On September 8, 2008 Michael Greaney writes on Helium.com:
It may come as a distinct shock to many people (especially politicians), but there are two essential facts about taxation that are almost completely ignored in the modern age. The first is that the purpose of taxation is to raise money to defray legitimate expenses of running the government. The second is that the State does not own you or have property in your possessions. Misunderstanding either or both of these essential facts leads to the false idea that the tax system can and should be used to redistribute wealth so as to attain a basic equality of condition for all citizens.
The proper role of government – most accurately viewed as a necessary evil – is to keep order and protect property and other basic natural rights. This is usually construed as providing a level playing field so that all citizens have an equal opportunity to participate fully in all the institutions of the common good: the common good being that network of social structures within which we as political beings realize and develop our essential human nature, acquiring and developing virtue and thereby becoming more fully human.
Equality of opportunity, however, is not the same as equality of results. Each and every human being should have equal access to the means of attaining a degree of wealth sufficient to generate an adequate and secure income to meet common domestic needs adequately. In a modern industrial economy, that means that no one can be prevented from taking any job for which he or she is qualified … or (much more important) prevented from becoming an owner of a moderate but meaningful stake of capital, that is, income-generating assets, or “wealth.”
The means of acquiring and possessing private property – meaning capital, not consumer goods (which are much easier to purchase) – is credit. Again, this means capital credit, not consumer credit, the latter being akin to heroin, and much harder to break an addiction to. A program that opens up democratic access to capital credit would be well within the scope of government – assuming that it was limited to people purchasing financially feasible projects – but not simply distributing cash taxed away from others in order to purchase those same assets.
A number of proposals have been developed to achieve the end of democratizing access to capital credit, such as Capital Homesteading for Every Citizen (from the book with the same title), but to date the only one that has been implemented is the astonishingly successful “Employee Stock Ownership Plan” or “ESOP” invented by Louis O. Kelso, and described in the book he co-authored with Mortimer J. Adler, “The Capitalist Manifesto.” First published exactly half a century ago as of this writing (1958), the “Capitalist Manifesto,” and its 1961 sequel, “The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings,” detailed a way for ordinary workers who lacked savings and the individual ability to get capital credit could organize, obtain loans, and purchase shares in the companies which employed them. To date, more than 10 million American workers in over 10,000 companies have benefited from this program.
As it is currently embodied in law, the ESOP unfortunately relies on certain tax subsidies – but these are not essential to its operation, and could be eliminated if the tax and banking system were reformed to reflect basic principles of justice detailed in the “Capitalist Manifesto” as well as “Capital Homesteading for Every Citizen.”
Thus, except in emergency situations, there is no reason or excuse for the government to use the tax system to redistribute wealth, not when a much better system for attaining a genuine economic democracy founded solidly on principles of natural law already exists and needs only to be implemented.
As for the emergencies, yes, they have a way of occurring, and sometimes the government must take steps to redistribute wealth to meet people’s basic needs until the emergency is over. Since the tax system exists and is an orderly method of carrying out this task, it can be used for this purpose – but this should never be a regular thing, and the program should be stopped as soon as the institutions of society have been restructured in a way that allows people to take care of themselves without coming under the control of the State.
As it is currently embodied in law, the ESOP unfortunately relies on certain tax subsidies – but these are not essential to its operation, and could be eliminated if the tax and banking system were reformed to reflect basic principles of justice detailed in the “Capitalist Manifesto” as well as “Capital Homesteading for Every Citizen.”
Thus, except in emergency situations, there is no reason or excuse for the government to use the tax system to redistribute wealth, not when a much better system for attaining a genuine economic democracy founded solidly on principles of natural law already exists and needs only to be implemented.
As for the emergencies, yes, they have a way of occurring, and sometimes the government must take steps to redistribute wealth to meet people’s basic needs until the emergency is over. Since the tax system exists and is an orderly method of carrying out this task, it can be used for this purpose – but this should never be a regular thing, and the program should be stopped as soon as the institutions of society have been restructured in a way that allows people to take care of themselves without coming under the control of the State.
Binary economics and democratic or universal capitalism, 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. It is a value system based on the importance and dignity of every human person. The “pursuit of happiness” phrase in the Declaration of Independence was interchangeable in those times with the word “property.” The original phrasing was “the right to life, liberty and property.” “The pursuit of happiness” phrase was a substitute for the “property” phrase. In the forerunner of the Declaration of Independence and Bill of Rights, the 1776 Virginia Declaration of Rights declared that securing “Life, Liberty, with the means of acquiring and possessing Property” is the highest purpose for which any just government is formed. Democratizing economic power will return us to the pristine innocence and economic power diffusion we had in a pre-industrial society where labor was the principal factor in the creation of wealth.
When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When capital workers (productive capital owners) replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.
Thus, as Kelso asserted, “the government continues to discharge its responsibility for the health and prosperity of the economy through coerced trickle-down; in other words, through redistribution achieved by the rigging of labor prices, by taxation to support redistribution and job “creation,” or subsidization by inflation and by all kinds of welfare, open and concealed.”
In Kelso’s words, “a democratic capitalist economy is a private-property, free-market economy in which goods and services are produced through the voluntary and universal cooperation of concurrent labor workers and capital workers under a politically democratic government.” At present the United States economy, nor for that matter any other economy does not operate as a private-property democratic-capitalist, free-market economy. What needs to transpire is an understanding of binary economics along with instituting credit mechanisms that will implement the goal of broadening productive capital ownership in ways wholly compatible with the U.S. Constitution and the protection of private property.
Democratic or universal capitalism has yet to be tried. We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the contenders for the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.
http://www.helium.com/items/1179144-reflections-redistribution-of-wealth-through-taxation?page=2
