It’s a huge mistake to bash the rich in this country. There’s a certain political strain that thinks it’s right and necessary and proper to take money from the rich. The truth is, if it weren’t for the rich in this country, we wouldn’t have a country.
Income inequality is a reason capitalism helps people think and work smarter and harder no matter what their education is. I do think we owe more loyalty to our workers and should pay them more, rather than focusing on our stock value.
The top 20 percent of income earners in the United States pay 80 percent of taxes. What do people in the U.S. not understand about that statistic? I’m a Democrat, and I get it. I know I’m paying a lot less in taxes because we have a wealthy class in this country. Not only the trickle-down aspect of them investing their wealth in growing our economy, which is a valid economic theory.
I think President Trump wants to get rid of corruption and waste and get a stimulus bill passed (see “Bold Plans for Our Transportation Infrastructure), but unfortunately he hasn’t been able to keep that conversation going with the public. In the U.S., we seem to be unable to work on more than one bill at a time.
Let me provide some food for thought. We’re currently about 3.1 percent rate of growth in gross domestic product (GDP). If we lower taxes, there is no way we shouldn’t get that up to 4 percent next year and hold steady at that rate for the next five years or so. In the meantime, we’ll tell people the facts: We’ll have a short-term, one- to two-year increase in the national debt, then we’ll start paying it down. The Government Accountability Office is using a 1.9 percent GDP grow rate to evaluate the tax bill. What do you think? No wonder they have been wrong for 20 years. (Remember when they said Obamacare would lower premiums?)
Also, Trump is the latest president to attempt a sweeping tax reform bill, which includes changes to how U.S. companies are taxed, especially on money that’s kept overseas. Trump proposes a one-time tax on existing overseas cash, then possibly 10 percent after that to bring it home. We need to bring that money back into the United States. Bring the corporations back, and bring the money back. Now. The difference could be astronomical for the working and nonworking classes. Under a better tax plan, the top 20 percent of Americans will be able to compete internationally, and pay the workforce more.
I’m an economist by education. There is no way the middle class can make more money without the rich getting richer. So let’s stop thinking about the impossible. No economic model will allow that to happen.
We have such old, classic-style economists in the government and advising the president. As I’ve written before, we need a whole new set of economic models and economic thinking in this country.
We must also talk about the poor. We talk about raising up the middle class, but I never hear anybody talking about the poor at all. And it always intrigues me how we send billions of dollars to other countries to help their poor and starving (which I agree should be done), while so many Americans are poor and starving. Think of the mother who is living on the street, trying to feed her kids. She wants to work. There must be programs we can develop to get people off the street and into housing and jobs. Maybe some tax-created incentives so that we can get them off taxpayer subsidies, saving money and helping those in need.
If the corporate tax rate were cut 15 percent, from 35 percent to 20 percent, there would be more revenue because more of that money would stay in the country. This would help the poor and working class because companies could then afford to hire more people and to give their employees raises.
On the day that new corporate tax rate goes into effect, companies could provide a 5 percent raise to every one of their employees. The labor side of a business doesn’t represent all of a company’s expenses; it’s maybe 25 percent to 30 percent. Providing a 5 percent raise would cost companies less than 1.5 percent of their revenue.
So the private sector must step up and pass a little of that tax benefit on to their employees. Let the owner of the company or the stockholders or the board of directors take credit for the raises. This would be great for both the image and public relations of American businesses.
If the major corporations in this country publicized their pledge to give a 5 percent raise to employees the day the new corporate tax rate went into effect, there wouldn’t be a single politician against it — that is, if that politicians wanted to stay in office.