So, back to my proposals:On Labor Day I posted two proposals, and a series of random thoughts in general support of them. This post outlines the proposals in more detail.
- Raise taxes on the wealthiest Americans, and even more on the large corporations.
- You can see from what I said last time that this is not an anti-rich proposal. It would be to the advantage of the entire country, including the super-wealthy, to keep the fruit of our labors from pooling in the hands of a few where it does no one (not even the few) any real good, but
- This is an anti-large-corporation proposal. The fact that some of our corporations are too big to fail, and that many of them have undue influence on our government, is dangerous to our democracy.
We could decide to empower the federal government to go in and break them up, but there's no guarantee that it would actually happen, or that the manner of the breaking up would be beneficial if it did happen.
On the other hand, we could escalate taxes according to corporate size dramatically, and then allow the corporations to break themselves up in order to avoid higher taxes.
They would probably make better decisions about how the breakup was done, but they would do it if it would save them money.
So I would suggest that the brackets simply keep going up as corporate income goes up, and that we also institute a graduated corporate property tax, which would discourage enormous corporate size even when corporations found shelters for their income. - All of this would encourage corporations to become smaller, which would mean more competition, a freer market, and a healthier economy without the government having to intervene in the details.
- Meanwhile, the higher tax rates would encourage hiring.
I explained this in detail about Joe the Plumber during the last presidential election.Contrary to corporate propaganda the higher a business's taxes are the more likely it is to hire, not the other way around. Remember, employees are deductible, so if my top tax goes up, I save more for every dollar I spend on employees.
Think of it this way (a slight over-simplification): if my marginal tax rate is only 1%, 99% of every dollar I pay comes out of my own pocket. But if my marginal tax rate is 50%, then I only pay 50 cents after taxes for every dollar I invest in employees.
I can hire a new employee for half the cost, I can give that loyal employee a 10% raise and it only costs me 5%!
Higher marginal rates make it cheaper to hire employees. - Then we should turn our attention to small business, which is where most of the innovation and energy of the economy comes from.
We should create a tax credit for all businesses below the median size in the country, based on the total amount they pay to the lowest paid quarter of their workers, and we should index that credit to the unemployment rate. - We target the bottom half of U.S. businesses: you know, the guys who actually grow by production and innovation instead of buy-outs and mergers. (And the ones who actually could use some help.)
- We give them a tax credit for x% of the amount they spend on the lowest paid quarter of their workers.
This would not be a hiring credit, which would only apply in the year of an initial hire, it would be a permanent credit, based every year on the amount a small business pays the bottom quartile of it's employees. A company could increase the amount of the credit in any year by either hiring more workers, or by paying them more. - We index the x% to the unemployment rate. When the unemployment rate is low, the credit is low. When unemployment goes up the credit goes up, making it even cheaper to hire new workers.
- Over the long run, this stabalizes the job market, making certain that there's always a good job out there for anyone who wants to find productive work.
- Meanwhile, it strengthens small business in general, and expecially start-ups, where the real innovation happens and most of the job creation gets done.
These two measures, taken together, would go a long way toward:
- Sizing down the "too big to fail" companies which need constant taxpayer bailouts and cause much of our economic problems in the first place. (Without the government having to step in and forcibly break them up.)
- Encouraging healthy competition and a freer market.
- Getting the economy kick-started, and keeping it on an even keel in the future, by:
- Strengthing small businesses and start-ups when they most need it, and
- Creating jobs in the private sector,
- Which would help us reduce the deficit as those small businesses and those employees begin to earn more and pay more taxes.
At least, that's what I think today.
