Usually I talk about monetary policy, but on the subject of fiscal policy – my proposal would be 1) introduce a flat income tax across all individuals and corporations of 15% while 2) introduce a capital gains tax of 60% – used to pare down the budget deficit until the deficit is cut by 90% wherein a downward adjustment to the capital gains tax is negotiated.
A high capital gains tax and low income tax would discourage speculation and encourage wage growth. Right now, the focus of the economy is on capital gains engineered with artificially ‘repressive’ interest rates – spurring (virtually riskless) risk taking for the sake of generating (virtually infinite) capital gains.
By implementing what I am proposing, the tumor that is the speculative banking class would shrink opening up space for higher wage paying jobs within an economy that taxes that income at very low rates. The high paying (non finance) jobs are there, but the speculative FIRE (finance, insurance and real estate) economy robs them of oxygen and light.
Social security would be ‘means tested.’ I.e., if your net worth and income are above a certain threshold you are ineligible. I would lower the age of a universal healthcare program like Medicare to 35; paid for by cutting defense spending by 80% – and I would make drugs like Marijuana legal.
Also, monopolies would be broken up. One of the biggest threats to jobs in U.S. are monopolies. A company like Coke for example, sure it employs a lot of people, but it controls way too much of the market. Let 10 or 15 companies take its place, creating 10 X’s more jobs. On the subject of globalization – wherein global trade impacts regional economies – I would match how companies allocate their capital globally with how they are hiring locally. Apple computer has over 60 bn. in cash parked overseas to avoid taxation. Fine, but then the iPads manufactured in China get a pro-rata import duty to match the lost tax revenue on Apple’s overseas investments.
Corporate ‘personhood’ must also be abolished, or, companies causing mass death like Union Carbide/Dow Chemical (Bhopal) must face the death penalty like any mass murderer.
Regarding the proposal by the French politician of a 100% tax on incomes above 1 mn. euros. Dumb idea. What happens is that people stop dreaming up ways to make tons of money with innovative technologies and business models so the fountain of growth needed to sustain an upward bias in living standards evaporates. Making lots of money is not a problem in an economy where the risks and rewards of enterprise are evenly distributed to the best of our ability. (Making loans available to Goldman partners at 0% while forcing folks in the hood to pay 400% (annualized) is just one example of how NOT to run an economy).
Also, recognizing the value of people who don’t do much is needed to round out a healthy, diversified economy. For example, people who elect to not own a car and don’t drive at all should be given a monthly stipend for the value they add to the community in the form of a cleaner environment. This credit can be paid for by the people who drive very low mileage vehicles extensively. For every Lamborghini owner there should be a homeless person or two getting a few bucks a month – paid for by the Lamborghini driver.
“Look at the lilies and how they grow. They don’t work or make their clothing, yet Solomon in all his glory was not dressed as beautifully as they are.”
Additionally, any kid who was brought up in the lower brackets of poverty who gets accepted to an Ivy League school gets their education paid for by a hedge fund manager’s tax. On the subject of hedge funds, there should be a limited number of hedge fund licenses available, like taxi medallions. Just like there is a strictly controlled number of ‘primary dealers’ of U.S. gov’t securities.
Extra Points: Every American should get, along with their social security number, a free bank account with the U.S. Citizens Bank wherein each security offering of every stock, bond, etc. is increased by 2% and those shares are divided amongst all citizens in their USCB account – available for withdrawal to pay for 1) education 2) charity 3) a donation back to the government to enter a national lottery to eat dinner at the White House with the President and the First Family.