The business cycle (and overproduction) is a myth. The problem is the tax cut cycle. When taxes are cut on capital gains and executive compensation, money is moved from consumption to speculation (which is savings, not investment in plant and equipment), leading to the creation of junk assets (such as mortgage backed securities and an overfunded oil futures market). When these financial products are sold to households and investment funds, they are revealed to be garbage (for example, single family rentals that are not well maintained or overpriced housing in the homebuyers market) and that is what crashes the economy.
Also, when taxes are cut, increased debt is required (which again, provides leverage for creative investment products) to keep the economy afloat. When taxes are increased, speculation decreases and people like Greenspan calls a balanced budget dangerous to capitalism. It is, but capitalism is investment, NOT THE FREE MARKET.
The reason wages have not gone up are two-fold. One, the minimum wage does not go up with inflation. Two, prices chase the median dollar, not the median household. The median dollar is at the 90th percentile. The reason for the spread, however, is bad math. Seriously. We give wages in the public and private sector on an equal percentage basis (high executive salaries come from speculation - because they are paid with capital gains or borrow against their shares - and borrowing is not income). If wages were increased on an equal dollar per hour basis, inequality would go away in a generation.
Taxes on incomes reward the rich for failure in their investments (capital loss), which offsets their salaries. If we had a nice value added tax on goods and services and another on assets,, it does not matter how they got their money, When they buy either stuff or stock, it would be taxed. No dodges. Also, if high incomes from salaries and dividends faced a residual graduated income tax - with no deductions for anything, then the combination of consumption VAT, asset VAT, a net business receipts tax to distribute social benefits with pay, rather than by government and that residual income tax would end high salaries (because the combination of taxes would result in marginal rates in the 80s) and, most importantly, cuts in worker salaries to get more profit.
The irony of Fox News and Trump's opposition to socialism is that it had less to do with opposing equality and more to do with nuclear weapons. On Ukraine (not just the current war, but the first invasion and the sanctions from it), Trump was bought off by Putin - the guy from the KGB with the nuclear weapons - so Trump and certain Republicans in media and Congress who oppose aid to Ukraine are essentially backing Moscow. The irony is thick.
Again, the free market is not capitalism. Capitalism is the unfree market for wages (monopsony) and products (monopoly) where the capitalists pocket the economic rent. In a real free market, there would be no rent. The current use of stock options, grants and capital gains/dividend favored rates as executive compensation gives the CEO class all of the profits from wage theft and unfree consumer prices. Investors, especially institutional investors, only get a "normal profit." Normal profit is a decent dividend based on what the market for savings and dividends provides. Anything over that goes to the executives. Adequate taxes (as above) end the incentive to steal.
Because reactionaries always split workers by race, gender, immigrant status and sexuality, working class traditionalists vote one way and workers vote the other. Not a new thing, but it is why socialism is so hard to vote in. Pretty much impossible - especially because socialists always favor the hated minorities. Therefore, the path is employee ownership. to goose employee ownership, replace capital gains and inheritances taxes with the asset value tax at a high enough rate so that heirs and trust funds want a tax break. That tax break would be to expand the capital gains exemption for sales to an ESOP or COOP to sellers of public shares. Also, mark asset VAT to market at IPO, option exercise and the first sale after inheritance, gift or donation. If heirs (farmers, small businesses or shareholders) keep the operation going, no tax. When they bail out of these businesses - they pay on full value, not appreciation. Except if they sell to that ESOP or COOP.
The other challenge is to make ESOPs democratic, rather than capitalist lite. The answer to doing so is to give them better toys - such as housing and consumer finance from within and cooperative purchasing of housing and food - or housing with the ability to grow food, also clothing, education, healthcare and whatever the employee-owners wish to buy cooperatively. In other words, have workers control the means of consumption.
How to get this to happen. Make all asset capital gains taxable at one rate - including short term gains, through the use of asset VAT. Repeal death tax as above with zero rating for ESOP sales. No capital gains tax either - asset VAT would do that. Convert the deduction for sales taxes paid to a credit - essentially turning business taxes to a VAT. This is a tax cut and a way to end income taxes for most households - although the child tax credit would be distributed by employers as a deduction from their net business receipts taxes. State NBRT would also have deductions for education, from ESL to Community College/first two years of 4 year college and tech school, at the school of one's choice - including Catholic School. Also health insurance. While there would be NBRT surtaxes for higher salary and dividend payouts, the recipients would not have to pay - just the employer. The credits would end small business, because big companies would get a tax break for rehiring such workers as staff rather than contractors.
The GOP will not resist such tax reforms. Cut taxes - get communism.
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