On September 24, 2019, Daniel Newhauser writes on Vice:
If millionaires and billionaires are squirming at the prospect of Sen. Elizabeth Warren’s wealth tax, wait until they get a look at what Sen. Bernie Sanders has in store for them.
Warren has made a two-cent tax on every dollar earned over $50 million a signature campaign promise — so much so that two of her aides dressed up as a pair of pennies at the Polk County Steak Fry in Des Moines over the weekend.
Not to be outdone, Sanders’ presidential campaign released a wealth tax proposal Tuesday morning that goes even further than Warren’s. It may not be as easy to create a costume or catchphrase around, but it is pretty easy to understand.
Sanders’ plan includes the same 2 percent tax on every dollar earned over $50 million. But it would also include a lower wealth tax bracket as well, instituting a one-cent tax on every dollar earned over $32 million.
Warren’s plan would increase the levy only once, at the $1 billion income threshold, with a 3 percent tax on every dollar beyond that. But Sanders would institute a progressive tax structure: 3 percent from $250 to $500 million, 4 percent from $500 million to $1 billion, 5 percent from $1 to $2.5 billion, 6 percent from $2.5 to $5 billion, 7 percent from $5 to $10 billion, and 8 percent on wealth over $10 billion.
“This country is moving into an oligarchic form of a society,” Sanders told the crowd at a campaign stop in Clinton, Iowa, Monday night, before the plan was released. “Although I suspect there are not too many billionaires in this room, what we are saying to the billionaire class is, ‘Stop the greed. Stop the corruption. Stop stepping on everyone in order to make more billionaires.’”
For voters or pundits hoping for a showdown between Warren and Sanders to clarify who is the true progressive candidate, this may be as exciting as it gets. The two candidates have refused to take any shots at each other.
On this issue, however, Sanders has taken a policy that has defined Warren’s campaign and built on it — a signal to the Democratic base that when it comes to policy, he is willing to go further than she is, even if he won’t say it outright.
Sanders also enlisted the two economists who helped design Warren’s plan to review his. Berkeley University economics professors Emmanuel Saez and Gabriel Zucman wrote in a letter that a progressive wealth tax is the most direct tool to curb runaway wealth concentration.
“Senator Sanders’ very progressive wealth tax on the top 0.1 percent wealthiest Americans is a crucial step in this direction. We estimate that Sanders’ wealth tax would raise $4.35 trillion over a decade and fully eliminate the gap between wealth growth for billionaires and wealth growth for the middle class,” they wrote.
The economists estimate that the proposal would tax roughly 180,000 U.S. households.
In case anyone tries to evade the tax, Sanders includes harsh enforcement provisions in his plan. He would require a national wealth registry and increase funding to the IRS to audit all billionaires yearly in addition to 30 percent of the returns that qualify for the wealth tax. The plan would also institute hefty exit taxes on those trying to move money to offshore accounts.
Cover: Democratic presidential candidate U.S. Sen. Bernie Sanders, I-Vt., speaks during a brief campaign stop at Town Clock Plaza in Dubuque, Iowa on Monday. (Nicki Kohl/Telegraph Herald via AP)
Gary Reber Comments:
A progressive wealth tax is the most direct tool to curb runaway wealth concentration, BUT is does not solve the structural concentrated capital asset ownership problem in the United States. We need to reform the monetary and tax system to empower EVERY child, woman, and man to become owners of the future productive capital assets formed and create barriers to prevent the concentration of capital asset ownership, which is how the relatively few multi-millionaires and billionaires get wealthy.
While Sanders acknowledges the importance of workers owning the corporations that employ them, unfortunately he has yet to advocate his position openly in speeches, interviews, press conferences, debates or political ads. Nor has he expressed any understanding of how this ownership concept can be extended to empower EVERY child, woman, and man to become a productive capital asset owner along with the responsible growth of the economy.
Sanders should realize that the core reason the top 1 percent receives virtually ALL FUTURE income gains is because the top 1 percent are the very people that OWN America, with the bulk of the capital asset owneship concentrated among the top .1 percent of the American population.
What Sanders needs to do is to aggressively advocate for unrigging the system with reforms that will empower EVERY child, woman, and man to acquire personal ownership stakes in the FUTURE productive capital assets that will propel our economy’s growth. I am not referring to unproven small business or entrepreneurial endeavors, which, however would be significantly strengthened as the overall economy produces an expansion of “customers with money” to create demand. The primary focus needs to be on the already successful businesses growing our economy. I believe that if Bernie Sanders fully embraces this policy direction, as he has clearly targeted concentrated capital asset ownership and its corresponding political power as the cause of economic inequality, he will win the primaries and the presidency, while more effectively realizing the political revolution that is long overdue to put all Americans on the path to inclusive prosperity, inclusive opportunity, and inclusive economic justice.
Sanders does not have to stretch his thinking much farther, as he already is a strong supporter of empowering workers to become owners of the business corporations they are employed by, using the proven financial mechanism known as the Employee Stock Ownership Plan (ESOP), which provides a pre-tax pay-back mechanism to finance worker ownership (as individuals) without ANY loss of wages or benefits or requirement of past savings, and with the newly issued stock purchase-financing paid for with the full earnings of the investments in a corporation’s growth. (See http://www.cesj.org/learn/capital-homesteading/ch-vehicles/employee-stock-ownership-plans-esops/)
But we must not limit broadening capital asset ownership to employees of corporations as there are tens of millions of Americans who do not work for a for-profit business corporations, such as workers in small businesses or government positions, or who are unemployed, under-employed or unproductive, on welfare or who are senior citizens with only meager Social Security income, which effectively reduces their life to a struggle to meet day-to-day, week-to-week, and month-to-month demands.
Instead of the OWN the FUTURE or BE OWNED issue being presented, all one hears from both sides of the political spectrum is: “We will provide JOBS and put Americans back to work and raise the minimum wage!” While that sounds good, it is, in fact, terribly shortsighted. With the U.S. population continuing to climb and the rate of job-devouring automation and robotics exponentially skyrocketing, along with the job-destroying and wage-devaluation forces of globalization due to American businesses outsourcing or off-shoring their parts and finished products manufacturing, an individual’s or family’s 100 percent reliance on “JOBS” for subsistence will soon be totally outmoded. This means that your children and their children will be faced with unimaginable economic insecurity in the FUTURE, regardless of educational achievement, if the system is not reformed to empower them to become productive capital owners, and prevent those who already hoard the capital asset ownership of America from monopolizing ALL FUTURE ownership of America’s capital asset growth.
This is not to say that education, and tuition-free public colleges and universities (as Sanders advocates) is not an important mission, but except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family and purchase a home or prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings. Thus, education is not the panacea, though it is critical for our future societal development to innovate and invent future technologies of production. Furthermore, younger, as well as older people, will increasingly find it harder and harder to secure a well-paying job — for most, their ONLY source of income — and will find themselves dependent on taxpayer-supported government welfare, open or disguised, or concealed.
Our visionary politicians would best serve us by devising plans that involve ownership of the capital asset producing corporations of the United States economy, in particular the large corporations responsible for producing the bulk of the goods, products, and services bought by Americans, without penalizing the wealthy class to do so. The Center for Economic and Social Justice (www.cesj.org) has solutions that make sense and which cross party lines quite easily. One of CESJ’s core policy proposals is to enact the Capital Homestead Act, also known as the Economic Democracy Act and adopt the Unite America Platform. This will empower EVERY child, woman and man to acquire personal ownershi[ stakes in the FUTURE capital asset wealth of the American economy, without the requirement of past savings or ANY reduction in wage earnings or benefits, using insured, interest-free capital credit, repayable with the FUTURE full earnings of the investments in the viable corporations growing the economy. (See 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/). Also see the Unite America Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html.
These proposals clearly demonstrate that most people are wrong to take for granted that the only way to finance new capital asset formation (not risky investment in already-owned stock speculation) — and thus widespread capital asset ownership and control — is through cutting consumption and accumulating money savings, thus assuring that ONLY the already rich can afford to finance new capital formation, and as a result the richer they will get. “Past savings” are by definition, the virtual monopoly of the rich. The solution is saving in the future to finance new capital asset formation now. In other words, we need to switch from financing with money withheld from consumption in the past, to financing with the present value of what is reasonably expected to produce in the future. That way, nothing is taken out of anyone’s pocket now, and anybody who comes up with a financially feasible project should be able to get financing for it.
We don’t need the rich to finance new capital formation. To finance new productive capital using “future savings,” it is only necessary to have a feasible capital project ready to start building. The present value of the project can be put into contract form (a “bill of exchange”) and either used directly as money to finance the new capital formation, or taken to a commercial bank and discounted, using newly created bank promissory notes as new money in the form of demand deposits (“checking accounts”). To make things less risky and ensure a uniform, stable, and elastic asset-backed reserve currency, the Federal Reserve Bank would rediscount such qualified paper, with the central bank’s promissory notes substituted for or backing the commercial bank’s promissory notes.
In other words, all that is necessary to finance new capital formation without the rich is feasible capital projects that can pay for themselves out of their own future earnings, and a banking system to provide media of exchange that are recognized as uniform and stable. Significantly, if new capital asset formation can be financed without using past savings, that means the rich are not needed in order to become an owner of productive capital…and that means that every child, woman, and man — regardless whether she, he, or it has savings now — can use “future savings” to become an owner without taking anything away from “the rich” or penalizing success, while at the same time becoming good “customers with money” to create demand for the responsible and “green” growth of the economy.
Using this method of finance is preferable to form new capital assets using the present value of the anticipated future stream of income and wealth embodied in a “bill of exchange” contract. Present value can be turned into “money” by contract, and this contract can be used to purchase new productive capital that repays its purchase price — “self-liquidating.” This will enable corporations with “feasible capital projects” (meaning they pay for themselves out of their own profits) to grow without having to retain earnings — instead, earnings can be fully paid out to the people to whom they belong: the shareholders. The new capital wealth creation, represented by new issues of stock (directly tied to ownership and control sharing) can be financed to benefit anyone (whether employed or not) without first having saved. This should be an equal opportunity right to interest-free capital credit.
The role of capital credit insurance facilitated with private insurance or a government reinsurance agency (ala the Federal Housing Administration concept) would serve as the replacement for past savings collateral to protect the commercial bank in the event of a failure of the capital project to produce the expected FUTURE earnings that would be used to pay off the capital credit loan. Thus, national capital credit insurance would replace the requirement for pledged security, allowing employees and non-employees (EVERY citizen within the system) to become new capital asset owners simultaneously with the growth of the economy, while eliminating the sole ownership of America by the few.
To win the presidency, Bernie Sanders needs to advocate for the enactment of this proposed legislation that will effectively empower EVERY citizen to become a productive capital OWNER without the requirement of past savings or ANY reduction in wage earnings or benefits.
If our politicians would, for a moment, bury their hatchets and open their minds and examine the ideas outlined by the CESJ, the voters in our country would be getting far more than just jobs and increased minimum wages, or falling into dependency on the State and whatever elites control the coercive powers of government for their economic well-being, and benefit from a long-term policy direction that will provide economic security to EVERY citizen and their heirs, as we build a FUTURE environmentally responsible economy that can support general affluence for EVERY child, woman, and man.
