On May 30, 2013, David Cay Johnston writes in the Columbia Journalism Review:
Look at the monthly Treasury Statements for the current year and previous years, and there is a clear surge in April. Federal receipts grew almost $88 billion to $406.7 billion, up more than 27 percent from a year earlier. That $88 billion is largely from a combination of increased corporate tax revenues and both individual income and payroll taxes.
Federal revenues should grow much faster than the economy in a recovery, even a weak one. That’s because tax rates are higher on higher incomes, and the data available so far (which don’t come up to the present) show incomes rising only at the top since the depths of the recession. For the bottom 90 percent of Americans, average real incomes were actually down 6.7 percent from 2008 to 2011, according to the latest analysis of tax return data by economist Emmanuel Saez of UC Berkeley.
Ordinary income includes wages, salaries and the exercise of stock options. In 2012 the top marginal tax rate was federal 35 percent, but in 2013 that rose to 39.6 percent on taxable incomes above $400,000 ($450,000 for married different-sex couples). In addition, there is a new Medicare surcharge tax of 0.9 percent on salaries and other earned income above $200,000 for singletons ($250,000 for married couples).
The top tax rate on investment income also rose, from 15 percent to 20 percent, prompting many people to sell profitable investment at the close of 2012. And capital gains are extremely concentrated, IRS data show. In 2010, just 7,747 taxpayers—out of 143 million—reported 38 percent of all capital gains. High-income taxpayers also pay a 3.8 percent Medicare tax on most of their capital gains, dividends, interest, rents, and most royalties.
That means that the rise in revenues that helped reduce the 2013 deficit may not owe much to broadly-shared growth—and a good bit of it may just reflect the richest households shifting the earnings away from future years into 2012. A similar surge occurred in 1986, when wealthy Americans took income to avoid paying more the following year once the Tax Reform Act took effect.
The real solution to deficit reduction and elimination, as well as for national debt, is to finance FUTURE economic growth simultaneously with broadening private, individual ownership of wealth-creating, income-producing productive capital assets.
The real discussion should be about OWNERSHIP. The richest Americans are rich because they are OWNERS of wealth-creating, income-generating productive capital assets.
This is the reality of the FUTURE, unless you and I and every other human being with a desire to be someone and contribute to the betterment of society do something about it. It all comes down to what source of income will each of us gain access to and whether we will Own or Be Owned in the economic sense.
The statement “Own or Be Owned” suggests the two alternative worlds of the FUTURE. Today’s reality is that the average citizen does not own wealth-creating productive capital assets (as do the wealthy rich people in our society). To change one’s plight from that of capital-less or under-capitalized and solely dependent on a job or government welfare assistance in one form or another, citizens must share in the ownership of the money system. Most of you out there do not even know how money is created. Money is created when the Federal Reserve Bank (a central bank privately owned) loans it to banks that you have your checking account or meager savings account (if any) with, and the banks re-loan it multiple times because laws allow them to have a fraction of the amount on hand or in reserve in relation to the amount of loans they are allowed to make (fractional banking). This creates boom and bust cycles in the national economy, and empowers an elite few who really OWN America. With proposed Capital Homesteading, the Federal Reserve would serve as a “public bank” and would loan money directly to citizens, who must put it in a personal special super-IRA retirement account which would invest in dividend-paying stocks of corporations that use the money for productive, economy-growing purposes. This would empower all, instead of an elite few and eliminate fractional-reserve boom and bust. It would also provide for unlimited private sector growth, and eliminate the need for socialist welfare programs funded with tax extraction and national debt. This would back the currency with real products or goods and services and reduce the size and scope of government. As government becomes smaller because individual citizens are able to support themselves and their families living off dividend income and resulting REAL jobs, national debt would be retired and demand for taxes would shrink. The tax system would be changed to be far simpler, flatter, and fairer. And all of us would be on the path to prosperity, opportunity, and economic justice to pursue our personal desires and experiences as we become strongly independent and responsible.
Everyone reading this article is invited to visit and consider joining the Web site of the Coalition for Capital Homesteading, an advocacy group advancing the Just Third Way vision and comprehensive system reforms designed to achieve a people-empowered, market oriented, property-based approach to economic democracy at local, regional, and national levels.
What I and my colleagues at the Coalition For Capital Homesteading (http://capitalhomestead.org/) are recommending is that the Federal Reserve become a more accountable and effective engine of non-inflationary private sector growth. We are asking the President and Congress to call on the Federal Reserve to use its existing discount powers under Section 13, paragraph 2 to open up a new source of mass purchasing power through widespread worker and citizen ownership of productive capital.
Today the Federal Reserve uses its powers to monetize unsustainable government debt, bail out banks deemed “too big to fail,” and widen the gap between the top 1 percent and the bottom 99 percent. The Federal Reserve could play a more positive role, removing artificial barriers to equal citizen access to acquiring and owning productive capital wealth. By creating asset-backed money for production, supported by growth-oriented tax policies, the Federal Reserve could truly help promote shared prosperity in a market system.
Chairman Benjamin Bernanke and other 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 where there isn’t enough savings in the system to finance economic growth.
I urge those interested to examine the systems logic behind the Capital Homestead Act’s tax and monetary reforms, expressed in “A New Look At Prices And Money” published in the Journal of Socio-Economics (http://www.cesj.org/binaryeconomics/price-money.html)
Sign the Petition at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687
Sign the Petition at http://signon.org/sign/reform-the-federal-reserve.fb23?source=c.fb&r_by=3904687
Sign the WhiteHouse.gov petition at https://petitions.whitehouse.gov/petition/amend-federal-reserve-act/GYqvqGr6
The answers are to be found in the proposed Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm, and the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797
