On July 6, 2020, Joe Guinean and Martin O’Neill write on The Guardian:
The economy we knew before the pandemic has disappeared. Rather than simply returning to how things were before the coronavirus shock, we’re set to emerge into a shattered economic landscape. Huge numbers of jobs have been lost and countless small businesses are laden with debt, teetering on the verge of bankruptcy. In the absence of additional government assistance, many of these businesses may disappear forever, further gutting our high streets and hollowing out our local economies.
For better or worse, the pandemic will create a new version of normality, with new patterns of economic ownership. One of the clear dangers we face in the aftermath of Covid-19 is increased inequality: many small and medium enterprises (SMEs) are likely to go bankrupt, allowing further consolidation by the largest firms. Private equity sharks waiting in the wings will snap up distressed business assets for pennies on the pound.
The Bank of England’s answer to this crisis has been to turn on the money taps of quantitative easing. This is an unfocused approach to supporting the economy, which can drive up asset prices. QE will make the rich even richer, but does little to increase spending or support the everydayeconomyof small businesses that are essential for recirculating local wealth.
Our economy after Covid-19 could turn out to be merely an uglier, more distorted version of the lopsided system we have today. We may find that we’ve stumbled into an “Amazon recovery”, where big businesses and corporate behemoths hold an even greater share of the market, billionaires get richer (and more numerous) and inequality is supercharged.
Like a handful of other corporate giants, Amazon has seen its business expand during this crisis. In the US, the company took on 100,000 new workers between mid-March and mid-April, before looking to create another 75,000 posts. Its stock price has soared by more than 50% since the beginning of April, and Amazon’s founder, Jeff Bezos, has seen his wealth increase by $30bn (£24bn) during the pandemic alone. The global billionaire class have never had it so good.
The government must ensure the recovery works for everyone, not just for the richest.A large part of the answer lies in a move to block corporate consolidation and predatory acquisition, preventing the leveraged buyout of the economy. This could take the form of a state holding company, with a mandate to support struggling SMEs directly through the coronavirus era and to prevent the destruction of what remains of the UK’s local small-business sector. It would target businesses that were cash-positive before March and can be once again, when the crisis has passed.
Later, where appropriate, this holding company could relaunch many of these rescued businesses under conditions of worker or community ownership, or as mission-driven social enterprises. In this way, the holding company could become an important instrument in a green transition, building community wealth by supporting local economic activity.
A democratic society can’t flourish under conditions of unrestrained inequality, and will be even more imperilled in an economy where wealth and power are further concentrated. The only alternative to an unjust recovery is to use state power to protect smaller firms and create a more democratic economy where ownership and economic rewards are more widely shared.
History can be our guide here. A similar move lay at the heart of the US response to the economic crisis of the 1930s. Under Franklin D Roosevelt, the Reconstruction Finance Corporation, a state holding company, was permitted to acquire failing businesses until they could be relaunched during the recovery from the Great Depression. One of the engines of the New Deal, the RFC became not only the biggest bank in the US, but also the single largest investor in the country.
Public holding companies are also commonplace around the world. Examples range from Temasek Holdings in Singapore to the Ministry of Enterprise and Innovation in Sweden and the Agence des Participations de L’État in France, which oversees the French government’s ownership stake in nearly 100 enterprises. The current UK government has already embraced this principle as part of Project Birch, which will bail out large corporations deemed to be of “strategic” importance to the economy in return for equity stakes.
If such a move is permissible to rescue giant companies, why not our small-business sector? Nothing could be more shortsighted than rescuing airlines while ignoring local firms, including the businesses that will be needed to create a more sustainable economy for the future. Nor can a balanced recovery be run by central diktat from Whitehall and the Treasury. Public holding companies could be established on a variety of scales, including by the devolved governments of Wales, Scotland and Northern Ireland.
Boris Johnson has wrapped himself in the mantle of FDR. But Johnson’s rhetoric is cheap. We should now hold him to account on the basis of what a genuine New Deal would actually require. This may sound ambitious, but ambitious action is our only hope to avoid a future owned by corporate behemoths. If we are to prevent the large-scale collapse of the SME sector, history shows that we need massive government intervention.
The vast power of the state was used to put the economy on life support during an unprecedented economic shutdown. Now that same power should be used to ensure that the economic recovery does not only benefit a small elite, as has too often been the case with crises in the past. Instead of ushering in a grim new era of supercharged inequality, the recovery could be the opportune moment to build a better economy.But this will only happen if we demand it.
Gary Reber Comments:
My name is Gary Reber. I consider Louis Kelso, the father of binary economics and the Employee Stock Ownership Plan my mentor. Kelso and I founded Agenda 2000 Incorporated back in 1968 to develop and advocate financial mechanisms which empower people to gain ownership stakes in economic development projects and the corporations growing the economy, using insured, interest-free capital credit, repayable solely with the full pre-tax earnings of the investments. Subsequently, I founded ForEconomicJustice.org to develop these ideas further and I serve on the board of the Center for Economic and Social Justice (CESJ.org). We focus on the means to reform the system, rebuild the economy, and reduce economic inequality while ensuring the broadening of productive capital ownership.
We can no longer simply pursue the same old paradigm that believes the economy will be saved if fixed wages and benefits are increased to a level beyond the dreams of avarice of a century ago. The irony that the higher fixed wages go, the worse off workers become seems to escape those in the old paradigm as the price level rises more than the wage increase, and workers get replaced by less expensive machinery and/or the controlling business owners shift production to low cost slave-wage labor countries wherein they have no responsibility for health care or retirement, where environmental controls and pollution controls are non-existent. As a result profits to the corporation owners can soar.
The reason American workers have suffered a devastating loss of economic power over the past four decades, is two-fold: 1) As unions and workers demanded increases in wages and benefits for the same worker input, the controlling owners of corporations began to automate their production and in the process, they owned greater asset values; 2) they also sought to significantly lower the cost of labor and other cost factors, such as regulations and taxes, by shuttering manufactories in our homeland and investing in developing countries, such as Communist China and other slave-wage Asian countries, who welcomed the American investment, technology-sharing, and opportunity to develop their manufacturing capabilities.
Unfortunately, our political leaders over the past five decades have paved the way for an exodus of our manufacturing, led by the controlling owners of American corporations and industries, and their political allies, resulting in direct investment in the development and execution of manufacturing in slave-wage countries. Aided by years of massive tax cuts and incentives they built manufactories and offices around the world, shutting down manufactories and jobs in our homeland. This investment and exodus have enabled those countries to build their productive and technological capabilities, and in the case of Communist China become the world’s manufactory, while thousands of factories were shut down and millions of jobs were eliminated in the United States.
Restoring manufacturing in the United States no doubt will prove a rough transition, as just in the past two decades since free trade was opened, China has dominated the production of goods previously manufactured in our homeland.
For the controlling owners of American corporations, it was cheaper to relocate production offshore, invest and manufacture goods offshore, and import back the products to the United States. Expanded free trade was supported with tax breaks to corporations offshoring production. Thus, production and importing back for American consumption was made even cheaper and thus more profitable still.
While intermediate supply chain and final goods exported from Communist China to the United States have been halted in some industries, we have yet to rebuild and expand our own homegrown manufacturing capabilities, and, as a result, we remain dependent on foreign supply chain and finished goods production. Not only are we still dependent on China, but even products in Japan’s and South Korea’s supply chains are essentially made in China and other parts of Asia, with materials and goods delivered to those countries, and then exported to the United States. The same situation is true for goods shipped to Mexico from Asian sources and then exported as final goods to the United States –– or from Asia to Europe, and then to the United States.
The actions that got the United States where we are today include the failure to take United Auto Workers Walter Reuther’s advice to keep wages where they are and help workers get their increases from the bottom line. Reuther warned that higher wages would destroy entire industries by lowering their competitiveness in international trade. Had we taken Reuther’s advice, businesses would not have set up shop in slave-wage countries like China.
Why is broadening ownership so important? Ownership entails reaping the fruits of all contributions that one makes proportionately to the productive process, whether via the productive capital one owns or one’s labor, or both. A person’s labor is compensated either by wages or by a share of what the enterprise produces that is attributable to their labor contribution. It is important for ALL the employees to own shares of the companies that employ them to build a productivity culture throughout the organization. Owning thereby entitles workers to the rewards of their own labor as well as that produced by their proportionate share of the physical capital.
No one knows how much disruption our interconnected and service-oriented economy can endure, especially since the past few decades have seen a debilitating decline in and rapid exodus of our manufacturing capabilities. We should have instead been in constant retooling mode with restoration of our manufacturing capabilities and constant technological improvement through research and development. As a result, we no longer manufacture the clothing, appliances, electronics, furniture, cars, infrastructure materials, lifesaving medical equipment, medicines and all manner of supply chain production, necessary to live and consume in today’s world.
The net effect has been a significant drop in our homeland production and our growing dependency on foreign production. Regrettably, producer-corporations have unnecessarily extended their supply chains and finished goods manufacturing to all parts of the globe and invested in lower-cost foreign production in order to boost short-run profits and share prices for their owners. As a result, the American economy is exceedingly vulnerable to external shocks to our supply chains as the world’s supply chains are fixing to buckle and freeze-up, thereby causing production and incomes to fall abruptly. In turn, shrunken incomes and cash flows will collapse the edifice of non-productive debt and speculation that has been piled atop the American economy.
This crisis should finally make everybody realize that there needs to be self-sufficiency for EVERY individual and the country. We must decouple our manufacturing reliance on other countries, to the greatest extent possible, and fully develop our economic infrastructure to produce in our homeland.
Writers on the subject consistently fail to recognize and address that in the United States, and for that matter, everywhere in the world, productive capital is increasingly the source of economic growth. Logically, if this is an undeniable fact, shouldn’t productive capital become the source of added property ownership incomes for all? If one simply postulates that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. This is the logical approach to prevent costs and prices from rising due to inflated fixed wages and benefits. Yet, sadly, the American people and its leaders, still pretend to believe that labor is becoming more productive and couch all policy directions in the name of job creation and wage increases, while envying the wealthy capital asset ownership class. Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital asset portfolios simultaneously with the growth of the economy, and create consumption demand.
No matter how much labor is necessary or unnecessary in the economy, it is imperative that the issue of concentrated capital ownership is addressed, and policies are enacted to simultaneously create new capital owners of the corporations growing the economy, both established and viable start-ups,as the economy grows.
Why is it that educated people cannot see the weakness of the wage slave system? How is it that the vast majority of Americans virtually never learn about why the rich get so much richer every year while everyone else gets left behind?
There is no question that we need to get big money out of politics, which allows the wealthy to control policy-making to the benefit of their ownership interests. As well, we need to set social responsibilities for the controlling owners of corporations that regulate their operations. Political democracy can only be meaningful if supported by economic democracy. Benjamin Watkins Leigh and Daniel Webster understood this when they stated a simple fact: power follows property. “Property” will either seize power, or “power” will take over property. The real solution is to open up access to the opportunity and means for everyone to become capital owners.
We need to simultaneously ensure equal opportunity for EVERY child, woman, and man to acquire ownership stakes in the wealth-creating, income-producing productive assets as they are formed and our economy grows, not just focus only on job creation. This can be achieved without the requirement of holding a job or having or pledging past savings to risk by using insured, interest-free capital credit, solely repayable with the full future pre-tax earnings of the investments. The loans would be insured using private capital credit insurance or public insurance. Government guarantees all sorts of things: loans, contracts, etc. It’s not novel for the public sector to provide guarantees.
One feasible way to significantly broaden capital ownership simultaneously with the responsible growth of the economy is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today –– management and banks –– that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by commercial credit insurers, backed by a new government corporation –– the Capital Diffusion Reinsurance Corporation (CDRC) –– through which the loans would be guaranteed. The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The Capital Diffusion Reinsurance Corporation would function similar to the Federal Housing Administration, generally known as “FHA”, which provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The FHA insures mortgages on single family and multifamily homes including manufactured homes. FHA borrowers pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. While pay-downs on home mortgages require a separate source of income, capital credit for productive capital formation is self-liquidating, with the earnings from the investment the source of the pay-down.
Members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the owners, who would regulate the monetization process. The result will be that money power will flow from the bottom up, not from the top down, not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of socially responsible and environmentally enhanced growth.
By implementing Section 13 of the Federal Reserve Act the central bank can be used as a means to make every American a productive capital owner, serving as the only alternative to the two twin oligarchies of capitalism and socialism.
The bottom line is that American prosperity must be inclusive, with equal opportunity for EVERY citizen to gain ownership stakes in the corporations growing the economy and to share profits and productivity gains across the economic spectrum. We must include non-managerial and managerial workers, current shareholders, workers not employed in corporations and non-employed citizens –– of every age, race, color and ethnicity.
Economic stimuli in the moment must focus on emergency government spending and worker income restoration to stimulate investment and consumption. Once the pandemic ends, however, we must immediately shift to long-term systemic reform. The priority must be to create capital ownership estates for EVERY citizen. In the interim, planning for systemic reform and execution is essential and mandatory.
The key issue in the post economic crisis will not be a lack of new money, but a lack of new owners of productive capital, resulting from a lack of a monetary system that universalizes equal opportunities for every person to access and acquire ownership stakes in the productive capabilities to be developed to meet future economic needs. Had stimulus packages in previous years been designed to create new owners along with new capital formation, our economy would have experienced sustainable and non-inflationary growth. More resources would have been available, and more people would have been economically secure and not dependent solely on jobs to deal with disasters such as the COVID-19 pandemic.
Collateralized by capital credit insurance, self-liquidating capital credit should, as a fundamental right, be made available on an equal basis to all citizens. Over time and exponentially, this would turn today’s non-owners into economically independent owners of productive capital. Such credit would finance the purchase of new or existing productive assets needed by businesses in a growth economy. Future earnings on the shares would pay off the acquisition loans.
What’s needed is an immediate restoration of consumer household spending power and a protective floor under incomes that may soon also collapse should mass layoffs emerge once again in another two or three months.
In the immediate short term, strictly as an emergency measure, massive government debt will be required, which will add substantially to the national debt now exceeding over $26 trillion (or about $72,000 per citizen) and increasing. Such debt results when the government spends money created and regulated by the central bank that has nothing of value behind it other than the government’s promise to pay in the future via taxation. Those measures, however, should cease immediately after the crisis is over. Future taxes should be collected to repay the government’s increasing debt from deficit spending.
As a matter of national policy, immediately enact the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) proposed by the Center for Economic and Social Justice (www.CESJ.org). The act would establish citizen tax-sheltered Capital Homestead Accounts (CHAs) for each citizen (see http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/).
The Act provides for the post-pandemic response to reform the system for inclusive growth and prosperity, broadening capital ownership simultaneously. The financial instruments and tools provided in the Act would empower EVERY citizen to transition from a non-owning wage or welfare slave, beholden to those who are owners or the government, into an economically independent owner of wealth-creating, income-generating productive capital.
To build a future economy, self-liquidating zero percent interest capital credit loans, collateralized by capital credit insurance, would be equally allocated, on an annual basis based on the projected capital needs of businesses, to EVERY citizen (children, women and men, from birth to death) exclusively for the purpose of investing in the new growth and transferred capital of the economy. These loans would cover all costs of purchasing voting, full-dividend payout shares of corporations and cooperatives that produce goods and services for potential national and global consumers.
The access to insured, self-liquidating zero percent interest capital credit loans would have to be truly universal to remove the stigma attached to means-tested programs such as food stamps. An equal amount of annual capital credit would go to everyone, whether they’re employed or not. No strings attached. No means test. No politicians demanding that you seek out even a menial job before getting the loans.
Each citizen’s capital acquisition loans would be wholly repayable with the full pre-tax stream of future profits earned on the shares, without any requirement to pledge past personal savings or reduce salaries, wages or benefits to invest.
The new monies would be used to invest in responsible and sustainable, environmentally sound growth projects and infrastructure, including alternative energy expansion and other climate crisis mitigation. These new development projects would hire workers in addition to creating new owners. This will be necessary since the current crisis will mean conventional private business investment will collapse across the board and such much needed investment will no longer be forthcoming from the private sector to revive the economy and create general affluence for EVERY citizen.
With the new monies, all manner of environmentally enhanced and sustainable projects can be planned and executed such as clean energy expansion, carbon pollution elimination, public transit development, robust infrastructure construction, smart grid expansion, green building, new “smart” cities, urban redevelopment, housing developments, homeland manufacturing capabilities, etc.
We need to use the powerful and proper function of commercial banks to create money by making loans and canceling money once loans are repaid. For this, commercial banks charge a one-time service fee (not interest) to cover administrative costs. Therefore, creating money can be entirely interest free (but not cost free). In addition to the principal to be repaid on interest-free capital credit loans to citizens, there would be a one-time premium to cover the risk of loan default as well as reasonable charges for the services of the Federal Reserve and commercial bank lenders.
Instead of printing trillions of dollars and giving it away to corporations, we need to make the money available as commercial loans with repayment guaranteed by the federal government.
In the immediate short term while the pandemic has the economy locked down, any corporation that receives an interest-free capital credit loan from a commercial bank “sold” to the Federal Reserve through the Discount Window with a federal government loan guarantee (loan default insurance via a Capital Diffusion Reinsurance Corporation or CDRC) would be required to issue full-dividend payout, voting shares in the amount of the proceeds of the loan and allocate the shares equally to each employee. The shares would be put into an escrow account until such time the capital credit loan is repaid. For the duration of the emergency, all debt service payments would be suspended.
Throughout the pandemic, the corporation benefiting from the federal government-backed grants, loans and loan guarantees would pay EVERY one of its employees an equal amount of emergency wage income sufficient to meet subsistence needs. These subsistence wages could not be used for acquiring capital. Payments for consumption needs should be in the form of grants that are passed through dollar for dollar to employees during the duration of the crisis to support purchase demand and enable the economy to keep functioning. The emergency capital credit loans would be used to finance broadly owned new productive capital investment to restart production and expand productive capacity.
Once the interest-free (but not cost free) working capital and new long-term capital loans are repaid with a reasonable capital cost recovery period, the money that was created to operate and purchase the capital and then repaid would be cancelled, avoiding both inflation and deflation. The capital itself would continue to produce wealth and generate consumption income for its new owners from ongoing full-dividend payouts from profits distributed as dividends tax deductible by the corporation but treated as regular income by the recipients. The capital would produce income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
When normal operations resume, the corporation would cease emergency subsistence payments, with employees paid at market-determined rates, with any increases coming from profits instead of increasing fixed wages and benefits.
Under this proposal, when a corporation becomes profitable, pre-tax profits paid out as dividends (tax-deductible to the corporation) would be paid through tax-sheltered employee ownership accounts to the loan-issuing commercial bank, thus canceling the corporation’s indebtedness. As the loans are repaid, shares would be released from escrow and put into each employee’s individual Employee Capital Homestead Account (ECHA), a vehicle similar to today’s tax-sheltered Employee Stock Ownership Plan (ESOP) accounts. (ECHAs could later transition to full CHAs when the Capital Homestead Act for all citizens is passed and implemented.) Full-dividend payouts would be passed through (after reasonable deductions for bank administration costs) to each employee to use for consumption.
A politically practical alternative to creating a new legal vehicle (the ECHA) would be to channel government-guaranteed loans made through local banks to a company’s Employee Stock Ownership Plan Trust. ESOPs, which are tax-advantaged corporate finance vehicles, are already recognized under United States law, and thus would not require additional Congressional approval. ESOPs can be used by any company incorporated as a C-Corporation or an S-Corporation. For purposes of receiving government-guaranteed loans for working capital or long-term growth capital, ESOPs should be required to issue and allocate new, full-dividend, voting shares to all employees on an equal basis.
In a worst case scenario, in the event of loan default on the part of the corporation, the federal government making the emergency loan guarantee would repay the balance of the loan to the issuing commercial bank, in which case the loan is extinguished and the proceeds are used to redeem the commercial bank’s paper (promissory note) from the Federal Reserve.
Since 1985 in the United States, commercial bank loans for industry, commerce, and agriculture that have gone bad typically have been between 1 and 5 percent (https://www.federalreserve.gov/releases/chargeoff/delallsa.htm). Assuming that 5 percent of all government-insured commercial bank loans may default, a $2 trillion+ loan guarantee package would cost the government a lot less –– $100 billion or more depending on the total trillions of dollars guaranteed. The government can waive an insurance premium or, for example, charge a 1 percent premium, in which case the government would collect $20 billion and reduce the loss by that amount.
In immediate and future time frames, we must ensure that federal government grants and loans do not end up with corporations whose controlling owners would buy back their stock, in order to reduce the number of shares so the remaining shareholders can consolidate more ownership, and buy up the assets auctioned off by corporations that go out of business during the pandemic. Otherwise, without ownership-broadening stipulations tied to grants and loans, the result will be the ownership of our nation’s wealth will become even more concentrated than before the pandemic struck. Consequently, there will be more Americans poorer as poverty spreads while multi-millionaires and billionaires become wealthier.
As the economy recovers, all money backed by government debt should be gradually retired and replaced with money backed by private-sector productive capital assets.
After termination of emergency financing, EVERY citizen would be able to establish a Capital Homestead Account (CHA) that is legally advantaged to acquire new qualified full-dividend payout, voting shares of any corporation with fully insured, interest-free capital credit. A one-time premium to cover the risk of loan default as well as reasonable charges for the services of the central bank and bank lenders would be in addition to the principal to be repaid on capital credit loans to citizens. The corporations eligible would be both established and startups, and would use the money exclusively to fund viable projects to grow the economy. CHAs, as with the temporary ECHAs, would make the debt service payments with pre-tax dividends to Federal Reserve-backed commercial banks issuing the capital credit, and afterwards, upon liquidation, paid to citizen beneficiaries as regular taxable personal income.
As part of the normal money creation process, Federal Reserve policies should allow for covering reasonable and fair financing costs of the central bank and commercial banks providing interest-free capital credit loans annually and equally to EVERY citizen for the exclusive purpose of financing future capital expansion via corporations. If a corporation rejects citizen financing, they would not qualify for interest-free capital credit through the Federal Reserve/commercial banking system. Political and media pressure will help to persuade corporations to do the right thing and have ALL citizens share in our collective prosperity.
The grants or alternatively preferred government insured capital credit would finance the purchase of new or existing productive assets needed by businesses. Future earnings on the shares would pay off the grants or loans. Once the grants or loans are repaid, the money created to purchase the capital would be cancelled, avoiding both inflation and deflation. The capital itself would continue to be a source of wealth and generate consumption income for its new owners.
Further economic measures will be needed to address the recession and recovery.
To meet the full costs of the government and start paying down its debt, a single tax rate should be imposed for all incomes from all sources above personal and family 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 exemption should be sufficient to meet each citizen’s or family’s common domestic needs. 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. Other personal taxes, such as payroll taxes, should be phased out. Remove all tax loopholes to eliminate corporate and personal tax avoidance, and business subsidies. 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.
To encourage full payout of corporate pre-tax earnings and finance new capital formation through the issuance and sale of new shares, dividends should be tax-deductible at the corporate level, enabling corporations to reduce their tax liability to zero. Dividends should be taxed as personal consumption incomes, except when used to pay for “qualified” shares (i.e., shares meeting required standards) held within each citizen’s tax-sheltered trust account. To pressure corporations to finance their growth, other than with retained earnings and corporation debt (neither of which creates any new owners), and pay out their full earnings as dividends to their actual owners, the corporate tax rate should be raised to at least 90 percent.
To overcome the COVID-19 coronavirus pandemic threatening our lives and our economy will require leadership, resolve, scientific knowledge, planning and resources. We must adopt laws promoting major reforms in monetary policy, central banking, tax and other laws for establishing a sustainable, resilient and just economy. Through a new visionary political and economic paradigm, we can build for EVERY person a more environmentally sound and sustainable economy that secures and enhances our personal futures, with preparedness to deal with future crises.
One sign of hope is the pandemic has turned millions of people into good neighbors with a sense of realization that we are all interdependent on each other. Hopefully that can translate to reforming the system so that ownership and power concentration can be reversed with EVERY child, woman, and man having the right to property and equal opportunity access to the means of acquiring and possessing property to enhance the economic security, safety, and well-being of ALL. This will ensure inclusive prosperity and economic justice as our nation progresses into the future in harmony with all the people on Earth.
