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Responsible Tax Policy for Responsible People

Mark A. Goldman                                                                  Dated: 10/11/2011


Enlightened tax policy is a necessary tool for any democracy that hopes to stay a democracy. 

In a democracy, it is government’s job to maintain a level playing field so that all participants in the economy have a fair and equal chance to succeed and to benefit from the progress, growth, and prosperity produced by its economic engine. Tax policy is one tool that can help a democratic government make adjustments so that society’s economic playing field is kept level.

For example, corporations always will, if they’re operating as they should, attempt to maximize profits within the context of that society’s goals and legal system. If corporate managers can increase a company’s long term value by cutting costs, it seems only reasonable that they should do just that. They might do that through automation, innovation, and/or by transferring the production of their goods and services to places where labor costs are cheaper. That’s a no-brainer. Why should a business pay higher costs than necessary to manufacture their products? 

It should be in everyone’s best interest to reduce the cost of producing goods and services. It means that goods and services can be priced lower, thereby improving the standard of living of most customers. Consumers ought to be happy about that… with the proviso, of course, that it’s all done within the law and that the law is fair. Of course if labor is cheap because workers are treated like slaves, it means the laws are not fair and/or they are not being honorably enforced. Again, that too is where government comes in – its job is to make sure all participants are treated with dignity and that all participants are able to enjoy their basic universal human rights.

What isn’t fair is when labor is required to take on a disproportionate amount of the economic risk associated with unemployment due to improving technology, business innovation, and also changing economic conditions. But this unfairness is what we now have. We know this is what we have because we know that a disproportionate amount of economic gains are unfairly accruing to those who own and manage capital as opposed to those who provide the labor needed to make that capital productive.

The risk that labor faces... is the risk of becoming unemployed, not because they aren’t performing well, but because they are performing well, and have been for some time. If they weren’t performing well, owners of capital wouldn’t have the infrastructure or capital available that allows them to innovate. Similarly, when economies slow down or contract, non-management personnel are the first to lose their jobs and incomes, through no fault of their own.  

Owners and managers often reap rewards far in excess of the contribution they make to the overall economy. Who says so? I do. And so would most people who look with an open mind. As a culture, we have been taught to discount the contribution that labor makes—a contribution, without which, it would be impossible for owners and managers to accumulate the amount of wealth that readily accrues to them. Tax policy can be a most efficient and important tool for leveling what is by design an extremely skewed and grossly un-level playing field. 

If you review American history you will find that slave labor was the extreme case where managers and owners refused to acknowledge, (as did other members of society), that their wealth came into being only because their slaves did so much of the work, for which they were not compensated. 

Today, the same (closed minded) mindset that once prevented owners to admit how much their slaves contributed to their lives… persists with managers and owners who similarly refuse to acknowledge the contribution that workers make, without appropriate compensation. And many in our society are still conditioned to remain unconscious about the contribution that so many anonymous workers make or made to all the so- called ‘self-made’ millionaires who became rich and famous and now think they did it all by themselves. The reason it is so easy to dismiss the contribution that blue collar workers make, for example, is that many owners think of them as being easily replaceable. But that doesn’t change the fact that without them, our ruling elite would not rule, be elite, or be wealthy. There are no ‘self-made’ men or ‘self-made’ women… only a lot of short sighted people who think they are.

The reason that government no longer uses tax policy to help maintain a level playing field is that big money interests have used their excess profits to bribe politicians to ignore the responsibility they have to maintain that level playing field.

Those excess profits have been so large that politicians at all levels of government have allowed themselves to be bought and paid for (for many will do just about any dishonorable thing asked of them just to get their hands on that money, including making a pledge to never raise taxes whether doing so would be a good idea or not). 

But this is also true now of those who administer our colleges and universities. In order to obtain endowments and research grants, colleges and universities have largely adopted policies that work to corrupt our children by misinforming them about the purpose and value of a good education; making sure that students are indoctrinated to accept and work for the corrupting economic culture that waits for them when they graduate. Our kids are not being trained to think for themselves or to work for the improvement of society as a whole, but rather to work only for themselves or for corporate interests in hopes that one day they too will take their place as one of the thoughtless elite who never question if what they do does or does not add to the sustainability and well-being of the planet and its inhabitants. 

Tax policy needs to be designed to transfer an appropriate amount of money from those who didn't really earn it to those who did, if those individuals can be identified; and if they can't be identified then to society in general.  These monies could be used to raise the standard of living of those who will otherwise never be fully compensated for the contributions they make... and also simply to make the planet a better place to live for everyone... like for example, by offering society a high quality universal healthcare system that covers everyone, benefits to pay for higher education for all qualified students, educational opportunities for the retraining of displaced workers, adequate and fair unemployment insurance, reduced working hours, decent pensions, safe working conditions, long term care benefits, better transportation systems, an enlightened energy policy, and aggressive consumer protections among many other things.

The fact is, democracy cannot survive in a system where 1% of the population receives or controls 40% or more of the country’s wealth.  That's what we have now and it's not working.  

Fortunately, in spite of our failing educational system, some of our kids actually do learn how to think for themselves. Some of them are beginning to figure out that the system that’s evolved is more likely to lead to social dysfunction and unhappiness for most of humanity, rather than to a world that nourishes and uplifts the human spirit and sustains life for future generations. We need to make a lot of changes and an intelligent use of tax policy is a tool can help us do it.

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