In Tom Campbell’s article appearing in the Los Angeles Time on Sunday, April 22, he argues:
“But we’re having the wrong conversation. The question shouldn’t be whether wealthy people are paying their fair share but rather how investment, consumption and taxes figure in our economic recovery.
“Instead of asking what is fair, let’s start with a more basic question: Why does Buffet (who pays tons of taxes) pay less than 30% of his income to the federal government?
“The reason is that he makes most of his money in capital gains and dividends, which are taxed at a lower percentage than ordinary income. The lower rate was adopted not to help the rich but to encourage people to invest.
“What we need to do is change the debate from Buffett and his secretary to an explicit debate over investment versus consumption, and which the government should be trying to encourage. The question should be: Do we need to incentivize investment over consumption, or consumption over investment, in today’s economic circumstances?”
Unfortunately, the requirement for investment is “savings,” which automatically limits the opportunity to the richest, most successful citizens among us. And the system is so structured that the financial mechanisms of pure credit available to the rich mean that they will perpetually concentrate the ownership of future productive capital investment among their minority.
The present system’s structure, under state statues, allows corporations to retain earnings and debt finance new productive capital formation. Neither financial mechanism (savings or borrowed debt) broaden ownership of productive capital investment. What is needed is a policy to require corporations to issue new stock representative of the capital requirements to engage in new productive capital growth. What we must do to rechart the direction of the American economy, which continues to concentrate future productive capital ownership among a rich minority, is to escape the chains of “savings-based’ investment. “Savings-based” investment limits future growth investment to the rich and excludes the 99 percent majority who have limited savings or no savings to invest. We need to adopt policies and programs that use “future savings-based” finance, the same finance mechanisms used by the 1 percent to accumulate more and more productive capital wealth, whereby the investments pay for themselves, and provide a path to greater prosperity, opportunity, and economic justice for ALL American citizens.
