Taxing the Rich

As we begin the 2^nd quarter of the Twenty-first Century the challenges for America continue to increase. For most people, the greatest worries are external – China, Russia and to a lesser extent Iran. Many consider the first two to be existential threats while Iran is merely a nuisance that requires periodic attention. All three were much larger threats under the previous administration headed by crooked and incompetent Joe.* Today, at least for now, President Donald Trump, exercising his economic authority holds all three at bay and by the end of his term may well see the collapse of two of three problems.

However, I believe that the greatest existential threat is internal. It is the growing concentration of wealth in a relatively small percentage of the population. According to Forbes 2025 list of billionaires, there are now over three thousand billionaires in the world. About a third of those billionaires reside in the United States. The top 0.1 percent of nation’s wealthiest control approximately $162 Trillion of the nation’s wealth – or about 14.0 percent. At the same time the concentration of the nation’s wealth in the bottom fifty percent of the population continues to decline and now rests at about 2.5 percent. In summary the rich are getting richer and the poor are getting poorer.

Whenever I read and reread these numbers and the trends inherent in them I recall a conversation of about fifty years ago that I had with a good friend of mine in Montana who was a state legislator. John was a hard and fast Democrat and I was/am a staunch conservative. Despite that difference there were few, if any, political things upon which John and I disagreed. I asked him why with his rather conservative approach to government he remained a Democrat. John responded that there were more poor people than rich people in the world and that isf we did not take care and provide for the poor that they would, at some point, simply overwhelm us and take everything. At that point in time, he felt that the Democrats were more in tune with the needs of the poor. And even now, fifty years later, and despite the fact that the Democrat Party left John a long time ago, he holds to that belief – and so do I.

And history has reinforced that belief and never to a good end. The French revolution saw a violent clash between the royalty, the bourgeois, and the peasants resulting in a destruction of their political system and a takeover by the English. In Russia, the peasants revolted against first the monarchy and then the bourgeois resulting in the murder of over twenty-five million Russians and the establishment of the all encompassing and repressive Communist regimes under Lenin, Stalin and the succession of brutal dictators that followed – the nature of that beast continues today under Vladimir Putin although without the pretense of being a “communist.” And the same with Mao Zedong in China, Pol Pot in Cambodia and Ho Chi Minh in Vietnam, Fidel Castro in Cuba, and Daniel Ortega in Nicaragua. In each instance ruthless men preyed upon the misery of the poor with promises of redistributing wealth and power from the rich to the poor and delivered instead a permanent form of poverty to all with no means of escape except joining the government and preying upon the poor also. (If any of this sounds familiar in New York City, Minneapolis, Seattle, Portland, Detroit, etc. you would be right.)

All of this is made worse by a government that is riddled by the dumbest people in our society. (To paraphrase Sen. John Kennedy (R-LA), I don’t think that Jasmine Crockett is dumbest person in Congress but she had better hope that that person doesn’t die.)

So what should be done. Well, I am a dedicated capitalist and do not believe in the concepts of taking from the rich and giving it to the poor. But I also recognize that blind allegiance to capitalism and a free market fuels the growing disparity between the rich and the poor. It is the reason that we have anti-trust laws and we should recognize the monetary policy needs to attend to the disparity also. Following is a multi-step process that could go a long way to relieving the pressure caused by the concentration of wealth.

1. Continue the current tax code as applied to taxable income under $1Million. (Index that threshold to account for inflation.)

2. For income exceeding $1 Million eliminate all deductions, credits and other means of hiding or deferring income and tax that excess at twenty percent on a flat tax basis.

3. Limit the use of the proceeds from that flat tax to reducing the national debt and thereafter fully funding the Social Security System with an actual trust – only the old age assistance program and not Medicare, Medicaid, Obamacare, disability programs – like other welfare programs they should remain the responsibility of the general fund.. The trust cannot be used for any other government purpose.**

4, Restrict use of welfare funds to citizens of the United States. Eliminate welfare payments to able bodied persons who are not providing care for underage minors.

5. Adopt a balanced budget amendment with exceptions for national emergencies and a supermajority vote of both Houses of Congress. That will keep Congress from increasing the national debt at the same time that the new flat tax is trying to reduce it.

At some point in time after the revenue generated by that tax has reduced the national debt to zero and fully funded the old age assistance program under Social Security the excess revenue should be used to reduce the tax for that portion of the income under the indexed $1Million – starting with lowest range of income and working up to the higher rates..

Will this cure everything? I doubt it but it starts. Increasing the amount of money to the working class will promote economic growth and job growth. The fundamental cure for poverty is a good job and good wages. And the opportunity for the socialists/communists to prey on the poor ebbs rapidly.***

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* I have noted in previous columns that even the worst public figures are entitled to the courtesy of their designated title initially and/or the courtesy title of Mr., Mrs, or Ms. thereafter. However, Joe Biden was the worst head of state in our nearly 250 years of existence. So bad was he that it is impossible to determine whether he actually served as President of the United Sates or ceded all power to a cabal of unelected bureaucrats and wealthy donors. He has sullied and corrupted every thing he touched and remains undeserving of any official courtesy.

** Currently there is no Social Security Trust and the money that you and your employer contribute monthly has never been invested and instead has been used for general government expenditures.

*** While you might imagine that I am agreeing with Sen. Bernie Sanders and the other socialists/communists in American politics, nothing would be further from the truth. They believe in taking from the rich, keeping a little for themselves and using the rest to buy dependency of the masses. I believe in doing what is necessary to create economic opportunity for those willing to work.