Steeply Graduated Income Taxes

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Discussion

Allan Engler:

"If public deficits were the real problem—not just a pretext—military spending particularly in the U.S. would be drastically cut. Taxes would be raised. Of course, tax increases have consequences. Higher sales and value-added taxes reduce consumer purchasing power, further weakening markets in times of recession. Taxes on enterprise revenues can reduce expenditures for plant and equipment and lead to the failure of more businesses.

Steeply graduated income taxes would upset the super-rich but are otherwise benign. Taxing income over $200,000 a year at rates of 75 per cent, and over $500,000 at 90 per cent would substantially increase government revenues without reducing markets for most goods and services. Taxing profits on the buying and selling of stocks, bonds, real estate, and currencies could raise additional revenues. International agreement to raise tariffs to 15 to 25 per cent from the current average of five to ten per cent would raise more. Although the profits of transnational corporations would be squeezed, the resulting growth in local production for local consumption would expand employment, income, and public revenues everywhere.

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Steeply graduated income taxes would make public debt manageable. Unlike taxes on consumption, taxes on the highest incomes would not dampen markets for consumer goods. Additional public revenues could be used to improve education, healthcare, social housing, income support, public transit. As employment and markets expand, enterprises would be encouraged to invest more.

Undistributed corporate profits are the main source of investment in research, development, plant, and equipment. By discouraging the distribution of profits as dividends, executive salaries, and bonuses, confiscatory tax rates on the highest incomes would give enterprises more reason to retain earnings, increasing the funds available for investment in real means of livelihood.

With far higher taxes on capitalist income, the super-rich will have to make do with less sumptuous homes, fewer and less luxurious automobiles, yachts, and vacation spots. For everyone else, the cost of keeping up with the Joneses will be less. People in all income groups are likely to save more, making more funds available for investment in housing and local enterprises.

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Steeply graduated income taxes would transfer control of social surpluses from a corporate oligarchy to elected national, regional, and local governments.

Can governments and elected representatives be trusted to act in the common interest? With steeply graduated income tax, a small self-serving minority would have less money to influence legislation and corrupt politicians. Billionaires, like the Koch brothers—two of the wealthiest men in the U.S. who have bankrolled the U.S. Tea Party—would have less spare cash to dominate and manipulate political agendas in their narrow class interests.

Steeply graduated income taxes alone would not end capitalist entitlement, but as elected governments gain more revenues to expand social entitlements and public employment, people will demand to have a voice in economic decisions. The right of wealth-holding minorities to impose their immediate interests will be replaced with the transparent, democratic right of people to direct economic life in the common interest, in the interests of human and environmental well-being.

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The wealthiest one per cent presently claim twenty per cent and more of total income. If their share were reduced to five per cent, extravagant consumption and the accompanying waste of resources would be greatly reduced.

Governments would have the funds needed to replace dependence on private automobiles with fast, accessible public transportation. Federal, regional, and local governments could be provided with the funds to construct public heating and cooling systems that require less fossil fuels. Investments could be made in local agriculture for local markets. Environmental protection agencies could employ enough inspectors to investigate complaints and to act against corporate damage to ecosystems.

As control of social surpluses passes from the hands of wealth-holding minorities to elected governments, people will mobilize to demand that national, regional, and local communities provide more employment and goods and services as human rights. Fewer people will come to depend on the profitability of capital in general and of transnational corporations in particular. More people will be free to oppose environmentally destructive industrial activity.

As communities replace private corporations as the institutions making economic decisions, industrial and service workers, professionals, the retired, homemakers, students, farmers, mushroom pickers, loggers, and ecologists will all have the right to a voice and equal vote. The interests of major shareholders and top corporate executives will no longer take precedence over the income and employment of common people, or over the carrying capacity of environments." (http://dissidentvoice.org/2010/11/tax-the-rich/)