As we embark on a new year and decade, new challenges face our country and our world, and echo the Chinese aphorism “may you live in interesting times.” I do not believe that our challenges are any greater than our predecessors, but they are more than likely more complex, and our awareness of these issues and the concomitant saturation with divergent philosophies and their informational caches has left us either numb, overwhelmed, and dare I say, neurotic. This has impelled me to do the impossible, which is to not only define these challenges, but to recommend some potential solutions, or at the very least, some avenues that may lead us to solutions. I have listed the challenges in descending order, from the least challenging to the most challenging; in reality, however, they are all monumental, interconnected, and open to hierarchical rearrangement. I will post these as time allows. The challenges are:
10. Taxation Reformation
9. Energy transformation and independence
8. "War" on drugs
7. Democratization of information
6. Deindustrialization
5. Global fascism
4. Educational decay
3. Ideological entrenchment
2. Obsessive ethnocentrism
1. Reframing of values
Taxation reformation—Although taxation seems to be a mundane issue relative to only the rich, the reality is that it is intimately tied to economics, productivity, and quality of life. Therefore, it affects all strata of society. Nor is this only a matter of the byzantine nature of our tax code; to say that our tax code is complex and cumbersome is beyond an understatement. We have to take a deep breath in order to deal with this issue.
The deeper reality is that the way we do business now is not only sustainable, but morally reprehensible. It has in fact, served to widen the gap between the proverbial “haves and have nots,” creating a highly stratified society in which the rich get richer, the poor become ever more dependent, and the middle class bears the brunt of these two worlds. David Bessie, producer of the documentary “Generation Zero,” states it this way: “We have socialism for the poor, capitalism for the middle class, and socialism for the rich.” This has tilted the playing field towards the ultra rich, lining the pockets of investment bankers and hedge-fund managers and has resulted in a devastating economic crash. The result, beyond the painful and obvious suffering of our citizens, was that the proverbial fat cats not only avoided prison, but were actually rewarded with about a trillion dollars, which they quickly reinvested to further line their swelling pockets. As Robert C. Lieberman writes in his review of the book Why the Rich are Getting Richer: American Politics and the Second Gilded Age, by Jacob S. Hacker and Paul Pierson, “And yet a curious thing has happened in the midst of all this misery. The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer.” Of course we call this TARP, but it’s more like TARPed and feathered for the middle class, which ultimately finance this financial chicanery. And this happened under two different presidents from opposing parties, so this is not a democrat or republican issue—this was a bipartisan screwing all the way.
Hacker and Pierson then unload their derision on the taxation and economic policies of Presidents Ronald Reagan and George W. Bush, along the overall climate created by D.C. which in recent years rewarded the ultra rich with lavish stock options, staggering bonuses, and golden parachutes. To a degree, Hacker and Pierson are right on. The reality is that IRS revenue increased under Reagan and Bush, as it did under Kennedy. So where did all this money, money that could have been reinvested to help those at the margins, go? Was it the “war on terror,” social Security, Medicare, Medicaid? While this topic would require a separate treatment beyond the scope of this writing, suffice to say, the money was not just spent, but overspent, as our crushing deficit sorely reminds us.
However, the authors are only revealing half of the picture. On the other end of the spectrum are people mired in generational poverty, who have become hooked on a variety of entitlements. According to usgovernmentspending.com, we spent almost $490 billion on welfare alone, not to mention hundreds of billions more on education and pensions. To be sure, all of these areas need funding, but If you look at the condition of our schools and the mess pensions have caused a multitude of states, you see the bigger picture: we have created a two trillion dollar entitlement state that threatens to consume the entirety of our GDP, and more importantly, will ultimately undermine our ability to create and perpetuate prosperity. The ultimate irony is of course that it is this very prosperity that allows us to care for those who need our help! Yet, still we march on, lining the pockets of Goldman Sachs while simultaneously creating dependence and generational poverty amongst the populace we purportedly want to ease the suffering of. Neither of these two extremes should be tolerated, because only the ultra rich benefit, something that neither true conservatives nor liberals want.
The idea that the middle class is being squeezed is reflected with empirical evidence that wages for this SES group have moved up only incrementally in the past twenty plus years. Despite an overall rise in our standard of living as a nation, the middle class is stuck in financial stagnation, with the cost of living outstripping wage increases. Rahter, these funds are being diverted to either overseas, or to the cost of healthcare, And although President Obama should be applauded for trying to insure the less privileged, by no stretch of the imagination will the Affordable Health Care act be affordable to anyone, especially those footing the bill. This is the angst that gave rise to the Tea Party movement. Whether you agree or not with their perspective and policy points, it is clear that the working man and woman are frustrated, and they want something done to address their anxieties. The tax code is a good place to begin.
For a tax system to be effective, it has to be fair, simple, and broad. A dual flat tax rate, such as 12% and 6% on gross income with no (or few) exemptions, is one option. The other is taxation on consumption, or a national sales tax, with compensatory vouchers sent to the most vulnerable and truly needy in order to offset a portion of their burden. Either way, everyone must be stakeholder, and neither the rich, nor the poor, should be shielded. Several positive things will happen as a result of this radical change.
First, we will capture a greater share of revenue because high-priced lawyers and accountants will not be able to shield their clients from paying their fare share. Second, U.S. corporations will begin to relocate on American soil, employing more American citizens who will then pay taxes. Third, the sway of corporations will diminish because they will not be able to lobby congress for taxation entitlements. And finally, because the federal government will increase it’s revenue intake, this money can be reinvested into free-market solutions, such as Health Savings Accounts, school vouchers, loans for entrepreneurs, and economic help for college based not on race or gender, but rather on achievement, and when necessary, on finances. If President Obama and Congress can for once see beyond the partisan rhetoric and do what is right, everyone will benefit. We are waiting to exhale.
