A common-sense plan to cut inequality
GRAFTON, N.D. — According to Politifact, 400 American billionaires own more wealth than the 155 million Americans in the bottom half of our population.
Clearly, our capitalist system has become unbalanced. Inequality has soared to levels not seen since 1929.
We need to remake capitalism with a human face. That means redistributing America’s wealth.
We can start with a new tax code. Two highly credentialed men — Lawrence Kotlikoff and John Goodman — have developed a promising system they call the Common Sense Tax. (See www.thecommonsensetax.org)
The Common Sense Tax simplifies Americans’ tax returns down to the size of a postcard. It eliminates all deductions except for charitable donations and all credits except for the Child Tax Credit and the Earned Income Tax Credit.
It eliminates the corporate tax as well.
The FICA tax falls from 15.3 percent to 13 percent.
A flat tax of 25 percent would apply to income above $50,000 for individuals and $100,000 for families. So, an unmarried individual earning $51,000 would pay a tax of $250.
How simple. But I have do one concern: If our goal is to reduce inequality, perhaps we should tax very high incomes at progressively steeper rates.
The extra federal revenue can be redistributed to lower-income families, who will spend it, boosting economic growth.
As the economy approaches full employment, employers competing for scarce workers will bid up wages, enabling more Americans to live secure and joyful lives.
The alternative is to continue a system that sucks vitality from our people and arcs toward oligarchy.