Monday, February 02, 2009

New Year Revolutions

Ted Rall IMO, is a modest - at best - cartoonist. But as a political observer, he gets very high marks from me. I have been sitting on his column, Only One Solution: Soak the Rich and Corporations, for many days - wondering why I couldn't have written something half as good as he has. But, rather than trying to re-invent his wheels, I've decided to just give them my spin.

Here's what Rall says:
A moratorium on housing foreclosures and evictions is a good idea. So is making the tax code more progressive. . . . .the rapidly metastasizing disease that threatens to kill the U.S. economy [is] income inequality.

. . . . . Tax returns give only a partial picture of a nation whose riches have been aggregated in the hands of a tiny elite. The Internal Revenue Service captures only about 70 percent of business and investment income....
That means the other 30% goes unreported.
So actual income inequality is bigger than IRS data indicates . . . .The wealthiest one percent of Americans earned 21.2 percent of all income in 2005.

. . . . . What if we played Karl Marx and left that one percent of the population (people who earn over $350,000 a year) with their fair share--one percent of national income? If we divided the rest of the loot equally, everyone else--99 percent--would get a 20.2 percent pay raise . . . .

Due to wage inequality, the average worker earns 40 percent more than the median. Close the gap, and two-thirds of Americans get a raise. One-third gets a cut. But only a small group, the top five or ten percent, would feel significantly pinched. Most of the third wouldn't lose much. And everyone would benefit from the increased economic activity that would result from equal income distribution . . . . . Call it trickle-up economics.
The under examined myth in this country of ours is that salary is the biggest motivation for creative people. It's especially unexamined by the Reich wing because for the richest of the rich, satisfaction of greed is purpose for life.
After-tax 2007 profits for U.S. corporations totaled $1.8 trillion, up 10 percent since 2001. (Bear in mind: this figure doesn't include CEO salaries, capital reinvestments, and the acquisition price of other corporations.) The effective average corporate tax rate in the U.S. is about 13 percent--one of the lowest in the industrialized world. If we were to double the effective tax rate to 26 percent, the U.S. would remain a tax haven compared to Germany and other major European countries.

Let's say the IRS took that extra 13 percent corporate profits tax and cut a check to the American people. Why not? Without us, the U.S. consumer, these companies wouldn't be in business. In 2007, every worker in the U.S. would have gotten a check for $12,000. That's a lot of xBoxes, not to mention mortgage payments.
Ted's right.

It's as old as the hills and Henry Ford. Remember, Ford was the tycoon who wanted to ensure labor would make enough salary in order to be consumers. What free enterprise really needs is a market. Markets need disposable incomes. It's not the prospect of tax breaks that spurs investment, it's the prospect that good and services will be purchased when and if they are produced. It's not saving the greedy billionaires from their just taxes. It's the palpable prospect of buyers, consumers and customers that motivate entrepreneurs to create and build businesses. Tax breaks for the wealthy is the wrong way to go. Dead wrong.

Where am I wrong on this?