Essentially the United States has two tax systems: one taxes the wealth people accumulate, the other taxes the labor people perform. Above: At the G-8 summit in Northern Ireland, world leaders discussed globe-trotting corporate tax dodgers.(Matt Dunham / Associated Press / June 18, 2013)
On June 20, 2013, Bob Lord and Sam Pizzigati write in the Los Angeles Times:
Imagine a society with two tax systems. One taxes the wealth people have accumulated. The other taxes the labor people perform. This society seems to be getting along well enough, raising enough tax revenue to finance the public goods and services that voters have told lawmakers they want to see supported.
Now imagine that lawmakers have decided to cut the tax rates on wealth and raise them on labor. At the same time, the amount of wealth subject to the lower tax rates is rising as income from labor is shrinking.
That society, we would agree, is asking for trouble. In real life, would any society choose to take such an unsustainable course? One already has — the United States since 1980.
As a member of the Center for Economic and Social Justice (CESJ) (www.cesj.org), I advocate the proposals for tax reform and national debt reduction. Briefly, we advocate under the proposed Capital Homestead Act a single rate of personal income tax, set at a level to balance the budget and eventually eliminate the national debt. The single rate would be levied on all income from whatever source derived, above generous income exceptions for the poor and middle-income citizens. There would be no differentiation between labor and capital incomes, or incomes from charity, gifts, welfare or gambling. All other taxes would be abolished, including sales and property taxes.
As we propose, in addition to a lifetime tax deferral on income used to make debt service payments on assets in a Capital Homestead Account (a tax-sheltered asset accumulations that we are currently estimating for Americans at $1 million), non-dependents would have an annual income exemption we estimate at $30,000, while dependents would have an estimated annual income exemption of $20,000. A “typical” family of four would pay no income taxes until aggregate income reached $100,000. The effective tax rate for individuals would thereby be moderately progressive. Anyone whose income fell below the exemption would be provided with government vouchers for necessary goods and services if private charity proved insufficient.
To encourage full payout of dividends, even where the full payout provision is not mandatory (i.e., not attached to Capital Homestead shares), dividends would be tax-deductible at the corporate level, while treated as ordinary income at the personal level. Further encouragement to finance growth by issuing new shares instead of retaining earnings would, if necessary, be given by raising the corporate tax rate to higher levels than at present.
For more information, see 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
Also, see the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690
http://www.latimes.com/news/opinion/commentary/la-oe-pizzigati-tax-system-20130620,0,1078537.story
