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On Social Security -  the system is not "broke" and can be funded as far as is necessary by raising the ceiling on the salaries from which FICA taxes are deducted.  In fact, there is no reason not to raise it to whatever the ordinary members of the House and Senate are paid in lockstep with when they raise their own pay.  It is more than ridiculous that they do not pay Social Security taxes on all their tax-payer salaries while the vast majority of Americans do.

If in fact we did raise the ceiling to that level, rather than RAISING the age for Social Security, we could consider LOWERING the age for full social security.  Too many of those who bloviate about these issues are people who do intellectual work.  I was eligible for full Social Security at 66.  I could have drawn it and kept teaching, and may return to teaching next school year.  But imagine a coal miner, a laborer, a construction worker, anyone who does PHYSICAL labor -  why are we denying them full benefits when they are no longer able to continue to do the kind of work in which they have been employed?

And were we to lower the age for basic benefits, that might open up more opportunities for younger people to be employed.

I have some more thoughts below the squiggle.

I admit I am not an economist.  As a teacher of government I have had to guide my students through economic issues.  That certainly includes our perverted tax structure, which has gotten that way in part because the voices of ordinary folks are rarely included when deciding about tax policy.

So here are a few thoughts I have to offer.

1, A different tax rate on capital gains should only be for original investments, not for trading for example pre-existant stock.  That is not investing in building a business.  I will grant that there may need be some kind of sliding scale for when a corporation issues additional stock - which has the effect of diluting the ownership of extant shares.   I also think a flat 15% rate is far too low -  here a sliding scale might also apply to encourage investment rather than speculation:  30% for 1 year, 25% for 2 years, and a bottom rate of 20% for 3 years or longer.

2. There should be caps on the amount of home interest deductions to which someone should be entitled.  If someone want to spend 100 million dollars on a house, there is no reason the rest of us should be financing that by allowing them to deduct mortgage interest or 90 million or more.  If that cuts back on the building of luxury houses, perhaps the resources could be redirected to something more productive to society as a whole.  The ceiling should be adjusted with inflation, and it can be phased out over a scale, as we already phase out the ability to deduct interest on educational loans.  

3.  We need to reexamine those portions of the tax codes addressing non-profit organizations.  Religious organizations should be entitled to use tax exempt funds only for clearly educational or charitable purposes, and that should NOT include involvement in the political process, nor should it include investment in for-profit entities.  The abuse of 501(c)4's in the recent election cycles is something that clearly needs to be addressed.

4.  As an individual I am not allowed to deduct political contributions from my income subject to federal taxes.  I am allowed to deduct a nominal amount from the income subject to Virginia taxes.  We really need to ensure that corporations are subject to strict limitations on political expenditures:  that is, lobbying activities should be limited to a certain percentage of revenue, and direct contributions to political actions committees or on political advertising should not be considered a deductible business expense.  I know that the corporate world will fight this, but allowing such expenditures constitutes a subsidization of such expenditures by the rest of us who cannot take such deductions.

My last point for today is one I have made before, in the past with detailed charts.

The minimum wage is far too low.  

I want to tie Congressional pay to the minimum wage on some fixed multiplier, so that if Congress wants to raise their pay, it automatically results in an increase in the minimum wage.  Since those at the lower income level pay payroll taxes on all of their wages, this would increase the revenue coming in to both Medicare and Social Security, relieving the financial pressures on both systems.  I would suggest that were we to look at the historic relationship between minimum wage and Congressional pay, any hourly wage of less than $10 is very much insufficient.  Remember, working 2000 hours would still only provide $20,000 of wages, which is still insufficient to get one out of poverty, but which certainly is a significant increase for those only making the current $7.25/hour.   People at low wages spend all they make, so this would result in an injection of money into the economy of consumer spending, which would help both the private and public sectors.

I am willing to explore some process of phasing this in for employers of less than some minimal number of employees, say 20 or 25.  Large corporations are already making humongous profits.  Those who have minimum wage employees can well afford to pay them decent wages - and in many place $10/hour is not a livable wage.

There is much more one can address.  The entire approach to corporate taxation needs to be rethought.  So does the matter of executive and director compensation, and how that is addressed through the tax code.

There is no fiscal cliff.  There is more than enough revenue available.  Our problems come from the inequities of our current system, which greatly favor some economic activity over other economic activity.  When corporations are sitting on trillions of dollars and making hundreds of billions in profits while paying little if anything to the federal, state and local treasuries, we do not have a spending problem, we have a revenue problem because they are not paying for the services we the people provide them through our government.

Our government.   Not theirs.

Originally posted to teacherken on Fri Nov 09, 2012 at 12:01 PM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  Why I wrote this - (10+ / 0-)

    I listened to Speaker Boehner.  I listened to President Obama.  I heard the discussion among the talking heads, the villagers, and what I did not here was some basic common sense and concern for the ordinary people, even in the President's words.

    The American people want the rich and the corporatists to pay more.

    That it does not happen is because the system is perverted in ways that allow them to influence governmental decisions and the political processes in ways that benefit their economic interests while the rest of us suffer in higher taxes imposed on us while the services upon which we depend are cut.

    I am not a polemicist.  I am certainly not an economist.

    But this is basic arithmetic.

    This is also common decency.

    If we always start from the standpoint of business, we will never change.

    If we will not think first and foremost of the citizens, who should be considered as more than either employees and/or consumers.

    I do not claim this is a thoughtful post.

    You could say I hope to provoke a discussion, even an argument.

    Or as Rachel used to say, talk me down.

    "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

    by teacherken on Fri Nov 09, 2012 at 12:00:44 PM PST

    •  Good piece, Ken (2+ / 0-)
      Recommended by:
      Mostel26, teacherken

      There are zero economists that the Republicans listen to, not  even the long dead Austrians or even Adam Smith.

      You make a lot of good points. I had to retire early on disability from a basically white collar job. I'm from a blue collar family as is my wife and we know whereof you speak.

      Some people can go on indefinitely. Some workplaces value them. But all too often people find themselves on the scrap heap before full retirement age which is already too high. It didn't hurt me and my wife will go next year at 66. She's been self-employed for nine years and it's as difficult if not worse than her old job.

      I believe we ought to start moving the Medicare Age down, not up,  in the absence of universal single payer. It would help to control health care costs, because if we chose 50, that's when health care costs on average start to rise and need the rigor of Medicare - it works. We're not making babies any longer but we have more chronic and severe issues.

      Keep going. Sorry it fell into the cracks.

  •  I think that the tax rate on large amounts of (1+ / 0-)
    Recommended by:
    Pescadero Bill

    (not meager savings accounts or 401ks) money, like Rmoney's, that is setting around doing nothing but breeding more money should be 90%.

    Money that is invested in keeping jobs in America should receive the tax breaks.

    "Drudge: soundslike sludge, islike sewage."
    (-7.25, -6.72)

    by gougef on Fri Nov 09, 2012 at 12:21:19 PM PST

  •  Sane script for an insane political theater. (2+ / 0-)
    Recommended by:
    GPMOAT, LibrErica

    Other than that, I've got nothing. I'm not sure how you get any of it passed in this Congress. That is, short of all out political war.

    BTW, have you seen this insanity?

    Vote Tea Party Taliban! Bring the Burqa to America.

    by Pescadero Bill on Fri Nov 09, 2012 at 12:22:51 PM PST

  •  A reply on your 4 points (0+ / 0-)

    1) We can do a Reagan like (1986) tax reform that treats cap gains/dividends as ordinary income.  This would allow us to lower the top rates (which R's say they want) while also raising more revenue (by using only 80% of the gains from raising those investment income rates to lower taxes).  Easy to do if the R's are serious about helping small businesses as opposed to the very wealthy investor class.

    2)  The mortgage deduction is already limited to $1.1 million.  However, I think we need to phase it out entirely, as it is a perverse incentive (ie you are rewarded to borrow more, put less down, and have a higher interest rate).  If there is ever a time to get this out of the tax code it is right now with rates under 4%.

    3)  I agree.

    4)  Clamping down on lobbying is best accomplished through fixing the corporate tax code and thus reducing the incentive to lobby.  Obama really should push hard on a corporate code that eliminates all loopholes or targets business activity/revenue vs profits.  

    Even for the middle class, there are way too many deductions that give preferential treatment to one taxpayer over another and ideally we could eliminate most/all and lower rates so that everyone at a given income level pays the same tax to the government.

  •  Patient Capital (3+ / 0-)
    Recommended by:
    LibrErica, Pescadero Bill, Mostel26

    I fully support eliminating capital gains taxes on investments held an appropriately long period of time, say 7 to 10 years.  An investor who is willing to tough out the vagaries of the market and economic trends over that long a period of time deserves to be rewarded for their patience in trying to help actually build a business and to avoid any impact of inflation during that period.  The current idea of enabling an "investment" held for a year to be subject to capital gains designation is just ludicrous.  It's still no different than holding a lottery ticket for a long time.  And the idea of allowing only real investments in initial stock purchases to qualify is spot on.  Trading is gambling - period.  Can somebody explain the difference between trading on the bourses and buying a lottery ticket?  Just think of all of those books and courses on systems used to buy lotteries resemble nothing so much as the technical analysis texts and seminars offered to "traders," for a very good reason.  It's gambling income and should be taxed accordingly.

    "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

    by PrahaPartizan on Fri Nov 09, 2012 at 12:27:08 PM PST

  •  Thoughts (1+ / 0-)
    Recommended by:
    tofumagoo

    1. I like the Canadian approach to capital gains. It is simple. 1/2 of a gain is tax free. The other half is taxed as income. What this means is that the rich pay more tax on a gain.  You always have to remember with these issues that you want to keep the record keeping simple (otherwise you just employ lots of accountants) so different rates for different periods is unduly burdensome.

    2. Again I prefer the Canadian approach to mortgage interest. Mortgage interest is NOT tax deductible, but any gain on a primary dwelling is tax free. Again this makes sense as the biggest beneficiaries of the current system are the rich - they have bigger houses and bigger tax bills to deduct against. The worst off are the people who can not afford a house at all. They get nothing for their rent.

    3. Agreed on minimum wages.

    4. The single biggest thing that has to change is the treatment of carried interest. Right now folks like Romney and his palls get an unbelievably good deal on what really should be treated as income. That this exists is a crime.

    5. I continue to be astounded with all the talk about SS and spending and tax cuts, but almost no mention of the INSANE amounts being spent on defense. When you are running a trillion dollar deficit you have to look at everything and it is clear to me that defense should be able to be cut more than anything else given the run up in expenditures over the last decade. All I hear is DEAD SILENCE.

    Those who make peaceful revolution impossible will make violent revolution inevitable. - JFK

    by taonow on Fri Nov 09, 2012 at 12:31:26 PM PST

  •  Corporate Governance (0+ / 0-)

    Somehow, publicly traded corporations should be required to put their lobbying expenditures to a direct vote of the shareholders.  Let the executives explain just how they want to spend that money.  The right-wing thinks it's just fine that a union members get to vote on political expenditures, but the concept applies equally to corporate shareholders.  Besides, it will force the magnitude of the expenditures by publicly traded firms out into the open so that the electorate can understand just what's being "invested" by business in procuring favorable legislation.  This is another instance where transparency cannot hurt.

    "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

    by PrahaPartizan on Fri Nov 09, 2012 at 12:32:05 PM PST

  •  I'm not an economist either (1+ / 0-)
    Recommended by:
    Mostel26

    and I can only stand to listen to it being discussed for so long before I run away screaming and crying, but... your points seem valid to me.

    And I would add that in addition reforming the tax code to reward patient capital, with a zero or extremely low rate for investments held more than 5 years, I would propose that we punish speculation the way several other governments do with a microscopic transaction tax on securities trading.

    Read this article about it.  If the free-est countries in the world (according to the Heritage Foundation) do it, then I don't know why we shouldn't do it.  Plus, it just makes a lot of sense. Speculation does nothing but extract money OUT of the real economy resulting in actual harm to actual citizens. So let's tax speculation per transaction and keep the capital gains tax at 15% for impatient capital.

    Women do 2/3 of the world's work, receive 10% of the world's income and own 1% of the means of production.

    by LibrErica on Fri Nov 09, 2012 at 12:53:33 PM PST

  •  Financial Transactions Tax, please (1+ / 0-)
    Recommended by:
    Mostel26

    In addition to increasing taxes on capital gains, we need to tax each and every purchase/sale on Wall Street a small fraction of a percent. The speculation in the stock market makes Las Vegas look like friendly round of Friday night poker. Also, the speed at which computer driven transactions take place leads to excessive volatility in the markets. A financial transactions tax might slow down the insane pace of speculation, or if not, would provide a significant source of revenue to the federal government.

  •  Making this happen (0+ / 0-)

    In order to move towards these types of policies, we need to snag some legislative gains.  The upgrades in the Senate (Warren, Heinrich, Hirono, Baldwin, etc.) will help us out, but the House is going to be a difficult get due to the Gerrymandering by Republican state legislatures. I'm dying in PA-07 with Pat Meehan as our rep. PA-06 and PA-08 are also in a bad spot with Gerlach and Fitzpatrick.  All 3 of these jokers were gifted with extra red districts for 2012 through 2020 elections by the Rs in Harrisburg.  

    I really don't know how to do this in PA, let alone every state, but we need a national plan to get good Democrats elected in every state legislature. The PA House of Representatives and PA Senate are going to become more difficult to win because the Republicans state level Gerrymandering plan goes into effect for the 2014 state house and senate elections. A ton of PA House seats were R "keeps" by very small vote totals, but the state and county Democratic organizations in PA were crushed by Republican ads.

    I don't mean to thread jack with my level of upset at not winning seats in the PA Legislature, but all of the goals in the diary are important to our nation. I just hope we can all make them happen.

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