We're in a new gilded age (and have been for awhile, it's just gotten really bad lately), where the richest people are doing very well, but little of the wealth is trickling down to the poor working folk. Median incomes have been stagnant since the 1970's.
So what do we do about it? The way to balance an inequality is to shift a bit from one side over to the other. Wealth redistribution, in other words. Ideally, we want every income bracket to grow at the same rate as the economy grows. If the richest people are soaking up all (or nearly all) of the gains, and everyone else is stagnant, that's not good for society. We'll never reach perfect parity among all wealth/income brackets, but we can institute policies that give a reasonable approximation of fairness.
1. Expand the Earned Income Tax Credit. This is a great way to redistribute wealth, and should be the primary method. Unlike raising the minimum wage, the EITC doesn't have any effect on small businesses' labor costs. It's basically a government subsidized pay raise. We can look at GDP growth and use the EITC to spread the wealth around to income brackets that are being left in the dust. Since the money would be going to poor and middle class people, it would also be a great stimulus to the economy.
2. Means-test Medicare and Social Security. This is an obvious one, and again, is not going to create a disincentive to becoming rich.
3. Universal health coverage. Health care costs disproportionately affect the poor (those who can't get Medicaid) and middle class more than the wealthy. Institute a two tiered system- medicare for all, along with a private insurance market for people who can afford more bells and whistles.
Of course that wouldn't be cheap, but we can come up with the money the same way Republicans always use to make their crazy tax cuts deficit-neutral: project higher economic growth. Only in this case, you really would have higher economic growth. The link between business and health coverage would finally be severed. Bankruptcies due to health costs would be eliminated. Anxiety about health costs would disappear, increasing productivity (I'm assuming that stressed out people are less productive).
4. Increase the minimum wage to $10, and index it to inflation or the Consumer Price Index. The minimum wage should not be the primary method of wealth redistribution. The Earned Income Tax Credit should be the primary tool to insure economic gains are spread evenly.
5. And, of course, raise taxes. The top marginal rate is 39%. That can go up a bit. Not to 90%, like Bernie Sanders wants, but somewhere around the mid 40's. The point really isn't to raise revenue, but to shift money around from one group to another, via the EITC.
In that vein, we should double the estate tax. It currently provides about $18 billion in revenue. I think this is one of the best ways to redistribute wealth because it doesn't create much of a disincentive to make more money. Yeah, it's terrible your kids are only going to inherit $20 million of your $100 million estate, instead of $60 million, but you're not going to lose any sleep over it.
6. Make the government the primary lender for student loans, and cap student loan payments to a low percentage of income. Expand student-loan forgiveness programs.
All of these are politically doable. We're slowly drifting to universal heath coverage. There's broad support for raising taxes on the rich and raising the minimum wage. The EITC is a little wonky and a lot of people don't even know what it is, but I think expanding it would be supported once people understood what it was.
So what do we do about it? The way to balance an inequality is to shift a bit from one side over to the other. Wealth redistribution, in other words. Ideally, we want every income bracket to grow at the same rate as the economy grows. If the richest people are soaking up all (or nearly all) of the gains, and everyone else is stagnant, that's not good for society. We'll never reach perfect parity among all wealth/income brackets, but we can institute policies that give a reasonable approximation of fairness.
1. Expand the Earned Income Tax Credit. This is a great way to redistribute wealth, and should be the primary method. Unlike raising the minimum wage, the EITC doesn't have any effect on small businesses' labor costs. It's basically a government subsidized pay raise. We can look at GDP growth and use the EITC to spread the wealth around to income brackets that are being left in the dust. Since the money would be going to poor and middle class people, it would also be a great stimulus to the economy.
2. Means-test Medicare and Social Security. This is an obvious one, and again, is not going to create a disincentive to becoming rich.
3. Universal health coverage. Health care costs disproportionately affect the poor (those who can't get Medicaid) and middle class more than the wealthy. Institute a two tiered system- medicare for all, along with a private insurance market for people who can afford more bells and whistles.
Of course that wouldn't be cheap, but we can come up with the money the same way Republicans always use to make their crazy tax cuts deficit-neutral: project higher economic growth. Only in this case, you really would have higher economic growth. The link between business and health coverage would finally be severed. Bankruptcies due to health costs would be eliminated. Anxiety about health costs would disappear, increasing productivity (I'm assuming that stressed out people are less productive).
4. Increase the minimum wage to $10, and index it to inflation or the Consumer Price Index. The minimum wage should not be the primary method of wealth redistribution. The Earned Income Tax Credit should be the primary tool to insure economic gains are spread evenly.
5. And, of course, raise taxes. The top marginal rate is 39%. That can go up a bit. Not to 90%, like Bernie Sanders wants, but somewhere around the mid 40's. The point really isn't to raise revenue, but to shift money around from one group to another, via the EITC.
In that vein, we should double the estate tax. It currently provides about $18 billion in revenue. I think this is one of the best ways to redistribute wealth because it doesn't create much of a disincentive to make more money. Yeah, it's terrible your kids are only going to inherit $20 million of your $100 million estate, instead of $60 million, but you're not going to lose any sleep over it.
6. Make the government the primary lender for student loans, and cap student loan payments to a low percentage of income. Expand student-loan forgiveness programs.
All of these are politically doable. We're slowly drifting to universal heath coverage. There's broad support for raising taxes on the rich and raising the minimum wage. The EITC is a little wonky and a lot of people don't even know what it is, but I think expanding it would be supported once people understood what it was.
via International Skeptics Forum http://ift.tt/1enaIMb
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