On August 10, 2019, Nathan Schneider writes on The Nation:
What if employee-owned businesses were the key to a healthier, more humane economy?
As a human-resources professional, Jennifer Briggs got used to firing people.
She’d refer to it as “layoffs,” “right-sizing,” or whatever euphemism her employer wanted her to use at the time. She was a foster child turned single mother who had relied on food banks to feed her kids, and, as unpleasant as it was, managing and cutting employees at a large public company became her livelihood. So she compartmentalized the painful parts as best she could. “I downsized a lot, and it wore me down,” Briggs says. But, she adds with half a smile, “I’m really good at it.”
In 2004, Briggs took a job as vice president of human resources and organizational development at New Belgium Brewing in Fort Collins, Colorado, not far from where she grew up. She liked that the company already had a culture of shared governance and a profit-sharing plan for employees. And it was during her tenure that cofounder Kim Jordan called an all-hands meeting and announced that she had sold the company.
The several hundred anxious employees each received envelopes; inside, Jordan told them, they’d learn the identity of the buyer. To the sound of an auditorium full of paper-tearing, one by one they found themselves holding a mirror. The tearing turned into silence, then cheering.
Since December 2012, the company has been 100 percent employee-owned.
This counterintuitive turn of events—that hundreds of people could unknowingly, without paying a cent, buy the company they work at—is only possible (and actually somewhat commonplace) thanks to a device known as the employee stock ownership plan, or ESOP.
Beginning in 1974, Congress has recognized the ESOP as a tax-advantaged retirement plan, like a pension program or a 401(k). This means that in addition to investing employees’ savings in the broader stock market, the ESOP could invest in their company, even to the point of owning the whole thing. In the process, companies can issue shares to employees with money borrowed from the seller of the company or a bank and pay it back with employer retirement contributions and any dividends that the shares earn. If their company does well, rank-and-file employees can end up reaping gains far beyond their wages, to the point of low-wage workers retiring as millionaires.
Through ESOPs, there are about 14 million employees at 7,000 firms in the United States coowned by part or all their workers, from the 200,000-strong Publix Super Markets to the 200 of Bob’s Red Mill. (In comparison, there are only a few hundred worker cooperatives, the older major form of broad-based employee ownership.) The National Center for Employee Ownership lists over 300 lenders, accounting firms, and consultants around the country that specialize in servicing ESOPs. After leaving New Belgium in 2017, Briggs became one of those consultants. Colorado’s Governor Jared Polis—who began his campaign at an ESOP grocery store—appointed Briggs to a new commission on advancing employee ownership in the state. Rather than cutting jobs, her job has become making owners.
Employee ownership is one of those mythical, elusive ideas that can claim bipartisan support in Washington. Senator Russell Long, a centrist Democrat, arranged for the earliest ESOP legislation in the 1970s. One of the model’s loyal supporters over the years has been Paul Ryan, the Republican former House majority leader. The 2016 Democratic Party platform approved of profit-sharing plans as a means of countering wealth inequality, and its Republican counterpart celebrated ESOPs as a means to “enable workers to become capitalists, expand the realm of private property, and energize a free enterprise economy.” But lately the most strident support has been coming from the left.
Worker-owned businesses are part of Representative Alexandria Ocasio-Cortez’s resolution for a Green New Deal. Bernie Sanders has introduced employee ownership legislation in the Senate and in May proposed mandating employee ownership for large companies. Fellow presidential candidate Senator Kirsten Gillibrand introduced the most important new employee ownership law in years, the Main Street Employee Ownership Act, which President Trump signed (knowingly or not) in 2018 as part of a defense appropriation. In a hyperpartisan climate, the cosponsors were split nearly down the middle.
In Newark, New Jersey, Mayor Ras Baraka has established a fund to finance conversions of local companies to employee ownership. “Ultimately, we need to spread the access to capital,” he says. “People need to own the things that they produce. It helps push back against gentrification, against displacement.” City-backed employee ownership efforts are also underway in Madison, Wisconsin; New York City; Oakland, California; Philadelphia; and elsewhere.
Nationwide, an initiative called Fifty by Fifty has set out to turn 50 million employees into owners by 2050. Behind its strategy is a demographic reality: More than 2 million baby-boomer business owners are set to retire in the coming years, often with no succession plan. Could their workers fill the void?
“The chance to dramatically expand employee ownership is greater than ever,” says Marjorie Kelly, an executive vice president at the Democracy Collaborative and a cofounder of Fifty by Fifty. And “the real potential for an employee-centric economy lies with ESOPs.”
The ESOP research agenda has long been housed at Rutgers University, which is now home to the Institute for the Study of Employee Ownership and Profit Sharing, where I recently completed a fellowship that funded me to contribute to the growing body of work on ESOPs and structures like them. At the institute’s conferences, lefty worker coop activists and politicians mingle with ESOP executives and the likes of Michael Keeling—the longtime president of the ESOP Association lobby, a Ryan enthusiast, and a Texan who befriended George W. Bush at Yale. Keeling’s contributions are not so much conference presentations as orations, and this June he used his time to implore those gathered not to fall into petty partisanship and recognize the transpartisan opportunity that employee ownership represents.
A one-sided strategy, anyway, would drown in irony: The socialist left has embraced the invention of an avowed capitalist.
When Louis Kelso appeared on the Bill Moyers interview show A World of Ideas in 1990, Moyers had trouble categorizing his guest. Kelso, who’d grown up in poverty, became a successful corporate lawyer. He wore only blue-and-white, polka-dot bow ties. During World War II the Navy assigned him to Panama, and he used his plentiful downtime there to compose a sprawling economics treatise, which a client and friend, the popular philosopher Mortimer Adler, helped condense into the nearly 300-page Capitalist Manifesto. When it appeared in 1958, it was a national best seller. By the time of the interview, a year before Kelso’s death, he was best known for devising the ESOP, which bore the whiff of communal ownership.
At one point, Moyers asked him whether he considered himself a capitalist or a socialist. “I don’t know what I am. I don’t fit any of the definitions. I think I’m the capitalist of tomorrow,” Kelso responded.
The animating idea of Kelso’s career, which he came to as a student and sailor and held to unfailingly afterward, was that the production of market value results from two kinds of inputs: labor and capital. As technology advances, labor becomes less important and capital more important. Capital, in turn, will end up claiming a greater share of the resulting profits. Kelso followed Karl Marx’s analysis of the problem of capitalism—that capital wants to eat labor alive—but inverted the solution. Rather than folding the means of production under a workers’ state, he wanted to create more capitalists. That, he believed, would ensure that ever more people own the means of production and reap their capital’s returns. Creating more capitalists, he thought, would protect democracy and capitalism alike from capture by a small, wealthy elite.
He didn’t think the crushing inequalities capitalism could produce are capital’s fault; the problem, as he saw it, is that only the wealthy have the opportunity to become true capitalists—to borrow and live off what they own and to coown the means of production. If anyone could do those things, capitalism would be an equalizer.
At the time, the economics profession of the time wanted little to do with Kelso. A 1970 Time article quotes Milton Friedman calling Kelsoism “a crackpot theory” and “Marx stood on its head.”
The trouble with Kelso, though, was that he had more than a theory. While publishing his polemics, he was also devising and testing the ESOP—first through real-life experiments in the 1950s, beginning with a Bay Area newspaper chain that became fully employee owned. He leaned Republican, and for decades he tried to interest Republican politicians in providing the policy support his models needed in order to spread. But it was in Long, a centrist Democrat, that Kelso found a champion to turn his theories into law.
The form that ESOP legislation took, as a retirement plan inscribed in tax and employment policy, was an uncomfortable compromise for Kelso. “Louis never intended that,” recalls Patricia Hetter Kelso, his coauthor and eventual spouse. “It was Senator Long’s idea. Louis argued with him quite a bit about it.” Long insisted that adding the ESOP to retirement legislation was a chance that would not soon come again, so they went with it.
The ESOP, after all, was supposed to be only the beginning. The Kelsos’ last book, in 1986, was subtitled Extending the ESOP Revolution. It referred to the ESOP as not the goal in itself but merely “the Trojan Horse for democratizing American capitalism.” Coowning workplaces was meant to whet people’s appetite for other kinds of capital ownership, inviting them into a world in which more of their income might come from what they own than from where they work. Unlike Baraka, for instance, Kelso opposed raising the minimum wage, which he thought would delay and inhibit the real goal of democratizing capital.
The ESOP is only one of eight proposed plans that appear in the Kelsos’ 1986 book—ranging from a consumer stock ownership plan (CSOP) for companies like grocery stores and electric utilities to plans for coowning infrastructure and commercial real estate. Each follows the spirit of the ESOP: Set up a trust that can borrow money on behalf of ordinary people, buy stock on the promise of future earnings, and distribute the proceeds back to the new capitalists, as Kelso liked to call them. The beneficiaries don’t need to put up their own cash. After all, as Kelso saw over and over in his lawyering, rich people never do. If they can get away with making investments on borrowed money, why can’t everyone else?
Even well-planned capitalism still has its crises, however. Spectacular failures in ESOP companies like Enron and United Airlines left employees with little to retire on and tarnished the idea’s public image. Critics on both the right and left have wondered why ESOPs deserve the public subsidy of favorable tax treatment. And although unions have sometimes participated in setting up ESOPs—such as at United—they have hardly embraced the Kelsos’ call, which constitutes the conclusion of their final book, for unions to embrace a “new role” of stewarding their members’ newfound coownership plans. But if unions don’t take the job, others might.
When The Capitalist Manifesto was first published, the employment system seemed to be working in the United States. Wages were rising along with the growing economy. Kelso’s early books bore the burden of having to convince readers that seeds of trouble were germinating beneath the apparent prosperity. In 1972, Nobel laureate economist Paul Samuelson penned a dismissal of Kelsoism on the basis of its failed predictions. But that was just around the time that labor’s share of income began to flatline as capital’s spoils increased. About half of US households own no stock whatsoever, and most stock is owned by those at the top of the pyramid. We no longer have to be convinced that there is a problem.
A Kelsoist echo rings through the recent calls among Silicon Valley CEOs and radicals alike for a universal basic income, a nonlabor income for everyone. These proposals generally involve taxation and redistribution, not capital ownership. But as government seems unlikely to adopt sweeping new entitlements and the platform bubble bursts, ownership is coming into the picture again.
After years of refusing to recognize their workers as true employees, Uber, Lyft, and Airbnb have tried to make them coowners. By 2018, all three companies had submitted letters to the Securities and Exchange Commission seeking permission to more easily issue their stock to their most loyal contractor-users. (Regulations would be more permissive for equity grants to standard employees.) The SEC was not especially obliging, nor were the companies’ motivations likely more noble than securing users’ loyalty ahead of risky IPOs. Nevertheless, the move indicates an oblique aspiration for at least some crumbs of Kelsoism.
Users and regulators could take these platforms up on their request but demand a more democratic form of corporate governance in return. Between the ESOP and CSOP, there might lie an ownership plan for platform users: a stock-holding user trust. Like an ESOP, it could buy stock with borrowed money and return the proceeds to the people who help make the shares gain value. It could also lend users governance rights over their platforms’ behavior. User trusts could thus help platforms address their mounting accountability crises, from data stewardship to labor abuses. Tech founders might even someday aspire to an exit that involves selling their start-ups to their users rather than to speculators.
User ownership could also be imposed as a tool of regulation. Antitrust authorities might employ it to tame a company that holds a natural monopoly. Just as Elizabeth Warren’s Accountable Capitalism Act proposes to require employee participation on the boards of the largest companies, the largest platforms might be required to make space for user participation in governance. Warren, like Kelso, says she is out to save capitalism. But the truth is that the capitalism of more capitalists might start to seem hardly recognizable as capitalism.
Although ESOP growth has slowed in recent years—by far, most ESOP participants are in plans created before 1999—the nature of ESOPs has been changing. By law, the model is remarkably management-friendly and entails little in the way of worker governance. But employee ownership increasingly looks like its form at New Belgium Brewing, where forklift drivers might go home with balance sheets to study, where decisions at the top emerge from meetings on the shop floor. To complement their ESOPs, companies are becoming benefit corporations, encoding a social purpose into their legal documents. The difference in ownership takes on a life of its own.
If the political moment for employee ownership starts a wave of business conversions, there are no utopian guarantees. It could mean merely more of a certain kind of transaction, or it could continue a backdoor transformation of the relationship between labor and capital. Both Kelso the capitalist and his leftist inheritors are rooting for transformation—for opposite reasons that may somehow be more or less the same.
https://www.thenation.com/article/esop-capitalism-worker-owner/
Gary Reber Comments:
I am a Kelso “inheritor” and continue the advocacy for a transformation to an Ownership Society. Louis Kelso’s work today is carried on by the Center for Economic and Social Justice (CESJ), based in Washington, D.C. Norman G. Kurland is the President of the organization and author of numerous books and articles. I am a member of the Board of Directors.
As a matter of background, during the late 1960s and throughout the 1970s, following university doctorate studies in economic development and urban and regional planning in Sweden, I became a political economist and economic justice advocate. During that period I co-founded the advocacy-consulting firm Agenda 2000 Incorporated with my mentors Louis O. Kelso, John W. Dyckman, and Kurland.
Louis Kelso was a leading corporate tax and financial lawyer, investment banker, and political economist based in San Francisco and the author of The Capitalist Manifesto (Random House 1958), The New Capitalists (Random House 1961), Two-Factor Theory: The Economics Of Reality (Random House, 1967), and later Democracy And Economic Power: Extending The ESOP Revolution Through Binary Economics (Ballinger Publishing Company, Cambridge, Massachusetts, 1986; reprinted University Press of America, Lanham Maryland, 1991). The first two books were co-authored with Mortimer J. Adler, President of the Institute for Philosophical Research, former professor of the Philosophy of Law at the University of Chicago, and author of The Idea Of Freedom. Kelso’s latter two books, Two-Factor Theory: The Economics Of Reality––How To Turn Eighty Million Workers Into Capitalists On Borrowed Money And Other Proposals and Democracy And Economic Power: Extending The ESOP Revolution Through Binary Economics, were co-authored by Patricia Hetter Kelso, his collaborator and wife since 1963. The four books present Kelso’s theory of binary economics (or the economics of reality), which describes labor and physical capital as independently productive and the financial tools for democratizing productive capital ownership in a private-property, free-market economy where most products are exponentially made by physical capital. For more reading visit www.kelsoinstitute.com. Free downloads of The Capitalist Manifesto and The New Capitalists are available at http://www.kelsoinstitute.org/pdf/cm-entire.pdfand http://www.kelsoinstitute.org/pdf/nc-entire.pdf, respectively.
The Capitalist Manifestowas a critique of Karl Marx’s attack on “capitalism,” who like all collectivists, thought the way to restore “economic justice” is to attack the market system and abolish the institution of “private property” in the ownership of capital. Kelso and Adler defined “economic justice” in a way that provides universal access to future capital ownership opportunities for EVERY child, woman, and man, without redistribution. That is, reform the tax and monetary system to enable every child, woman, and man to purchase capital using “pure”, interest-free capital credit collateralized with insurance, and pay for it out of the future earnings of the capital itself. This is the smart means to acquire capital, which wealthy people fully understand. As Kelso saw over and over, as a corporate tax attorney, wealthy people do not put up their own cash, and if they can get away with making investments on borrowed money, why can’t everyone else?
Kelso’s invention of the leveraged Employee Stock Ownership Plan (ESOP) was a first step away from the injustices of both monopoly capitalism and all forms of collectivism. He offered a JUST, third way in which everyone controls his or her life, and safeguards liberty, by having private property in capital.
John Dyckman was Professor and Chairman of the Graduate School of Urban and Regional Planning at the University of California, Berkeley and the author of numerous books and articles on urbanization. Under Dyckman, I taught binary economic development theory in the graduate program while running San Francisco-based Agenda 2000 and the advocacy Institute For The Pursuit Of Economic Justice at Berkeley. I founded both organizations.
Throughout this period, I was a guest lecture at universities throughout the United States, England, and Europe, espousing binary economics and democratized, broadened individual capital ownership. I once made a presentation on binary economics to the Institute for American Studies of the Union of Soviet Socialist Republics (USSR).
In 1974, I was a candidate for the United States Congress, running on an economic justice platform (see http://www.foreconomicjustice.org/?p=336). The year prior I testified before Congress on tax reform (see http://www.foreconomicjustice.org/?p=6641).
When we study today’s American society, the wealthiest 400 Americans own more productive assets than the poorest 150 million Americans. The wealth and income gap between the top 1 percent and the bottom 95 percent continues to widen. Most Americans have become wage slaves, welfare slaves, charity slaves, or consumer debt slaves. And the poor are increasingly poor with more and more of the unemployed no longer counted in the work force.
The solution, as Louis Kelso clearly saw, is our government should guarantee that every citizen enjoys an equal opportunity to acquire and use such social goods as capital credit to purchase self-liquidating productive capital assets, i.e., assets that produce marketable goods and services to pay for themselves out of their own earnings (“future savings”) and thereafter generate an income for the owner. It is with this goal that our government needs to establish Justice and promote equality of fundamental human rights and opportunities for every child, woman and man to become empowered to develop to their fullest potential.
The task ahead is to focus public attention on the need to organize in social justice to reorient political philosophy back to its roots in essential human dignity and justice, and the necessity for empowering every citizen through Capital Homesteading with the equal opportunity and means to acquire and possess private property in capital as a fundamental right of citizenship and as the chief means of empowering people to protect their lives and liberty. Such would build a just free market-based foundation of economic democracy to increase the effectiveness of political democracy, thus reversing the dangerous trend where citizens have become increasingly dependent economically on government.
Though some political philosophies embrace the idea of a universal basic income, a non-labor income for everyone, these proposals involve taxation and redistribution, not capital ownership.
While the ESOP is embedded in law, this financing mechanism ONLY applies to those who are employed in for-profit corporations, leaving out far more than half the American population. As well not all ESOPs are created equally, nor do they provide for an equal allocation of the new stock issues representing the investment in future capital projects. Nor do ESOPs, as currently organized, provide for worker governance. Thus, in reality, ESOPs are only a part of the solution.
Economic Democracy has yet to be tried. In Kelso’s words, “a democratic capitalist economy is a private-property, free-market economy in which goods and services are produced through the voluntary and universal cooperation of concurrent labor workers and ‘capital workers’ [those who own the tools] under a politically democratic government.” At present, the United States economy, nor, for that matter any other economy, does not operate as a private-property democratic-capitalist, free-market economy. What needs to transpire is an understanding of binary economics along with instituting “pure”, interest-free capital credit mechanisms, collateralized with insurance, that will implement the goal of broadening productive capital ownership simultaneously with the productive growth of the economy in ways wholly compatible with the U.S. Constitution and the protection of private property.
Former President Obama stated: “What’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality.
Technology and automation are key to building an affluent future economy, as the origin of productivity growth in the future will continue to be automation. Because of this, the relative standing of labor will decline, and Americans will no longer be secure in earning through a job. Technology’s increasing power is exponential, and this advanced productive capital is purely labor-displacing. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in turmoil and upheaval, if not revolution. Thus, it is imperative that we finance this affluent future economy using, non-savings-required, insured capital credit methods that create new owners simultaneously with the growth of the economy.
Kelsonian binary economics and the various “pure”, interest-free credit mechanisms derived from its understanding are not “socialist” or “communist” solutions but are based on the principles and dynamics of a private-property free market economy. When understood, the current system is exposed as a system rigged to continually concentrate the ownership of capital in the 1 to 5 percent of the population. Also exposed are the dire moral implications of the current system, which is presently propelled by greed in our society. A new system that would ensure equal opportunity for every child, woman, and man to acquire productive capital with the earnings of capital and broaden its ownership universally does not require people to be any better than they presently are, but it does enable our society to leverage both greed and generosity in a way that honestly recognizes and harnesses productive capital as the factor that exponentially produces the wealth in a technologically advanced society.
The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need, so they invest their excess in new productive power, making them richer and richer through greater capital ownership –– the means used by the wealthy to become more wealthy. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or government welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.
While Americans believe in political democracy, political democracy will not work without a property-based free-market system of economic democracy. The system is the problem, but it can and must be overhauled. The two prerequisites are political power, which is the power to make, interpret, administer, and enforce laws, and economic power, the power to produce goods, products and services, whether through labor power or productive capital.
The political power that can be wielded as a result of concentrated capital asset wealth ownership has resulted in a rigged system that ensures the present-day wealthy capital ownership class will get richer and essentially own and control the future, while the vast majority of Americans will suffer increasing economic inequality and fall further and further in terms of earnings and quality of life. How the system is structured makes a big difference in whether or not individuals have an equal opportunity to succeed.
What others and I at Agenda 2000 and the Institute For The Pursuit Of Economic Justice advocated was embracing the goal of teaching working people, the 99 percent, to become capital “workers,” those who contribute productivity through their individually-held (not collectively), privately-owned capital, which is employed in production to supplement their being a labor worker or replace the wage income from their labor entirely. Today, working with my colleagues at the Center for Economic and Social Justice and ForEconomicJustice.org, the goal into the future is for all Americans to be capital “workers” (applying the “tools” they OWN to produce) and not be labor workers dependent on labor earnings too much of our lives. We should all be productive and produce goods, products, and services in a way in which the current and future state of technology permits. Not only is our right to life denied if we don’t have effective access to the ownership of capital, our liberty is denied because without economic power our political power is useless. Thus, the national economic policy should be universal participation in the ownership of wealth-creating, income-producing capital, alongside REAL, not artificially-induced, full employment of the labor workforce as a direct result of building a future economy that can support general affluence for EVERY citizen.
At present, there is a brewing power struggle going on in the United States between individual human beings (citizens) and the plutocratic powers who manipulate our government and the would-be plutocratic powers (top corporate executive managers and financial barons). What the 99 percent movement should be about is returning America to economic democracy. If we do not achieve economic democracy, then plutocracy will lead to fascism — the ownership of productive capital by the rich and by their institutions.
As Kelso would say, today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.
The CESJ advocates a JUST Third WAY free-market system that economically empowers all individuals and families through direct and effective ownership of the means of production.
The CESJ is calling for a Capital Homestead Act (CHA), which takes its lead from the Homestead Act of 1862. The Homestead Act offered the landless white citizens of America part-ownership of the country by giving them 160 acres of frontier land, free, if they produced on it income for themselves and their families for a period of five years. Of course, the finite free land divided up fast and not EVERY citizen became a landowner at a time when owning land was the most valued capital asset. Also it required the aspiring landowners to labor and work the land to make it productive.
In Lincoln’s America of 155 years ago, the problem confronting the vast majority of the citizens of our nation was that most people owned no land that they could work to sustain their livelihood. Today, the major problem for the vast majority of the people of our nation and of our world, for that matter, is that 99 percent of the people own no wealth-creating, income-producing capital (or a viable share) in a high-tech, capital-intensive economy. The Capital Homestead Act would make it possible for every American to become a viable owner of productive capital, without taking from the tiny elite who now own our corporations. The CHA is primarily a tax-sheltered vehicle for the democratization of capital credit through local banks. It would enable every child, woman, and man to accumulate wealth and receive dividend incomes from newly issued shares in new viable and growing corporations, without being taxed on the accumulations.
In addition toserving as a source of capital credit for corporate workers, the Act provides for Capital Homestead Accounts. CHAs would provide an ownership-building account for individuals who do not work for profit-making enterprises (or in place of), such as school teachers, civil servants, military personnel, police, and health workers, and for individuals who have no remunerative employment, such as the disabled, the unemployed homemakers and children.
The CESJ also proposes the following:
· Eliminate all tax loopholes and subsidies.
· Provide a tax exemption of $100,000 for a family of four to meet their ordinary living needs.
· Encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full-voting, full-dividend payout shares for broad-based citizen ownership.
· Eliminate the payroll tax on workers and their employers, but
· Pay out of general revenues for all promises for Social Security, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.
· Establish a single tax rate for all incomes from all sources above the personal exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term national debt. The poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes which under some tax proposals would be exempted from any taxes.
· At death, individuals should be discouraged from passing on their wealthy estates solely to their heirs. As a substitute for inheritance and gift taxes, impose a transfer tax on the recipients whose holdings exceed $1 million in value, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.
· The Federal Reserve would stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman, and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to purposely acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.
· The CHAs would process annually an equal allocation of productive credit to every citizen to specifically and exclusively purchase full-earnings, full-dividend payout shares inqualified corporations, both established and start-ups, needing funds for growing the economy through viable self-liquidating capital formation projects and private sector jobs for local, national and global markets.
· The shares would be purchased using interest-free capital credit wholly backed by projected “future savings” (earnings) in the form of new productive capital assets as well as the future marketable goods, products and services produced by the added technology, renewable and “green” energy systems, manufactories, rentable space for entrepreneurial endeavor and infrastructure, both repaired and new, added to the economy.
· Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, which employs the concept of “risk pooling” to spread financial risks evenly among the citizenry, but
· Would not require citizens to reduce their funds for consumption (savings) to purchase shares, nor would there be any other requirement other than being a citizen.
The Center For Economic and Social Justice advocates new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism — the main source of corruption of any political system, democratic or otherwise. The CESJ advocates the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who rely only on their labor worker earnings. Under the JUSTThird WAY’s more just and simple tax system, access to ownership of the means of production in the future would by provided to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right. The system was made by people and can be changed by people. Guided by the right principles of economic justice, “we the people” can organize and demand that the system be reorganized to make true economic democracy the new foundation for true political democracy. The result of this movement of new justice-committed leaders and activists will be inclusive prosperity, inclusive opportunity, and inclusive economic justice.
Visit the Center for Economic and Social Justice to explore the philosophy and solutions that will empower us to make true economic democracy a reality. Also, for an in-depth overview of solutions, see my article Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy.
