On October 14, 2019, Matt Brunei writes on Jacobin Magazine:
Bernie Sanders just released a landmark plan to shift ownership and control of the US economy away from the very affluent and towards workers and the public.
Bernie Sanders released a proposal today that would gradually shift 20 percent of corporate equity into funds owned and controlled by the workers in each company. The plan, which would apply to all publicly-traded companies and large closely-held companies, would move 2 percent of corporate stock into worker funds each year for a decade. Once the shares are transferred into the funds, workers would begin receiving dividends and have the ability to exercise the voting rights of the shares, including the right to vote on corporate board elections and on shareholder resolutions.
Sanders’s plan is by far the most radical worker ownership proposal put forward by a presidential candidate in recent memory. By last count, the market value of publicly-traded domestic companies stood at $35.6 trillion. This means that the Sanders plan would shift at least $7.1 trillion of corporate equity into worker funds by gradually diluting the value of previously-issued corporate stock.
Those who stand to “lose” from the proposal are the incumbent owners of corporate equity, which are overwhelmingly affluent people. At present, the top 10 percent of families own around 86.4 percent of corporate equities and mutual fund shares, with the top one percent owning 52 percent by themselves. Closely-held businesses, which will also be affected by the scheme if they are large enough, have similarly concentrated ownership, with the top 10 percent of families owning 87.5 percent of private business equity and the top one percent of families owning 57.5 percent of it.
Of course, these incumbent owners will not actually lose anything in an absolute sense. The average historical return of the US stock market has been 9.8 percent per year, while the average return of the last 10 years has been just over 13 percent. The effect of the two percent share issuances is to knock the total rate of return down by two percentage points, meaning that incumbent owners still get richer year-over-year, just less so than they would absent the Sanders plan.
The Sanders proposal largely mirrors an idea first presented by Mathew Lawrence that was recently adopted by Jeremy Corbyn and the UK Labour Party. In the Labour Party version of the plan, large UK corporations are required to transfer one percent of corporate equity into “Inclusive Ownership Funds” (IOFs) for ten years, which would effectively shift 10 percent of corporate equity into worker funds. As in Sanders’s plan, UK workers would receive dividends from the IOFs and exercise the voting rights of the equity owned by the funds.
Both the Sanders and Corbyn plans are rooted in a longer market socialist tradition most commonly associated with the Swedish labor movement and Swedish labor economist Rudolf Meidner. Meidner’s 1978 book laid out a plan that would have used similar share issuances (often called “share levies” or “scrip taxes”) to gradually bring Swedish corporations under the ownership of sector funds controlled by unions and communities. A policy based on Meidner’s plan was successfully implemented in the 1980s but the unrelated electoral defeat of the Swedish Social Democratic Party in the 1991 elections caused the policy to be scrapped before reaching its full potential.
Sanders’s new worker funds plan fits neatly alongside other elements of his reformist democratic socialist platform, including the nationalization of the US health insurance industry and the enormous expansion of federally-owned power companies as part of his Green New Deal. Taken together, these and other Sanders policies would significantly shift the ownership and control of the US economy away from the very affluent and towards workers and the public more generally.
While Bernie Sanders’ support of worker ownership is to be commended, it won’t be as effective for his presidential campaign if he supported universal future ownership opportunity through the central banking, commercial banking and tax reforms proposed the Capital Homesteading Act summarized at https://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.
Still, I give Bernie Sanders a cheering and applauding standing ovation for bringing to the forefront the issue of capital asset ownership in the choice before all Americans as to the future we want for ourselves, our children, our grandchildren and great grandchildren, and generations beyond.
Economic democracy, or what could be termed economic personalism, is founded on the principal that economic power has to be universally distributed amongst individual citizens and never allowed to concentrate among a few. It is a value system based on the importance and dignity of every human person. America was founded on the principle that the basic responsibility of government is to maximize the welfare of its citizens.
The issue of who should own American hawkers back to 1976, in which at one point the discussion led to The Joint Economic Committee of Congress endorsing a policy to broaden capital ownership as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.”
Unfortunately the Congress and no past or present President or candidate for the presidency (until now with Bernie Sanders) have never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.
Instead, the American people have been promised that if the wealthy ownership class could gain even more earnings through low taxes and deregulation, the savings would be reinvested to grow the economy and create more and better jobs and higher wages. The focus has always been on job creation and wage growth, while the rich get richer by invisibly accumulating more capital asset ownership.Of course, there is always some truth to the idea that new jobs will be created through reinvestment, but jobs are eliminated as well, as the reinvestment is increasingly directed to the formation of new, highly-efficient non-human technological means of production, requiring far less workers and/or to extensions to other countries with lower labor costs and no or few regulations. Americans should be smarter and realize that this is an underhanded scheme for the already wealthy and their heirs to OWN America and further concentrate and monopolize ownership of ALL productive capital, present and future. Such “trickle-down” thinking does not work. As a result of such unworkable policies, fewer and fewer people remain good “customers with money” to buy what the economy is capable of producing. And even then, as consumers, the vast majority of Americans have gone into consumption debt in order to provide for themselves and their families. Americans increasingly do not feel secure and are being challenged as to how to survive, faced with mounting over-extended consumer credit as well as less and less job security to earn sufficient income to pay off their debt. Unnecessarily, millions of Americans are faced with losing their savings and homes, and their jobs –– and their dreams for a better life –– with no way to earn through owning the wealth-creating, income-producing productive capital now formed and that which will be formed in the future.
As history has confirmed, better earnings and better job prospects did not and will not trickle down by lowering taxes on the wealthy and the corporations they own or deregulating the rules of responsible production. Responsibly growing the economy simultaneously with creating new capital owners, and thus “customers with money,” is the ONLY way to achieve inclusive prosperity and economic justice.
While the Sanders agenda is focused on giving workers an ownership stake in corporate America, the vast majority of Americans do not work in the corporate America Sanders has targeted, or even work for a for-profit, State-chartered corporation, and thus will be left out of the Sanders ownership-broadening solutions.
Let’s address each proposed solution:
• Share Corporate Wealth with Workers. Under this plan, corporations with at least $100 million in annual revenue, corporations with at least $100 million in balance sheet total, and all publicly traded companies will be required to provide at least 2 percent of stock to their workers every year until the company is at least 20 percent owned by employees. This will be done through the issuing of new shares and the establishment of Democratic Employee Ownership Funds.
I think a more comprehensive approach would be to eliminate all tax loopholes to eliminate corporate and personal tax avoidance and business subsidies, and raise the corporate income tax to at least 90 percent, but allow corporations to fully eliminate their corporate tax burden by paying out 100 percent of their earnings to their owners, who then would be subject to a personal income tax. This would effectively eliminate retained earnings and corporate debt financing, neither of which creates any new owners, and instead would incentivize corporations to issue and sell new stock, not only to those employed by the corporation but to EVERY child, woman and man who would be equally eligible to purchase the new shares with the earnings of the new investments in the corporation’s growth.
The income from the capital investment would be isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capital owners. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. This is the smart means to acquire capital, which wealthy people fully understand.
The funds to purchase the new stock issues would come from an equal annual allotment of capital credit provided to EVERY child, woman and man issued by commercial banks authorized to create new money backed by the Federal Reserve, which also should be broadly owned by all of the citizens in each of the 12 Federal Reserve Bank regions.
We need to define “economic justice” in a way that provides universal access to future capital ownership opportunities for EVERY child, woman, and man, without redistribution. That is, reform the tax and monetary system to enable every child, woman, and man to purchase capital using “pure” capital credit collateralized with insurance, and pay for it out of the future earnings of the capital itself.
To solve the security issue, that is, the risk that a new capital investment might not pay for itself out of its future earnings can be absorbed by capital credit insurance or commercial risk insurance. Thus, in order to achieve a national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance, facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration mortgage insurance concept), would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percent) to overcome the collateralization barrier that excludes the non-halves from access to and the means to finance their ownership of wealth-creating, income-generating productive capital.
My colleagues and I at the Center for Economic and Social Justice (www.cesj.org) call this solution Capital Homesteading. The process works as follows:
1. Each year (annually, bi-annually or quarterly) the government estimates how much productive capital will be added to the economy in the coming period, both in the private and public sectors. Dividing that number by the current number of U.S. citizens determines that period’s per-citizen allotment of interest-free capital credit.
For example, the total annual U.S. capital formation increment for 2018, which according to the Federal Reserve Bank of St. Louis amounts to $3.955 trillion. When that number is divided by the total 2018 U.S. population of 328.9 million citizens, the result is an annual per-citizen capital credit allocation of $12,023. (For purposes of this illustration, however, we’ll use an annual capital credit allotment of $7,000, calculated for a slow growth economy.)
2. An enterprise that needs to finance new capital assets, such as plant, equipment, structures, patents, information technology systems, etc., decides to finance that new productive capital by selling newly issued Capital Homesteading shares to citizens, at their current market price. The enterprise can escape paying corporate income taxes on all full-dividend payout, voting shares. Future dividends not used to repay a Capital Homestead loan would be taxable at the personal level.
In this example a family of four goes to their local bank to set up four individual, tax-sheltered Capital Homestead Accounts (CHAs). With the parents making decisions on behalf of their minor children, they will get investment advice from the bank and use their annual capital credit allotments to purchase qualified shares of the enterprise. (A portion of their capital credit allotment will be used to cover the one-time cost of capital loan insurance and bank service charges.)
NOTE: The vast majority of Americans is not accustomed to investing or well educated in this regard and must rely on professional investment advisors who advise clients on which stocks to purchase, in this case qualified new issued stocks. Legislation must ensure stiff penalties are incurred on financial advisors who seek to gain big fees and commissions from corporations selling new issues of their stock, and eliminate such practices. Investment advisors must be required to offer advice or recommendations that put the interests and well being of investors first. Such legislation would prioritize the financial needs of clients, disclose conflicts of interests, and eliminate conflicts that taint the advice American investors receive from financial advisors. The for-profit investment broker-dealers sector should be replaced with flat fee financial advisors, in which their fee is built into the CHA accounts as a portion of capital credit allotments.
3. Under the Capital Homestead law, the enterprise must pay annually to each citizen’s Capital Homestead account all the profits earned on the shares to be purchased.
The initial stream of corporate profits will be used to pay off the scheduled CHA loans. When the citizens receive dividend incomes above their periodic principal payments on their CHA loans, they will be subject to personal income taxes on any additional dividends. Capital Homestead shares are tax-exempt as long as they remain in the tax-sheltered Capital Homestead account.
4. The family’s adults present “bills of exchange” for the bank’s approval and acceptance, in order to obtain their chosen shares for each CHA loan for that period. (Before the loan is made, the lender, risk insurance company and other entities will first determine the “feasibility” of each particular loan. (“Feasibility” means that the enterprise’s new capital is expected to generate enough profits to pay for itself.) Such a feasibility analysis will judge the soundness of the enterprise that needs to purchase the new capital assets, including the quality of its management and workforce, its current and future markets, etc.)
The bank in turn issues a promissory note for each Capital Homestead loan and sets up a checking account for each member of the family. (In a process called “discounting” the bank will deduct from the total loan principal a one-time premium for capital credit risk insurance and service fees for the bank and other advisors.)
5. The bank guarantees to a Capital Credit Insurer to add a risk premium to the principal needed to purchase the shares. (This premium and the bank service charges will be paid out of the CHA loan discount.)
6. The Capital Credit Insurer insures each of the CHA loans.
7. The local bank bundles (or transfers to a Capital Credit Syndicator) all insured CHA loans.
8. Either directly or through the Capital Credit Syndicator, the bank takes to the discount window of its regional Federal Reserve Bank the bundled CHA loans for “rediscounting.” (This is where the Federal Reserve deducts from the total loan an amount to cover its own actual servicing costs for issuing new money.)
9. The regional Federal Reserve issues to the local bank a promissory note and creates new asset-backed money or “demand deposits” (a checking account) for the local bank.
10. The local bank then transfers to the citizen’s Capital Homestead Account the new money to be used to purchase the newly issued shares of the enterprise.
11. The Capital Homesteader writes out a check from his or her Capital Homestead Account to purchase the new growth shares.
12. The enterprise uses the cash to purchase new capital assets and working capital.
13. The enterprise acquires and puts into operation the new capital (technology, structures, land, etc.) to increase its production of marketable goods and services.
14. The enterprise, as it generates profits, makes scheduled payments of dividends to the citizen’s Capital Homestead Account. These dividends are tax-deductible to the enterprise.
15. The Capital Homestead Account makes periodic installment payments of principal on the citizen’s CHA loan. Once principal payments on that loan are made, all additional future dividends become a new source of consumption income for the citizen.
16. The Capital Homestead money creation cycle ends with the original money being cancelled, in order to avoid the inflationary effects of money remaining in the economy not backed by capital assets or marketable goods and services.
• Democratize Corporate Boards. Under this plan, 45 percent of the board of directors in any large corporation with at least $100 million in annual revenue, corporations with at least $100 million in balance sheet total, and all publicly traded companies will be directly elected by the firm’s workers – similar to what happens under “employee co-determination” in Germany, which long has had one of the most productive and successful economies in the world.
The labor union movement needs to transform to a producers’ ownership union movement and embrace and fight for economic democracy. Historically and in its present form, the labor movement is destructive in that it agrees with the idea that propertyless people should exist to serve those who own property. The labor movement doesn’t seek to end wage slavery; it merely seeks to improve the condition of the wage slave. If it actually cared about human rights and freedom, it wouldn’t call itself the “labor movement.”
When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.
• Require Federal “Stakeholder” Charters for Large Companies. Under this plan, U.S. corporations with more than $100 million in annual revenue, corporations with at least $100 million in balance sheet total, and all publicly traded companies must obtain a federal charter from a newly established Bureau of Corporate Governance at the Department of Commerce. This new federal charter will require corporate boards to consider the interests of all of the stakeholders in a company – including workers, customers, shareholders, and the communities in which the corporation operates.
This is a forced judicial law approach, which, under the terms of incorporation, for-profit business corporations would be required to issue and sell full-voting, full-dividend payout stock to the general public when they launch an Initial Public Offering (IPO) and thereafter to underwrite their growth with the purpose of providing opportunity for both their employees and non-employees, to participate in their growth, and thereby the economy’s growth, by purchasing the newly issued stock using insured, interest-free “pure” capital credit (CHAs), repayable solely out of the full earnings generated by the earnings produced by the actual future capital assets, and without any requirement for past savings to pledge as loan collateral security.
Of course, there needs to be a financial mechanism put in place that will guarantee loan risks associated with the commercial banks making the “pure” capital credit loans; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital — the rich, and those who can afford to speculate on the ups and downs of Wall Street market value. This is because “poor” people and the majority of Americanshave no security or collateral, or sufficient income resulting in savings to pledge against loans as security in the event full repayment does not occur, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.
Criteria must be created to qualify the corporations wanting to form new capital projects, both new start-ups and established ones, subject to this policy and those corporations that qualify overseen so as to ensure that their executives exercise prudent fiduciary responsibility to generate loan payback. Of course, the number one criteria would be that any proposed capital project be determined to be viable. Once the guaranteed loans are paid back to the lending entity, the new capital formation will continue to produce income for existing and future owners.
While tax and investment stimulus incentives (such as government contracts, grants and loans) are tools to strengthen economic growth, without the requirement that productive capital ownership is broadened simultaneously, and in the case of issuing public contracts that the companies awarded the contracts by fully employee-owned, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency on redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are solely dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percent will be enabled to acquire productive capital assets that are paid for out of the future earnings of the investments and gain greater access to job opportunities that a growth economy generates.
• Ban Stock Buybacks. Under this plan, large-scale stock buybacks will be treated like stock manipulation, just as they were before 1982.
Require Firms that “Outsource” Production to Low Wage Countries or Automate to Convey Shares to “Laid Off” Employees. Under this plan, the owners of firms that dispose of American labor to take advantage of robots or cheap labor overseas will be required to share the gains that they make through such practices with those whom these practices harm. Champions of “globalization” and “automation” often claim “everybody wins” through these practices, or that at least the gains exceed the losses. If those claims are true, then the owners of those firms can more than afford to share their gains with the workers they displace. It is time to enable the owners of outsourcing and automating firms literally to “put their money” – that is, their ownership shares – “where their mouths are.”
Strong tariffs and denial of access to American markets should be imposed on American corporations who are outsourcing supply chain goods and products or producing products for export to the United States in slave-wage labor and environmentally and human rights non-regulated countries. We should, however encourage advancing our own manufacturing capabilities with the most sophicatelly advanced automation- and “machine”-dominent technologies, but ensure they are broadly owned by remaining employees, former employees displaced and other citizens, always as individuals.
• Establish a U.S. Employee Ownership Bank. Under this plan, a $500 million U.S. Employee Ownership Bank will be created to provide low-interest loans, loan guarantees, and technical assistance to workers who want to purchase their own businesses through the establishment of Employee Stock Ownership Plans (ESOPs) or Eligible Worker-Owned Cooperatives. In order to be eligible for assistance under this plan, the ESOPs or worker coops would need to be at least 51 percent owned by workers.
My former partner and mentor, as well as corporate tax attorney, investment banker, binary economist and author, Louis O. Kelso (now deceased) was the architect and pioneer of the Employee Stock Ownership Plan (ESOP), which Kelso invented to enable working people without savings to buy stock in their employer company and pay for it out of its future dividend yield — on the promise of the capital investment’s future income.
Kelso created the ESOP as a credit mechanism, which, with the support of Senator Russell Long (Democrat, Louisiana), was included in the employee benefits sections of the Internal Revenue Code (Employee Retirement Income Security Act of 1974 [ERISA], also known as the Pension Reform Act) as legislation not to look like something new and different.
The ESOP provides access by employees to capital credit to buy company stock and pay for it in pre-tax dollars out of what the assets underneath that stock yield. Bank loans are made to the ESOP trust that represents employees, instead of to the company (current owners). The trust gives the lender a note and with the borrowed monies makes the investment in the company stock. The company then issues stock to the ESOP trust. The company now has the money, which otherwise could have been borrowed directly without the ESOP (benefiting current owners), to make the planned investment and repay the loan from pre-tax forecasted future capital earnings. The company promises the bank to make pre-tax full-dividend payments to the ESOP trust to enable the trust to replay the lender. Assuming that it would take five years for that capital investment to pay for itself, at the end of five years the employees now own the full stock value in the expanded company.
Companies can use the ESOP as the credit mechanism to create employee ownership in ratios up to a 100 percent leverage buyout. Nothing has been taken away from the existing owners. However, using the ESOP, the existing owners, unless also an employee, will surrender the exclusive right to acquire more ownership in the company and have a smaller percentage of ownership in the total company, but they have not been prevented from making a fair rate of return on their thus-far accumulated ownership shares because the company earns a rate of return throughout the process. After the loan has been paid off with pre-tax earnings, the employees will have more earnings from capital and they will have more consumer power to purchase goods, products and services. Multiply this by tens of thousands of employee-owned companies and the economy revs up to grow dramatically.
There are now more than 7,000 profitable ESOP companies, but only 1,500 of those companies are reportedly worker majority owned, with workers paying for their stock shares out of future corporate profits, not by reducing their take-home labor worker incomes.
ESOPs work as designed and optimized when the workers receive the full property rights as owners, including full-voting rights, not simply treated as beneficial owners with power concentrated at the top of the company, without any accountability or transparency. Unfortunately, some ESOPs have been structured so that the rights, powers, and benefits of ownership remain concentrated in a small non-accountable elite controlling corporate and financial governance. When all of the employees are owners, dependent on their income from the company’s bottom line rather than through ordinary labor wages, salaries and benefits, the workers’ economic interests are more invested to see that their company succeeds. In this way, each person in the company is empowered as a labor worker and as a capital “worker” (owner) and inspired to work together as a team to make better operational decisions to serve and maximize value to their customers.
Under our current financial system, the security (collateral) necessary to secure an ESOP loan must come from the company, and therein the current owners are providing the security to broaden employee capital ownership with the benefit that expanded capital ownership drives expanded consumer power to purchase products and services. (This is somewhat akin to Henry Ford’s reported policy to pay workers sufficient wages to enable them to purchase the automobiles they manufacture.) Under this scenario the company owners are “insuring” the risk without a benefit, which can be re-compensated by paying the employees less labor wages, reduced pension benefits, and receiving government tax forgiveness benefits, which are written into the Internal Revenue Code.
With the ESOP, employees can acquire capital ownership with the earnings of capital. ESOPs have thus far only provided part of the solution, and the stock acquisition is limited to the employer-company and to those employed by a for-profit business corporation.
Robert Ashford, Professor of Law at the Syracuse University College of Law (New York) and a former lawyer in Kelso’s San Francisco law firm, specializes in the teaching of Kelso’s binary economics. He has also written a book entitled Binary Economics: The New Paradigm with Rodney Shakespeare. Ashford has expanded the ESOP trust into what he terms the “Super ESOP,” which includes multiple company diversification facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration mortgage insurance concept). Under Ashford’s plan, the promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the ESOP trust is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust enough money to enable the trust to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership-broadening financial capital to be invested in ownership-broadening ESOP trusts to create new capital owners. Thus, national capital credit insurance replaces the requirement for the current corporate owners to pledge security.
ESOPs and other Kelsonian plans avoid the gambling trade and Wall Street firms that play with your money. The ESOP circumvents that. According to Kelso: “In a single transaction, you finance tools for the employer and ownership for the employees. The pre-tax yield of corporate assets of prosperous companies varies from 25 to 60 percent. The yield on secondhand securities [previously owned] is around five or six percent. Sure, with capital gains, you can get a little more, but don’t forget, that’s a zero-sum game; for every gainer, there’s a loser. Wall Street doesn’t fly any airplanes or raise any corn or do anything else in the way of producing products and services. It just plays games with your dough. And when you take it out in pensions, you’re going to get less than the company put in for you. You have to; that’s the dynamics of it.”
• Guarantee a Right of First Refusal. Under this plan, workers will be given the right to buy a company when it goes up for sale, is closing, or if a factory is moving overseas and will receive financial assistance from the U.S. Employee Ownership Bank to make that possible.
• Create Worker Ownership Centers. Under this plan, worker ownership centers, modeled after successful programs in Ohio and Vermont, will be established in every state and regional center in the country. These centers will educate retiring business owners and workers about the benefits of employee ownership. It has been estimated that with education and financial assistance from the federal government between 150,000 to 300,000 retiring owners of small to mid-sized businesses could sell their companies to their workers.
• Diversify Corporations. Under this plan, we will develop rules to diversify corporate boards by ensuring a significant portion of every board be comprised of people from historically underrepresented groups (e.g. marginalized by gender, race, ethnicity, religion, disability or sexuality). And we will require every corporation to complete an annual report that gives the compensation, gender, and racial composition of board and employees.
What follows in Sanders’ solutions list I can essentially agree with, including Make Large Corporations Pay Their Fair Share Of Taxes, though I would put the burden of paying the taxes on the owners of the corporations, rather than the corporations, as legal business entities.
As noted above we need to eliminate all tax loopholes to eliminate corporate and personal tax avoidance and business subsidies, and raise the corporate income tax to at least 90 percent, but allow corporations to fully eliminate their corporate tax burden by paying out 100 percent of their earnings to their owners, who then would be subject to a personal income tax. This would effectively eliminate retained earnings and corporate debt financing, neither of which creates any new owners, and instead would incentivize corporations to issue and sell new stock, not only to those employed by the corporation but to EVERY child, woman and man who would be equally eligible to purchase the new shares with the earnings of the new investments in the corporation’s growth.
In conclusion, the Center For Economic and Social Justice advocates new justice-committed leaders, such as Bernie Sanders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism — the main source of corruption of any political system, democratic or otherwise. The CESJ advocates the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who rely only on their labor worker earnings. Under the JUSTThird 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 to eliminate corporate and personal tax avoidance and business subsidies.
• Provide a tax exemptionof $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 national debt. 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.
• At death, individuals should be discouraged from passing on their wealthy estatessolelyto their heirs. As a substitute for inheritance and gift taxes, impose a transfer tax on the recipients whose holdings exceed $1 million in value, 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.
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 to specifically and exclusively purchase full-earnings, full-dividend payout shares inqualified corporations, both established and start-ups,needingfundsforgrowingtheeconomy through viable self-liquidating capital formation projectsand 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” (earnings) in the form of new productive capital assets as well as the future marketable goods, products and services produced by the added technology, renewable and “green” energy systems, manufactories, 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, which employs the concept of “risk pooling to spread financial risks evenly among the citizenry, but
• Would not require citizens to reduce their funds for consumption (savings) to purchase shares, nor would there be any other requirement other than being a citizen.
For an in-depth overview of solutions to economic inequality, see my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11
Other references include:
Support the Agenda of The JUST Third WAY Movement (also known as “Economic Personalism”) 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/ 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/
