The present poverty rate is dragging down not only our
economy but also our society. Wealth inequality has overwhelming negative consequences
for society's health including infant mortality, obesity and mental illness. It
degrades the fabric of our existence through more homicides, more people in
prison, higher rates of teenage births and decreased social mobility and
patriotism. The present poverty rate is stripping away many people's belief that
we're all in this together and that everyone has a fair shot at a good life. It
is a real threat to our social cohesiveness.
With the institution of a new and more equitable system, the
wealthy can still be wealthy while the poor can, at the very least, enjoy some
of the benefits of living in America. They could become better citizens and
greater consumers and contribute more to the overall economy and our social
security. That would benefit everyone. Societies can achieve both higher growth and greater
equality; the two are not mutually exclusive.
To address the issues of poverty and inequality, we need to
change our tax and social policies. We can learn from some of the other
developed countries that are ahead of us in this field, such as Finland. In
Finland, although they pay higher taxes, the Finns are happier. They also enjoy
equally good but cheaper universal health care. They have lower poverty rate.
They also have safer streets, lower infant mortality, and lower student loan
rates. We don't need to adopt everything the Finns do, but we can adopt what
can better our common lives.
A New System:
Any new system should
have three main objectives:
1) to narrow the widening wealth inequality gap,
2) to provide the funds needed to eliminate poverty and
hunger, to support universal healthcare and adequate schooling, and to maintain
our eroding infrastructure, and
3) to maintain the financial incentives that drive people to
invent, research and develop new industries and businesses. The new system
should continue to allow those among us who contribute most to our society to
benefit from their efforts and become wildly rich.
In this proposed system, each person or family living in America
should pay no taxes on poverty level income (at this time, it is about $11,000
a year for an individual, $15,000 a year for a single mom with one child, and
$23,000 for a family of four). The government should financially support those
earning less than these poverty levels and bring them up to that level. Any
income, from any source, above that level would be taxed at a progressive tax
rate (with a maximum of a 50-75%) the exact level of which would be determined depending
on the prevailing budget needs. Corporate income would be treated the same way.
An inheritance tax of
80-90% should also be instituted depending on the size of the inherited
fortune. No one should be entitled to huge fortunes they did not earn. In
addition, a reasonable formula should be found to relate the wages of a company ' s senior managers to that of its workers. It is unfair that
the CEO makes in an hour what the average worker in his company makes in a whole
year. Real wages stopped growing in the 70s even as workers productivity
increased and generated more profits for the management and shareholders. In
general, tax rates should be adjusted annually to ensure the collection
of enough funds to meet fiscal obligations and to reduce the deficit without
extra borrowing or the need to abandon essential needs. There would be no deductions, exemptions, or
credits of any kind.
The new system would thus provide a reasonable safety net
for the poor (although not as big as that in Finland) and help reduce the
negative effects of wealth inequality and at the same time maintain the
incentives needed for a vibrant economy.
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