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My Fairy Godmother, Part 3
by Richard Girard
After I had ordered the pizza, I opened another root beer, and Marge grabbed a German double bock, and sat back to wait for the Italian pie.
“So what else would you do with the aristocracy and their corporate lackeys?” Marge asked.
“I would start by reinstituting a strong estate tax, or as I call it 'The Paris Hilton Tax.' I would exempt the first six to ten million dollars of an estate to make sure no family farmer lost their farm, although the last I heard, the Republicans have failed to show a single instance of someone having to sell the family farm because of the estate tax. I would charge—oh I don't know—a rate of fifty percent for all monies from ten to fifty million dollars, and a rate of seventy-five percent for everything over fifty million dollars. Family trusts—such as the Kennedy's or the Rockefeller's—would have to pay fifty percent for any individual inheriting more than one million from a trust, at the time they qualify for payment from that trust. If an individual's part of the trust was over thirty million, I would charge seventy-five percent. I would also index the triggering amounts to the rate of inflation,” I said.
“People would describe such rates as 'confiscatory,'” Marge pointed out.
“Probably,” I sighed, “and these amounts and percentages are just numbers off the top of my head; someone with access to a Cray needs to do some computer modelling to ensure that the Government's income improves. We also need to make the income tax more progressive.”
“I remember reading somewhere—I think it was Voltaire—that the sole purpose of Government was to redistribute wealth; the only question was whether the redistribution would be from the rich to the poor, or the poor to the rich. Even an old reactionary like Ted Turner has stated that he will leave enough money for his children to do whatever they want, but not enough to do nothing. It is not in the long term interest of either society, or the trust beneficiary, to provide them the means to live a decadent life of idle pleasure,” I observed.
“Thomas Jefferson thought highly of taxes as a means to prevent the establishment of a hereditary aristocracy. In 1786, Jefferson wrote to George Washington, 'I do not flatter myself with the immortality of our governments; but I shall think little also of their longevity, unless this germ of destruction [i.e., the aristocratical (sic) spirit] be taken out.' His remedy for the problem was stated in a letter to James Madison in 1785, 'Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.' A year earlier Jefferson had stated in another letter to Madison, 'Taxes should be proportioned to what may be annually spared by the individual,'” Jefferson, at the time of these letters, was our Ambassador to France, where he observed the worst examples of abuse by the aristocracy. I do not believe that he could avoid seeing the horrendous damage done to the French body politic that taking from the less well off—farmers, shopkeepers, and townsmen, as well as peasants—to support the King, clergy, and aristocracy, could do. In a few short years, it was to lead to the brutal excesses of the French Revolution.”
“Justice Holmes wrote, 'Taxes are what we pay for civilized society.' I believe it is simple justice that those with the most to lose, should pay the most for the government that protects them. The 'Marxists of the Right,' as Robert Locke calls the Libertarians, think that they should only pay for the services they use. As Mr. Locke pointed out (in the March 14, 2005 issue of The American Conservative) 'If Marxism is the delusion that one can run society purely on altruism and collectivism, then libertarianism is the mirror-image delusion that one can run it purely on selfishness and individualism.' You pay your taxes, and then it is your duty as a citizen, to watch your Government and make certain the money is being spent properly. This is one reason I am against the Omnibus bills that legislative bodies resort to at the end of a session. It makes virtually impossible to do our duty as citizens.”
“I would change the income tax with Jefferson's ideas in mind. I would exempt the first $10-20,000.00 of income from personal income taxes, the first $20-40,000.00 for a married couple, plus $5-10,000.00 for each dependent. No other deductions except business expenses if you are self-employed; catastrophic losses from fire, theft, disasters, etc.; and medical expenses not covered by the new National Health Care system. This would mean a family of three—a married couple with one child—would have $25-50,000.00 of income exempted from paying any Federal income tax. This is far more than the deduction for interest you would receive for a home costing $200,000.00 at 8% interest. Exact amounts would be determined after we do some computer modeling,” I added. “I believe that such a system would help reinvigorate the American middle class in a way we have not seen since the Second World War. After those exemptions, I would vary the tax rate between fifteen and fifty percent on all income, earned or unearned.”
“How about a flat tax?” Marge asked.
“If there is anything more unfair to most taxpayers than the “flat tax,” I do not know what it is. Let us consider two families of four, and simplify things by stating that their incomes includes no exemptions or deductions. Family A makes $30,000.00 per year, Family B makes $300,000.00 per year. If both have to pay a flat tax of 15%, That leaves $25,500.00 of disposable income for Family A, and $255,000.00 for Family B. $25,500 is only $6,000.00 above the poverty line. That is going to make it tight for Family A as far as basics like food, shelter, transportation, education, etc.; Family B is more than $230,000.00 above the poverty line. Family B will not be struggling for the basics of human existence.”
“I think that the FICA tax should be extended to all taxpayers, no matter what the source of, or how high their income. It should also be made progressive by having three rates: 3% of your total income for anything under $20,000.00 per year; 6% for incomes between $20,000.00 and $100,000.00 per year; 9% for all income of more than $100,000.00 per year, with employers matching the contributions of employees. Contributions for the self-employed and unearned income would have to be matched by the taxpayer. Monies to be used exclusively for Social Security, and a system of single payer National Health Care.”
“Social Security unemployment benefits, and a universal health care system should all be parts of a nation's social insurance program. It protects Americans from catastrophic events in their lives: serious illness, their employer going belly up, losing everything in a business because of embezzlement, losing your retirement because of corporate malfeasance or takeover, etc.. Our complex modern society no longer permits us to live off the food we raise ourselves, or pack up and move west if everything goes to hell,” I said, “We have a duty to insure that Americans do not have to suffer for life's iniquities.”
“What will the insurance companies do?” inquired Marge.
“Piss up a rope for all that I care!” I bellowed. After counting to ten, I continued in a calmer voice, “Insurance companies are the poster children for predatory capitalism. For example, with health insurance twenty percent or more of what is paid to insurance companies by the insured, goes to administrative costs and dividends for the underwriters of their policies. This is four times what Medicare and Medicaid require to administer their programs. And those self-same insurance companies will do everything they can to avoid paying benefits to the insured.”
“Almost one-sixth of our national economy is spent on healthcare, fifty percent more than the country with next highest percentage. We have dropped out of the top ten nations in terms of life expectancy, infant mortality, and nearly every other medical category, except how much we spend on on healthcare. All of this while more than forty-seven million Americans lack any health coverage other than going to the overburdened emergency rooms. Maybe the insurance companies could set up special policies for private rooms, liposuction, and breast augmentation, etc.. If these corporations really want to keep public health insurance, then let the Federal government be the policy underwriters, with the condition that rates will be adjusted according to income, and no one can be refused,” I finished.
Marge looked at me, and said, “All right, lad, all right. You've described taxes for the individual, and funding public health care. What ya gonna do with the corporations?”
“Fifty years ago, corporations bore thirty-five percent of our nation's tax burden; today they pay less than half of that amount. If these corporations hope to retain any claim to the advantages of personhood, they need to shoulder their fair share of the tax burden. This means a surtax on excessive executive salaries, and establishment of criteria for perquisites and bonuses to executives, For example, I think it is insane to give a corporate executive a bonus if the corporation loses money. We also need to change the way that stock options are assessed for both individual and corporate taxes. We need to institute tax penalties for shipping jobs overseas, raiding pension funds, or establishing offshore corporations for tax purposes.”
I continued, “I also believe that we need to force corporations to divest themselves of most of their mergers and acquisitions for the last twenty-five years. We should also discourage future acquisitions by establishing a Federal corporate charter system for all corporations that operate in more than four states, or merge with or acquire a corporation from another state. Corporations should be required to have their head office in the state where they have the preponderance of their assets, not in some state with an advantageous corporate tax structure. Finally, I think we need to establish an alternative minimum tax for large corporations, and index it to the rate of inflation.”
“Anything else?” Marge asked.
“I would like to make the corporate tax progressive, heavily weighted to the benefit of smaller businesses. We also need to institute a windfall profits tax, and give deductions to corporations for hiring people and building facilities in the United States proper, not simply American territory. I also think that corporations should have some limits on the tax advantages they negotiate with state and local government. Perhaps something along the current requirement that a person who starts their own business has three years to make a profit, or it becomes a 'hobby,' and you can no longer claim business expenses and deductions on your tax returns,” I said, “I do not know enough about large corporations to think of every contingency. I do know two things: that the multinational corporations desperately need to have their enormous economic power checked to prevent its translation into political power; and secondly, that corporations need to place the public interest ahead of that of their shareholders.”
The doorbell rang.
“Pizza,” I sighed, getting up and grabbing my wallet, “I'll be back with the pie, plates and napkins in a moment.”
