On January 20, 2018, Aimee Picchu writes on CBS News:
Income inequality is creating what charity Oxfam International calls a “deeply shocking” trend: Billionaires are not only growing wealthier and adding to their ranks, but the poorest half of the world is losing wealth at a time when the world’s economy is expanding.
The economic climate is accruing outsized gains to billionaires, whose fortunes rose by 12 percent last year, while the poorest half of humanity — 3.8 billion people — saw their wealth decline by 11 percent, Oxfam found. Its report will be released at the World Economic Forum in Davos, Switzerland, which begins Tuesday and draws billionaires like Microsoft co-founder Bill Gates, policymakers and corporate leaders.
With the benefits of the economic expansion shifting to the world’s richest people, billionaires are adding $2.5 billion in wealth each day. And every two days, a millionaire jumps into the ranks of the billionaire class, Oxfam said.
Oxfam, which has been studying the dynamics of wealth inequality since 2011, said the latest findings suggest that a new economic approach is needed to help recenter the wealth distribution. Many policy makers and economists have believed that economic growth will lift all boats, but that isn’t playing out for billions of people across the globe. One reason: Tax rates have dropped to recent historic lows, allowing the rich and corporations to hold on to more wealth, said Paul O’Brien, vice president for policy and advocacy at Oxfam America.
“The economic figures are going in the wrong direction. This isn’t just another year of the same old reality — it’s getting worse in terms of the accumulation of extreme wealth,” O’Brien said. “It’s deeply shocking to us.”
Tax cuts and trickle-down theories
The top-heavy distribution of wealth has coincided with a drastic reduction in tax rates for the world’s richest, Oxfam said. It found that the top rate for the rich in developed countries plunged from 62 percent in 1970 to 38 percent in 2013. In 2017, President Trump reduced tax rates for individuals and corporations, a decrease that favors the rich and businesses.
“The leadership we’ve had has put in place the policies that widen the inequality gap,” O’Brien said. “What we are calling for is leadership and policies that slow the gap.”
To be sure, conservative policy makers believe that lowering tax rates on the rich and businesses will spur growth, eventually providing more jobs and higher wages to middle- and lower-income workers. Yet there’s little economic evidence that such policies deliver on their promises.
A “human economy”
Instead of an economy that stresses growth at any cost, Oxfam is pressing for what it calls a “human economy.”
“Fundamentally the human economy is built from different principals than the growth economy,” O’Brien said. “For years, the consensus was, ‘Growth solves everything.’ But that has fallen apart. Our planet has limited boundaries. We can’t burn more, use more, and break through ecological boundaries that are essential for sustaining human life.”
The “human economy” would provide health care, education and gender equality to people across the globe, he said. “All the data show that educating your children is the best way to build a healthy economy and create genuine shared wealth. We need to get kids into quality schools, and get rid of these legal and cultural barriers to women being treated unfairly in the workplace, being burdened and discounted.”
Raising taxes on the world’s richest people and corporations would help fund those programs, with Oxfam calculating that boosting taxes on the richest by 0.5 percent would raise enough money to educate the 262 million children who currently don’t receive an education and provide healthcare that would save 3.3 million people from preventable deaths.
Higher taxes on the rich?
Whether the rich should pay higher taxes entered the political discourse this month after freshman Congresswoman Alexandria Ocasio-Cortez said the U.S. should raise taxes on the rich to their highest level since 1980, just before Ronald Reagan started hacking rates.
The top tax on the wealthy should rise to as high as 70 percent, Ocasio-Cortez told “60 Minutes” earlier this month. That approach stands in stark contrast to Mr. Trump’s 2017 Tax Cuts and Jobs Act.
Yet higher marginal rates on the richest Americans would mark a return to the more progressive tax structure of the 1950s and 1960s — under Presidents Harry S. Truman, Dwight D. Eisenhower and John F. Kennedy, for instance, the rate on those in the top bracket topped 90 percent.
“We totally agree with the congresswoman,” Oxfam’s O’Brien said. “We think higher taxes for the extremely wealthy have to be a fundamental element of a healthy economy.”
Gary Reber Comments:
If you haven’t figured it out already, these billionaire individuals and families are wealthy because they OWN productive, wealth-creating, income-producing capital assets, acquired through a system that requires past savings in order to take the risk to invest.
The solution should be obvious. That is to empower EVERY child, woman, and man to acquire personal ownership stakes in the productive capital assets formed in the future economy, without the requirement of past savings and without having to be subject to personal financial risk. This solution is the essence of the proposed Capital Homestead Act, a modern-day Homestead Act, but instead of land ownership it is the non-human productive capital assets that are the primary means applied to producing goods, products, and services.
The rise of billionaires and millionaires is the result of a system that facilitates concentrated wealth-creating, income-producing capital asset ownership in viable business corporations.
What we need to do is to focus on the financing of new wealth-creating, income-producing capital asset projects, while simultaneously creating new capital owners. We need to incentivize the corporations growing our economy to pay out their full earnings to their owners and stop their practice of retained earnings and corporation debt financing. We need to empower EVERY child, woman and man to acquire ownership in the growth of viable corporations, purchasing new stock issues representing new capital asset formation. The financing needs to protect commercial banks from risk of default on the capital credit loans issued, using capital credit insurance. The loans need to be interest-free and solely repayable out of the future earnings of the investments in the corporations growing the economy with viable projects and expansion of their operations. Citizens should NEVER have to have past savings to pledge as loan collateral security, or reduce their earnings and benefits from employment. We need to create an economy where workers, as individuals, own the corporation they are employed by. There should be no requirement to be employed so that other citizens not employed by business corporations can use the financing to purchase new full-earning payout and voting stock issues, repayable out fo the future earnings of the investments.
Under the JUST Third 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.
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-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 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, impose a transfer tax 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 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 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 using interest-free capital credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods, products and services produced by the added technology, renewable energy systems, manufacturing factories, 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, but
- Would not require citizens to reduce their funds for consumption (savings) to purchase shares.
The end result would be 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 the State and whatever elites control the coercive powers of government.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/10/jtw-graphicoverview-2014.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
Support the enactment of the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/.
