy to answer, too. The major part is the provision of basic services (clean water, sanitation, basic food, healthcare, affordable housing), just as it says at the top of the page. The other key requirement is reinvestment in related infrastructure, because, lacking that investment, we will find it more difficult and more expensive to maintain these basic services in the future.
Part of the resistance to socially-conscious politics is the idea that we are in a “zero-sum” game, in which, whatever I give away to you, leaves less for me. In fact, however, clean water means improved sanitation and less disease, which reduces health care expense – which we all pay for in terms of increased insurance costs and more out-of-pocket expenses, at least. Less communicable disease reduces your exposure, which should reduce your personal medical expenses, your lost-time, and – not least – your personal discomfort.
Affordable housing means more discretionary income for most of us, which generally circulates in the local economy. Even if it meant more savings – which would be a good thing for many of us – it generally returns to the economy via investment. Affordable housing would work to get some of our homeless rooted again, which would benefit the budgets of social services agencies (supported by our tax-money and charity-donations).
And basic food distribution – what more legitimate purpose can there be for government? To deprive any citizen of some base level of nutrition is not only profoundly immoral in a resource-rich country, it is practically a demand for anti-social behavior. Very few of us, if starving, would hesitate to steal food. It is a primal drive.
So – here we are at the end of Reaganomics, with the reincarnated Louis 16th as President, and with many of us facing moderate to severe economic problems. The only good news for the next 23 months is that the tax cuts for the super-rich will not be made permanent – we can hope anyway. After that, the first task will be to reverse the reductions; then to fund the infrastructure development that will permit and encourage a new economy.
The new economy must escape from the domination of fossil-fuel-based energy and embrace the renewable energy systems. It must reduce consumerism and increase conservation. Clearly, this will involve some of the other points of the 15-point program, such as points “5. Support rapid development of ‘alternative’, renewable energy sources (solar, wind, wave, etc.)”; and “6. Promote, plan, and construct affordable, environmentally-sensitive public transportation”. (These will be discussed in greater detail in later position papers.) In the shorter run, though, we need to start with a Public Works program to increase employment at living wages, to rebuild our pool of skilled labor, and to lay some of the foundation infrastructure elements down for the transformation to the new economy.
Simple things like buried electric power lines, buried glass-fiber-communication lines; rebuilt sewer lines, improved water recycling plants, enlarged waste and scrap recycling plants (Point 4 of the 15-point program); low-cost housing developments; two-track railroad systems (instead of one track with occasional bypasses); and solar-power-generating roof systems on public buildings could be the starting points. These projects all rely on standard engineering designs and technical skills that could be turned on with a minimum of fuss.
Meantime, development work on high-speed trains, preparation for large-scale solar- and wind-power “farms”, refurbishment of spur railroad tracks, and planning for major conservation projects (e.g., geothermal heating systems for neighborhoods and farms, LED and CFL lighting exchanges, solar-generation sunshades for parking lots, recycling of nuclear fuel) can prepare the way for the second, larger-scale stage. Underlying this work is the need to finance research (primarily by supporting students at the college level – Point 3 of the program). Supporting this work would be the workforce created by Universal Public Service (Point 2 of the program).
Frankly, as the expression has it, “this is not rocket science”. It is, in fact, using our known technology, and what’s left of our economic power, to leverage an improved future. It actually takes little more than a shared vision, the political will, and a reasonable level of managerial skill to implement these steps. This part of the overall program is not painful; it is exciting and energizing. It steps into the future on relatively stable ground, prepared here and elsewhere in the world. It merely needs activation.
Paul Spencer
