A SOCIALLY CONSCIOUS TAX PLAN
RECIPE FOR RECOVERY
BY ALAN SILVIUS
As a green, I believe in thinking globally, but I do not believe
in exporting capital when it results in the misery of unemployment at home.
Neoclassical economists, however, favor exporting capital as a means of
increasing the return on capital.
President Reagan assured the public that the so-called "supply-side"
tax adjustments would result in "jobs, jobs, jobs!" Relatively
little of the vast sums that were released from taxation provided jobs for
the American unemployed. Indeed, the jobs provided were largely minimum-wage
service-industry jobs.
A considerable investment was made in taking over existing firms by the
issuance of junk bonds. The capital gains tax reduction stimulated speculation,
but the much publicized Dow-Jones Index issues are largely military contractors
as well as transnational firms. As military suppliers, these firms wave
the flag; as investors they tend to ignore American labor for civilian manufacturing.
That infamous suede shoe salesman who was president from 1981 to 1988 revised
Labor Department standards for counting the unemployed. Anyone with a part-time
job was counted as employed. Previous administrations had attempted to estimate
hard-core unemployed-those who, having been repeatedly told that there was
no work for them, had ceased to call at the employment office. The percentage
of total unemployed reported by the Reagan-Bush administration never came
close to reality.
Robert Reich, Clinton's Secretary of Labor, announced that there were 16
million underemployed. This has to be a guess even though Reich is more
reliable than any Reagan or Bush appointee.
Clinton ran on promises that he is either unable or unwilling to keep. Both
parties now aim to reduce "spending" (read "except military
spending") and to increase regressive taxes. They choose to ignore
the structural fault of the American economy-the underinvestment in civilian
manufacturing.
The Establishment calls for "growth" as the cure for all social
ills. Unqualified growth, however, can be just more of the same old exploitation
of which we have had too much. If, contrary to logic, the Establishment-desired
growth should ensue, it is highly unlikely that the entrepreneurs will turn
to the towns of the abandoned factories or attempt to revive the rusting
hulks. The entrepreneurs consider it more efficient to destroy additional
wilderness and recruit new workers to operate the factory.
A faulty tax policy got us into this jam. A socially-conscious tax policy
is needed to get us out of it. Taxes on the poor should be eliminated. Taxes
on the lower middle-class (those below the median household income) must
be substantially reduced. Between the median household income and the one
million dollars annual income, tax rates should progress in even increments
up to a nominal marginal rate of 70 percent. Given that there would be an
initial $16,000 exemption per filer (to relieve the poor), plus the following
deductions, the actual rates of taxation would be much less than the nominal
marginal rates.
Deductions:
1. All expenses necessary for the production of income, including education.
2. Most socially-desirable investments made in America, whether by a proprietary
firm, a partnership, a cooperative, or a corporation.
3. A small donation to a political party, say up to $100. In effect, America
would invest in its own future, with the investment selected by an individual
investor. It would be most socially desirable for investments to be made
in reviving those rusting hulks, with the communities dependent upon them
coming back to life.
The revenue yield from this tax pattern will be less than the revenue yield
from the present taxes unless massive investments in America result. In
the latter case, a large percentage of those 16 million underemployed will
become taxpayers, resulting in rapid deficit reduction.
Ecconomics/Politics- -Archives
- - North Coast HOME- - Electrons
to the Editor
