This is what I've been talking about both on my blog and on Google+ the last few years, that if we don't do something about this soon, it will be too late - permanently. Here's why:
Let's say that, as a starting point or tipping point, where we go from sustainable inheritance to unsustainable inheritance, that inherited wealth accounts for, oh, 20% of the wealth of the republic. This isn't just cash or paper investments, it's real property like homes, land, and buildings. So, if that 20% is passed on, curated and managed, and passed on again, it should have doubled over the life of it's first heir. Now it's worth 40% of the wealth of the republic. That is to say, people who didn't work for it now own 4 out of every 10 dollars worth of anything.
The cycle repeats, the 40% is passed on, it's curated and managed, and passed on again, having doubled over the life of the heir. Now they own 80% of everything.
Follow me? Now, do it again. What's left for anyone else? By that point, the poor and middle-class will have had to sell everything they own just to survive. Now they're renters, probably from the same people they work for. From whom they also buy groceries - from the stores the people who essentially own them also own.
THIS IS WHAT THEY WANT!
If you don't think so, you're delusional.
At best, we would indeed see a landed gentry like in Europe who never work again, who outright own politicians so that laws are never considered which favor anyone but them and their ability to accumulate wealth. Old European money is so far removed from the day-to-day affairs and worries that they don't bother with whatever affects the commoners. They do as they please, the cops don't bother them because they really can't in most cases unless the person really screws up and his crime goes public, and their money pile grows larger and larger.
When I lived in Germany, my German boyfriend and I would be out and about and I'd ask him about some place that looked very nice, expensive, and old, and he would say that it belonged to some wealthy family, but despite the fact that they'd lived in the same mansion for a couple hundred years, no one knew anything about them. Later, I found that to be true in more than just Germany. People don't know, and know that they shouldn't go around asking.
That will happen here. In fact, it already has in wealthy enclaves. It will get worse as the already-elitist monied youth grow older, feel even more entitled, buy power, get richer, and feel superior even more so than today.
If we don't end it now, we're screwed. Do the math for yourself. It could happen still in my lifetime, much less the lifetimes of younger people like Millennials.
Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts
Wednesday, July 16, 2014
Monday, August 19, 2013
Response to Sanjay Sanghoee's blog on HuffPo
The current class war began January 20, 1981, the day that Ronald Reagan took office. He and Nancy made it a point to undo the populism that Jimmy Carter had brought to the White House, with Nancy infamously holding $5M cocktail parties while the country went through 3 separate recessions, all caused by what his former-opponent-cum-Vice-President George HW Bush had labeled 'Voodoo Economics' or what came to be known as 'Trickle-Down Economics'.
Reagan was a strong proponent of privatization and of limited government. You have to ask yourself why. Why do the wealthy want limited government? Is it just because they want lower taxes? No, that's not all. Limited government means limited power to oversee things like predatory lending, byzantine derivatives, shoddy work at top-tier prices, sub-standard materials in things like roads and bridges, and on and on. If they can get by on the cheap, they pocket the difference. If they can get by without that pesky guy from the Labor Bureau looking over their records, they can pay people whatever they want and pretend they only worked half as many hours, thereby pocketing the tax difference.
Take every "white collar" crime you've heard of from Martha Stewart's insider information to defense contractors underbidding and overcharging. Make 10,000 copies of each crime, then mix them all up and scatter them piecemeal all over your list of corporations. That's what privatization will lead to, but it will conveniently skip that annoying indictment and prosecution process and won't lead to jail, but to a new cabana in the USVI.
Privatization is the glue that binds class warfare as well as the engine that powers it. If the wealthy own it, the government can't very easily control it, and when they own every-damned-thing, the government will be a toothless tiger.
Remember what the poet John Donne said, and think about it in a privatization context: "If a clod be washed away by the sea, Europe is the less. As well as if a promontory were. As well as if a manor of thy friend's or of thine own were."
When we allow a single piece of public property that should remain in public holding to pass to privatization, America will be the less.
Reagan was a strong proponent of privatization and of limited government. You have to ask yourself why. Why do the wealthy want limited government? Is it just because they want lower taxes? No, that's not all. Limited government means limited power to oversee things like predatory lending, byzantine derivatives, shoddy work at top-tier prices, sub-standard materials in things like roads and bridges, and on and on. If they can get by on the cheap, they pocket the difference. If they can get by without that pesky guy from the Labor Bureau looking over their records, they can pay people whatever they want and pretend they only worked half as many hours, thereby pocketing the tax difference.
Take every "white collar" crime you've heard of from Martha Stewart's insider information to defense contractors underbidding and overcharging. Make 10,000 copies of each crime, then mix them all up and scatter them piecemeal all over your list of corporations. That's what privatization will lead to, but it will conveniently skip that annoying indictment and prosecution process and won't lead to jail, but to a new cabana in the USVI.
Privatization is the glue that binds class warfare as well as the engine that powers it. If the wealthy own it, the government can't very easily control it, and when they own every-damned-thing, the government will be a toothless tiger.
Remember what the poet John Donne said, and think about it in a privatization context: "If a clod be washed away by the sea, Europe is the less. As well as if a promontory were. As well as if a manor of thy friend's or of thine own were."
When we allow a single piece of public property that should remain in public holding to pass to privatization, America will be the less.
Monday, April 11, 2011
Tax equality for all, not just ‘tax the wealthy’
This morning, I had a great conversation with a friend in Portland via chat. We agree about quite a bit, but differ along some lines, just as friends should do. Where we differ is this: When I think tax equality, I think that means that everyone should pay the same rate regardless of who you are, where you're from, your religion, color or creed, and regardless of your income. I believe in a national sales tax which would replace ALL other taxes.
The way I have this envisioned is this: First, we would have a star-chamber panel of non-politically-aligned experts...that is to say not politicians...who would pore over each and every part of the Federal budget, as well as similar individual panels for each state, in order to assure that any waste in government that could possibly be eliminated would be, and that duplication of services, offices, and programs would be erased. Then, we would remove all other taxes, whether we call them taxes or not - if you pay it to the government...ANY government whether Federal, state or local...it's a tax - and replace them all with a national sales tax. Built into this system would be the ability to adjust the rate up or down as needed, quarterly or yearly. We may find it necessary to have a sliding scale built in so that luxury items would be taxed at a higher rate than standard items; a Mercedes taxed at 50% vs a Chevy at 40%. If those rates sound high, then consider that in 2007, MSN Money stated that the average median tax rate was 40.3% across all income groups. They took into consideration the same principles I set forth here that all taxes were considered - Federal, state, and local, sales taxes, income taxes, property taxes, et cetera. The advantage of having a luxury rate, and the equality, is that if Joe SixPack happens to score a lottery win and buys himself a Jaguar, then he still pays the luxury rate for it, just like a regular buyer of that car would. Equality. Also, this would encourage saving more money than we currently do, which would have the long-term benefit of people having enough money set aside to make large purchases rather than borrowing money on which they would have to pay interest as in the current system. And that means a higher standard of living.
But the other side of the coin is what's really on my mind, this morning. I notice when I talk to people, especially those of lower income groups, that they want tax parity for the wealthy. But at the same time, they'll tell you that they think that working families with children shouldn't have to pay taxes, or should be taxed at a lower rate. If that were done, or if these people were allowed to have their taxes rebated, even the sales taxes, then this breaks tax equality out of the gate. It's not tax EQUALITY if lower income groups pay LESS. The only way that it's e-q-u-a-l-i-t-y is if every income group pays the same for the same items. Again, luxury items could be taxed at a higher rate, but all income groups, that means any buyer from any group, pay the same amount of tax on that item.
I have the fortune ("fortune" being defined as hard work, ingenuity, and an entrepreneurial spirit) to have hoisted myself out of the lower and middle income groups. While I had help polishing the ideas I dreamed of, it was my own determination that put me into an upper income group. I state this for one reason: I know what it's like to grow up poor. My parents worked hard to pay for me and didn't take handouts. But like every other average parent, they received help in the form of a free education for me. My healthcare, dental, and vision needs were paid for by them, not by a government agency. They clothed me. They fed me. We got no WIC or food stamps. But we also didn't take lavish vacations or drive cars that were priced beyond our means; we ate well and dressed modestly, too. In sum, we lived within our means.
And there lies the rub. Americans have come to expect to live beyond their means. At first, that meant driving a nicer car and wearing designer clothes, but it's come to mean buying more house than we could afford and having others pay for our kids...or ourselves. The wealthy are justified in their anger at having to pay for others when those others are the recipients of handouts, regardless of whether we call them handouts or not. BUT...the wealthy are NOT justified when they shirk their tax obligations. And that happens far too often. Some of my wealthy friends tell me that they feel justified paying no or little income tax because they pay so much in sales taxes for the many things they buy. I understand that. But I also know that many of them shop exclusively online or in states with no sales tax (yes, those exist, in fact Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax, but they compensate with higher income and/or property taxes). So in a sense, even the wealthy are living beyond their means, or at least beyond their desire to pay their fair share of taxes.
What we have is a national tax-disassociative disorder. We're fraught with debt and don't have the national will to pay it down because we're so used to living beyond our means. We have politicians tell us every day that we need to lower taxes in order to stimulate growth, but what they don't tell us is the pain that will follow. And it WILL follow. Except for the super rich.
Don't get me wrong, I believe in, and actually do, pay my full tax rate. Honestly. I take no deductions. At all. Why? Because I believe that the tax money I pay goes to fund programs that I have used to my advantage, and many that I continue to use. In a sense, I'm just paying the system back for that I "borrowed". And it's important to remember that we have the luxury of having a national freeway system, not a national toll-road system. We have a national park system that is the match of any. We have institutions of higher learning that are subsidized by our tax payments that provide education for those who wouldn't be able to pay the rate that for-profit, private institutions charge. We have a Coast Guard that keeps our nation's shoreline safe from invasion, and rescues us when we tip over our boats or our cruise goes awry, not to mention the heroic work they do for the fishermen of our oceans. We have a military that keeps us as safe as they possibly can from foreign invasion and whose clandestine work often goes unheralded, and unappreciated; but not for certain military units dismantling terrorist cells worldwide BEFORE they can reach our shores, bombings and other acts of terrorism would be as common place here in America as in parts of the Middle East, if not more so.
But, we have rancor and dissent, too. We have a new political faction that feels that taxes are evil and should be repealed, eliding the fact that many of the services they take for granted would simply vanish without them. We also have a segment which believes that government should provide for them cradle-to-grave, despite the fact that we have a national debt that's staggering and not one, but two political party entities which purport to represent the will of an America that wishes them gone, dead, divorced from the marriage of our union.
So, what path do we take out of our morass? I know no one with a crystal ball who can provide that answer. But I do know this for certain: If we do not address, civilly, all of the issues which plague our nation then we can expect that divorce to happen sooner rather than later. It would not surprise me to see the new South attempt secession again. I could foresee the Midwest going along with them. But I also have faith in our ability to weather even this perfect storm. Perfect shit storm, would be more like it. And it's all of our own making.
Failing to have a real leader with real, prudent ideas...not a Ronald Reagan whose trumped-up legacy is as much a fiction as any children's fairy tale...means that we'll continue to stagnate and will take our places as a has-been along with Britain, France, Spain, and Portugal. What we need is an FDR, a George Washington, or an Abraham Lincoln. We need someone with the clarity of mind, the willpower, and the charisma to lead us to a new place, a new road at the least, one that would take us to a common goal of respect for our fellows, civility in politics, and concern for our fellow planetary citizens. What we don't need is one of the loony tunes nut-fudge-fringe candidates put forth by some, today. We don't need leaders who seek to serve only their benefactors. We don't need leaders who seek to lead by division like so many in our current situation. We need someone who will lead us firmly together while respecting our differences, but like a good nanny or school teacher, one who will glance sternly at the offending parties to quieten them to maintain order while never stopping, slowing, or looking over her shoulder to see if the kids are following; she will know they are because they're holding hands, not pushing and shoving and trying each to run his own way.
And perhaps that's the real problem: We've forgotten as adults what we were taught in kindergarten - how to be nice to one another, share and share alike, and that everyone has to do her and his part to make the project work, whether it's the kid who came to school chauffeured in luxury or the poor kid with the hand-me-down wardrobe who rode the bus. Everyone. Together. "...One nation, indivisible, with liberty and justice for all".
The way I have this envisioned is this: First, we would have a star-chamber panel of non-politically-aligned experts...that is to say not politicians...who would pore over each and every part of the Federal budget, as well as similar individual panels for each state, in order to assure that any waste in government that could possibly be eliminated would be, and that duplication of services, offices, and programs would be erased. Then, we would remove all other taxes, whether we call them taxes or not - if you pay it to the government...ANY government whether Federal, state or local...it's a tax - and replace them all with a national sales tax. Built into this system would be the ability to adjust the rate up or down as needed, quarterly or yearly. We may find it necessary to have a sliding scale built in so that luxury items would be taxed at a higher rate than standard items; a Mercedes taxed at 50% vs a Chevy at 40%. If those rates sound high, then consider that in 2007, MSN Money stated that the average median tax rate was 40.3% across all income groups. They took into consideration the same principles I set forth here that all taxes were considered - Federal, state, and local, sales taxes, income taxes, property taxes, et cetera. The advantage of having a luxury rate, and the equality, is that if Joe SixPack happens to score a lottery win and buys himself a Jaguar, then he still pays the luxury rate for it, just like a regular buyer of that car would. Equality. Also, this would encourage saving more money than we currently do, which would have the long-term benefit of people having enough money set aside to make large purchases rather than borrowing money on which they would have to pay interest as in the current system. And that means a higher standard of living.
But the other side of the coin is what's really on my mind, this morning. I notice when I talk to people, especially those of lower income groups, that they want tax parity for the wealthy. But at the same time, they'll tell you that they think that working families with children shouldn't have to pay taxes, or should be taxed at a lower rate. If that were done, or if these people were allowed to have their taxes rebated, even the sales taxes, then this breaks tax equality out of the gate. It's not tax EQUALITY if lower income groups pay LESS. The only way that it's e-q-u-a-l-i-t-y is if every income group pays the same for the same items. Again, luxury items could be taxed at a higher rate, but all income groups, that means any buyer from any group, pay the same amount of tax on that item.
I have the fortune ("fortune" being defined as hard work, ingenuity, and an entrepreneurial spirit) to have hoisted myself out of the lower and middle income groups. While I had help polishing the ideas I dreamed of, it was my own determination that put me into an upper income group. I state this for one reason: I know what it's like to grow up poor. My parents worked hard to pay for me and didn't take handouts. But like every other average parent, they received help in the form of a free education for me. My healthcare, dental, and vision needs were paid for by them, not by a government agency. They clothed me. They fed me. We got no WIC or food stamps. But we also didn't take lavish vacations or drive cars that were priced beyond our means; we ate well and dressed modestly, too. In sum, we lived within our means.
And there lies the rub. Americans have come to expect to live beyond their means. At first, that meant driving a nicer car and wearing designer clothes, but it's come to mean buying more house than we could afford and having others pay for our kids...or ourselves. The wealthy are justified in their anger at having to pay for others when those others are the recipients of handouts, regardless of whether we call them handouts or not. BUT...the wealthy are NOT justified when they shirk their tax obligations. And that happens far too often. Some of my wealthy friends tell me that they feel justified paying no or little income tax because they pay so much in sales taxes for the many things they buy. I understand that. But I also know that many of them shop exclusively online or in states with no sales tax (yes, those exist, in fact Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax, but they compensate with higher income and/or property taxes). So in a sense, even the wealthy are living beyond their means, or at least beyond their desire to pay their fair share of taxes.
What we have is a national tax-disassociative disorder. We're fraught with debt and don't have the national will to pay it down because we're so used to living beyond our means. We have politicians tell us every day that we need to lower taxes in order to stimulate growth, but what they don't tell us is the pain that will follow. And it WILL follow. Except for the super rich.
Don't get me wrong, I believe in, and actually do, pay my full tax rate. Honestly. I take no deductions. At all. Why? Because I believe that the tax money I pay goes to fund programs that I have used to my advantage, and many that I continue to use. In a sense, I'm just paying the system back for that I "borrowed". And it's important to remember that we have the luxury of having a national freeway system, not a national toll-road system. We have a national park system that is the match of any. We have institutions of higher learning that are subsidized by our tax payments that provide education for those who wouldn't be able to pay the rate that for-profit, private institutions charge. We have a Coast Guard that keeps our nation's shoreline safe from invasion, and rescues us when we tip over our boats or our cruise goes awry, not to mention the heroic work they do for the fishermen of our oceans. We have a military that keeps us as safe as they possibly can from foreign invasion and whose clandestine work often goes unheralded, and unappreciated; but not for certain military units dismantling terrorist cells worldwide BEFORE they can reach our shores, bombings and other acts of terrorism would be as common place here in America as in parts of the Middle East, if not more so.
But, we have rancor and dissent, too. We have a new political faction that feels that taxes are evil and should be repealed, eliding the fact that many of the services they take for granted would simply vanish without them. We also have a segment which believes that government should provide for them cradle-to-grave, despite the fact that we have a national debt that's staggering and not one, but two political party entities which purport to represent the will of an America that wishes them gone, dead, divorced from the marriage of our union.
So, what path do we take out of our morass? I know no one with a crystal ball who can provide that answer. But I do know this for certain: If we do not address, civilly, all of the issues which plague our nation then we can expect that divorce to happen sooner rather than later. It would not surprise me to see the new South attempt secession again. I could foresee the Midwest going along with them. But I also have faith in our ability to weather even this perfect storm. Perfect shit storm, would be more like it. And it's all of our own making.
Failing to have a real leader with real, prudent ideas...not a Ronald Reagan whose trumped-up legacy is as much a fiction as any children's fairy tale...means that we'll continue to stagnate and will take our places as a has-been along with Britain, France, Spain, and Portugal. What we need is an FDR, a George Washington, or an Abraham Lincoln. We need someone with the clarity of mind, the willpower, and the charisma to lead us to a new place, a new road at the least, one that would take us to a common goal of respect for our fellows, civility in politics, and concern for our fellow planetary citizens. What we don't need is one of the loony tunes nut-fudge-fringe candidates put forth by some, today. We don't need leaders who seek to serve only their benefactors. We don't need leaders who seek to lead by division like so many in our current situation. We need someone who will lead us firmly together while respecting our differences, but like a good nanny or school teacher, one who will glance sternly at the offending parties to quieten them to maintain order while never stopping, slowing, or looking over her shoulder to see if the kids are following; she will know they are because they're holding hands, not pushing and shoving and trying each to run his own way.
And perhaps that's the real problem: We've forgotten as adults what we were taught in kindergarten - how to be nice to one another, share and share alike, and that everyone has to do her and his part to make the project work, whether it's the kid who came to school chauffeured in luxury or the poor kid with the hand-me-down wardrobe who rode the bus. Everyone. Together. "...One nation, indivisible, with liberty and justice for all".
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