On April 5, 2013 Bruce Bartlett writes in The Fiscal Times:
People overwhelmingly desire a balanced federal budget; it is easy for politicians to support this goal but close to impossible for them to find the votes for any specific package of spending cuts or tax increases that would actually bring it about. The same is true of tax reform, especially one that is revenue-neutral, which by definition is a zero-sum game; one person’s or business’s tax cutting reform is necessarily offset by another’s tax increase.
It would be better from a macroeconomic point of view if companies replaced at least some of their debt with equity. But the benefits of tax-deductible interest are too great. Thus something needs to be done with the tax code to get them to change their financial structures.
Ideally, we should fully integrate the corporate and individual income taxes. Under such a system, all corporate profits would be attributable to shareholders whether paid out as dividends or not. Net operating losses would also be attributable to shareholders and deductible on individual returns. This would completely eliminate distortions created by the corporate income tax. The present corporate tax could be retained as a withholding tax, with such tax payments also attributable to shareholders.
What we need to achieve as an end result is to create new capitalists owners of FUTURE productive capital asset wealth to propel economic growth resulting in more “customers with money” and personal incomes and financial retirement security to support necessary government practices through taxation. We need to encourage corporations to raise money capital to create physical capital by issuing and selling new stock to ordinary Americans, who would purchase the stock via pure capital credit loans and pay for their acquisition out of future earnings on the investments.
The proposed Capital Homestead Act would make it possible for every American to become a viable owner of FUTURE productive capital. According to its architects, it would “enable every man, woman, and child to accumulate wealth and receive dividend incomes from newly issued shares in new and growing companies, without being taxed on the accumulations (including property and shares gained through inheritance, savings, and arrangements like Employee Stock Ownership Plans/ESOPs, Community Stock Ownership Plans/CSOPs, and Community Investment Corporations/CICs). In addition to serving as a source of capital credit for corporate workers, CHAs would also provide an ownership-building account for individuals who do not work for profit-making enterprises, 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.”
Under the Just Third Way and Capital Homesteading more just and simple tax system, the following is proposed:
• Eliminate all tax loopholes and subsidies,
• Provide an 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 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, 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.
• The tax rate would be a single 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 debt, but 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.
• As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose holdings exceeded $1 million, 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 man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.
• The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,
• The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.
• Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but
• Would not require citizens to reduce their funds for consumption to purchase shares.
The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
