On January 21, 2019, Tami Luby writes on CNN Business:
The world’s billionaires are growing $2.5 billion richer every day, while the poorest half of the global population is seeing its net worth dwindle.
Billionaires, who now number a record 2,208, have more wealth than ever before, according to an Oxfam International report published Monday. Since the global financial crisis a decade ago, the number of billionaires has nearly doubled.
The annual study was released ahead of the yearly World Economic Forum in Davos, Switzerland, which brings together some of the wealthiest and most influential people on Earth. The 106-page report is meant to call attention to the growing gap between rich and poor.
The combined fortunes of the world’s 26 richest individuals reached $1.4 trillion last year — the same amount as the total wealth of the 3.8 billion poorest people.
Most of these mega-wealthy are American, according to the Forbes list of billionaires used by Oxfam. The names include Amazon’s Jeff Bezos, Microsoft’s Bill Gates, Berkshire Hathaway’s Warren Buffett and Facebook’s Mark Zuckerberg, who collectively are worth $357 billion, according to Forbes.
Oxfam recommends that nations tax wealth at fairer levels, raise rates on personal income and corporate taxes and eliminate tax avoidance by companies and the super-rich. It also advocates providing universal free health care, education and other public services — andensuring that women and girls also benefit. And it suggests investing in public services — including water, electricity and childcare — to free up women’s time and limit the number of unpaid hours they work.
Tax systems questioned
The report echoes policy positions embracedby the newly empowered Democrats in the United States, who are advocating for similar reforms.
“There is going to be a broader and increasingly energized public conversation in the US and globally on what a fair and effective tax system looks like that will be very different from today,” said Paul O’Brien, Oxfam America’s vice president of policy and advocacy.
Democratic Rep. Alexandria Ocasio-Cortez, a freshman lawmaker from New York, has proposed taxing the wealthy as high as 70% to fund a climate change plan she’s pushing called the “Green New Deal.”And a growing group of lawmakers, including Sen. Bernie Sanders of Vermont, are pushing for Medicare for All to expand the number of Americans with health insurance.
Those issues are global.
“In many countries, a decent education or quality healthcare has become a luxury only the rich can afford,” Oxfam said. “Every day, 10,000 people die because they lack access to affordable healthcare.”
The impact is disproportionately felt by women.”Girls are pulled out of school first when the money isn’t available to pay fees, and women clock up hours of unpaid work looking after sick relatives when healthcare systems fail,” the organization said, estimating that “if all the unpaid care work carried out by women across the globe was done by a single company, it would have an annual turnover of $10 trillion.
“The problem is felt acutely in places like India, the world’s fastest growing major economy. The country has one of the world’s lowest female labor participation rates. Recent data from the World Bank showed only 27% of women aged 15 or older were classified as working or actively seeking a job.
A report last year by the McKinsey Global Institute said India could add $770 billion to its economy by increasing gender equality, while Asia as a whole could boost its gross domestic product by as much as $4.5 trillion if more women are brought into the workforce.
Gary Reber Comments:
The root problem is the wealthy multi-millionaire and billionaire class have concentrated the ownership of productive capital assets (the non-human factor of production) within their tiny ranks. Through rigging the system, they have effectively created barriers to exclude the masses (as individuals) from gaining ownership stakes in an age where “machine” production is replacing the necessity for masses of human workers. If the masses now rely on performing a job to earn an income, and job destruction is the target for “machine” innovation and invention, then obviously without owning the “machines” fewer and fewer opportunities to work and earn an adequate income will lead to a poverty existence.
With respect to proposals put forth for lowering the corporate tax rate, the result will be that the wealthy capital OWNERSHIP class will have more money to acquire MORE capital asset wealth, all in the name of creating jobs. But the real prize is the capture of MORE capital asset wealth. Because Americans are not educated to understand the critical importance of owning capital wealth assets and how capital wealth is accumulated, they have not figured out why the rich are the only people who can invest and further concentrate the nation’s capital ownership wealth.
To stimulate the rate of economic growth and produce prosperity for EVERY citizen, we need to put money into people’s hands who will produce and spend money on consumption, not those who will simply use money to produce more without consuming, or consume without producing.
A primary reform of the tax code should require for-profit corporations to pay at least a 90 percent tax on corporate earnings but with the full pay-out of earnings dividends to owners tax deductible, shifting the tax burden to individuals. This would effectively eliminate retained earnings financing, which further builds wealth among those who already own corporations.
For-profit business corporations rely on retained earnings, i.e. earnings that are neither paid out to the workers as wages or profit sharing, nor distributed to the shareholders in the form of dividends, and debt financing to grow their businesses, neither of which create any new owners.
In the reformed system, there should be no tax loopholes, but earnings-dividends would be tax-deductible to the corporation, thus enabling corporations to escape paying any corporate taxes, as long as their full earnings are paid through to all of the owner-shareholders of the corporation. The owners then would be subject to ordinary personal income rates, with no advantages to capital gain income. The effect would be that when corporations need new money to expand and grow, they would issue and sell new stock. This new stock would be made available for purchase to EVERY American child, woman, and man using equally allocated annual capital credit accounts strictly for investment in qualified corporations, both established and viable start-ups, growing the economy. The capital credit-financed investments would be insured with capital credit insurance, interest-free and self-liquidating, solely repayable with the earnings of the new productive capital assets, and without the requirement of past savings on the part of the citizens.
To the question, “then how are corporations supposed to finance growth if they don’t retain earnings?”
The answer is by issuing new shares that people can buy on credit, collateralize with insurance, and repay with the future dividends on the shares themselves. This means that a lot more people will become shareholders, a lot more people will receive dividend income . . . and a lot more people will be paying taxes.
Who would purchase the newly issued stock corresponding to the financing of new, financially viable capital projects to be implemented by a multitude of business corporations? Every American child, woman and man would be empowered with equal access to insured, interest-free capital credit specifically to be used for such investment, without the requirement of past savings (denial of consumption) and with the full future earnings (future savings) of the investments used to pay off the capital credit loans. Once paid off (typically there to five years) the full income generated by the investments would then be available for consumption and the affluent enrichment of peoples lives. Thus, we would be able to effectively finance future economic growth and simultaneously create new capital owners.
A plan for access to an annual capital credit amount issued to EVERY child, woman and man should be based on the project’s annual value of growth. Thus, once the capital wealth accounts begin to be implemented, each year a new annual credit allotment would be issued to each individual citizen to be invested, and in a very short period of years, EVERY American would have built a significant ownership portfolio earning income for the new owners to support themselves and their families and provide for their retirement.
Such reform would generate mass purchasing power and keep prices and costs down. It would be a free market way to increase income. It would create new capital owners, including workers employed by the corporations, and provide for those workers true, direct production-based incentives to work better and more efficiently — regardless whether it’s the labor or the capital that’s responsible for production. After all, it doesn’t matter which does the actual production as long as the worker-owner owns both labor and capital.
By implementing such measures, we can simplify the tax code, reduce, if not eliminate, corporate income taxes, and yet raise the amount that can be collected in taxes.
A huge proportion of government spending, possibly 75 percent or more, is paid to people so they have enough income to meet the cost of living. If people can meet their own income needs out of dividend income, tax revenues will go up at the same time government spending is going down. The result: a “Balanced Budget”.
By eliminating ALL corporate taxes with the condition that ALL profits are paid out to the owners of corporations, future growth can be financed by issuing and selling new shares of stock in accordance with the value of the new capital asset productive capacity to be formed? Along with this proposal would be a proposal, such as the proposed Capital Homestead Act, to empower citizens, as well as those who are the employees of corporations, to acquire these newly issued shares using insured, interest-free capital credit loans, repayable out of the future earnings of the investments in the corporations growing our economy.
In this way, we can begin to broaden personal wealth-creating, income-producing capital asset wealth, ensure sustainable demand for quality products and services with EVERY citizen benefiting in new earning sources, and build a future, responsibly “green” economy that can support general affluence for EVERY citizen.
The economy would become more competitive as new corporations with viable capital formation projects would have a source of raising monies representing the asset value of the projects and not have their profits subject to corporate taxation. Thus, the new money creation would be directly tied to the asset value of growth projects. This is a win-win for corporations at they can simultaneously create new owners and thus “customers with money” to purchase what they produce and be further enriched as the economy takes off and grows responsibly and substantially to double digit percents annually with every individual citizen contributing productively through their capital assets and becoming a better “customer with money” to support what is being produced.
Tax reform and monetary reform necessarily go together. To make certain the private sector has enough money to meet the needs of commerce, agriculture, and industry for every person, the commercial banks backed up by the central bank would create money only when the new money can be backed by private sector hard assets.
Combine tax and monetary reform with an aggressive program of expanded capital ownership — financed by the commercial banks backed up by the central bank and made more feasible by a drastic overhaul of the tax system — and we can achieve a responsibly sound and growing economy. Not growth just for the sake of growth, or to make the rich richer, but because people’s living standards are rising, and the growth comes naturally.
Thus, this would solve our real problems of stagnant income and lack of taxpayer-approved investments in our infrastructure, education, healthcare, etc. that need addressing.
In conclusion, we need to begin instituting financial mechanisms, monetary and tax reform that empowers EVERY child, woman and man to acquire personal OWNERSHIP stakes in FUTURE capital asset projects (investments) using INSURED, INTEREST-FREE capital credit repayable solely with the FUTURE earnings of the investments, without the requirement of past savings.
