So, the 2012 national election is over (though some races have not, as of this writing, been decided). What’d we learn? A bunch of things. Some of these are not strictly related to the election, but I’m including them because the issues were raised during the election. This is my way of gaining closure on these issues.
Voter ID laws were (asnd will be!) all about suppressing the Democratic vote. GOP operatives went on record stating as much. It’s sad when moves like this are not immediately seen for what they are. I’ve been complaining for years to everyone that knows me. It’s finally getting some national attention.
Low taxes on the wealthy do not simulate the economy. There is absolutely no proof of this, yet the GOP has been spouting this nonsense for years and years. In the 80’s it was tried and it failed to have the prescribed benefit. It was dubbed trickle-down economics. Now, one of the wealthiest people in the US as called for a minimum tax on the wealthy. Excerpt:
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.
Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.
So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.
A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places.
Update 12/7/12: Fred Smith (FedEx Founder): Tax hikes on top 2% as job killer is ‘mythology’.
It’s an absurd notion that lowering taxes on the wealthy does anything but make the wealthy more wealthy, and absurd also that raising taxes on the wealthy causes them to stop investing.
The economy works best when the middle class is doing well and have money to spend on stuff. Skills just don’t pay the bills like they used to. The fact is, it’s not possible to make a living wage on full-time employment making minimum wage. The issue has been brought into the light with the recent discussions over the Black Friday Wal-Mart strikes. The bottom line:
Demos calculated that if large retailers paid their workers $25,000 a year and passed half the cost to consumers, the typical big-box shopper would pay an extra $17.73 a year.
If full-time work came with a minimum salary of $25,000, almost all of that extra money paid to workers would be put back into the economy, which would be a lot healthier.
Let’s stop pretending that unions are the reason we don’t have Twinkies anymore. The narrative is always the same when these types of stories break: greedy workers are the problem. The workers at Hostess had already gone through wage cuts. For example (emphasis mine):
In a piece for Salon, Jake Blumgart quoted a bakery worker who had been at the company for 14 years. “In 2005, before concessions I made $48,000, last year I made $34,000…. I would make $25,000 in five years if I took their offer. It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.”
I’m not saying unions are perfect. Unions fill a need, to combat exploitative management and ownership practices that have been in effect for centuries. The rise of unions in the last century coincided with the expansion of the middle class in America, and the greatest economic expansion in modern history.
Health care in this country is a joke. First, we tie health care to employers, which is a burden on the employers and dangerous for the employees, when they lose their jobs. Second, we spend more on and get less from our health care. Third, in what industry do they not publish prices and offer different and wide-ranging prices to different people, based on their affiliation? None other than the health care industry. If you walk in off the street to a hospital and offer to pay cash for a procedure, you will pay many times what someone with insurance will pay. This is insane and it should be illegal. Imagine if your landlord could jack up your rent based on who your employer was… how would that go over?
My prescription for the mess we find ourselves in. The election season provokes lots of discussion about our problems. It also made me think about what we should be doing. Below are my thoughts on the right direction. Notice that not once do I use the word “Republican” or “Democrat” or any other partisan term. These are issues that we should be able to discuss without the political labels we use to contaminate our discussions.
- As Warren Buffet suggests, we should have a reasonable minimum tax on the wealthy. One that they cannot get out of by hiding their money offshore.
- We should raise the minimum wage so that full-time workers can make a living wage. It should be at least $25,000 for full-time work, and there should be exceptions for small businesses and teenagers working while they go to school. Someone working full-time at Wal-Mart or Target should be able to live on their wage and not have to work multiple jobs to minimally support a family. UPDATE 12/7/12: an article in the Economist: evidence is mounting that moderate minimum wages can do more good than harm.
- We should have a single-payer system for health care, so we can get coverage decoupled from employment. We also need to insure that not a single person goes bankrupt because they get sick.
- We should close the loopholes on business taxes so that all businesses that make a profit pay taxes.
- We should lower the taxes on businesses. Given the previous item, we might be able to dramatically lower the tax rate of everyone pays.
- We should raise the minimum income at which point people pay taxes. I don’t know what the exact amount should be, but the “poverty line” should be raised and no one under that should be a cent of taxes.
- We should lower taxes on the middle class. People making incoming in the range from the poverty line to some reasonable amount ($80,000?) should have their taxes lowered.
- The tax code should be dramatically simplified. As it is, it’s a patchwork of complex regulations that allow people with means to circumvent paying taxes and for the major of us to waste lots of time once a year filling out forms. This necessarily includes closing loopholes so the wealthy will pay more tax, and like for business taxes, it might allow us to lower the tax rates.
- I think we have too few and too many government regulations. Congress should have to remove two laws for every one it creates. We live in an extremely litigious society, and we need to remove some of those incentives, without removing the safety net this provides for people being abused by the system. Regulation is a reaction to fraud and unfairness. I understand that. Sometimes the reaction is an overreaction, though. On the other side, we should enforce the good regulations that are on the books. The EPA enforces the laws related to the environment and their funding has been been systematically cut by Congress. Without the EPA, the air, water and soil of our country would be far more contaminated with pollutants. This is the same air we breath, water we drink and soil we grow our crops in. We are the beneficiaries of a clean environment, and it is well worth the cost, even if the products we buy are a little more expensive.