Wednesday, September 21, 2011

Economics and Politics

This is another departure from our usual topic. If you have a problem with that, click that little back arrow at the top of your browser.

I'm uncertain if its because of my maturity at the time, or if the situation has really deteriorated, but I've been paying a lot closer attention to politics in the last ten years or so. The thing I have noticed time and time again is that it the United States is not run by the will of the people, but by the pocketbooks of the people. Politicians get elected solely by the merit of how much fundraising they have done to get their message out to as many people as possible. These funds once raised make a politician beholden to their backers. I don't think it should surprise anyone that Bush II repealed a lot of environmental regulations and was backed by heavy industry and resource exploitation companies.

I don't want people to assume that I am a Democrat because I've bashed Bush II; far from it. Obama isn't any better, but democratic causes and supporters tend ot have a less blatant impact on the environment (Goldman Sachs donated a lot to Obama for example...hmmmm). I have my own issues with Obama; mostly that he is a complete political tool when promising not to be. There is a distinct difference between "Campaign Obama" who we've seen emerge again recently, and "Concession Obama" who has been living in the White House for the last couple years. I'm getting off point here.

Since the Supreme Court ruled that corporations are people; and there is no limit to their campaign contributions, I expect this trend to get worse. This combined with the fact that many politicians seem so against taxing corporations is leading us down a dangerous road. The main reason for not taxing corporations seems to be that they are job creators. This may be true, but CEOs are very poor job creators, even if corporations are good at it.

A friend of mine suggested something that I am finding makes more and more sense. Remove all regulations from corporations; all minimum wages; and drop the corporate tax rate to 0. Raise the income tax; especially among the wealthy; to a much higher rate than it is now (approaching 95%; they will be making more now anyway as they are most likely to be involved at upper levels of corporations). Then make the inheritance tax and gift taxes above a certain amount (think a million dollars maybe) 90-100%.

The net result of all of this is that most of the federal and state income will come from income tax and inheritance/gift taxes. Corporations, as the engines of job creation, will have unhindered resources to tax people. Any bonuses or incentives to upper management will be taxed to the point that it will be hard to justify (to get a bonus of 100k, you'd have to award yourself 2 million dollars). Even if this happens, that's just good news for the government. In reality, corporations will invest this in getting the best talent, improving the lives of their workers, becoming more efficient and improving their impact on the environment. The inheritance tax twofold. First, people should benefit from their parent's labor (up to a reasonable amount; hence the cap at 1 million dollars). Secondly, the fact that a parent is a good businessman, and makes a lot of money, has no bearing on whether their child would be a good businessman...so why should they control a large amount of money they didn't earn? A million dollars should be sufficient to get them started on a career of their own. This also prevents people from hoarding wealth, encouraging them to use it to fund projects of their choosing rather than leaving it to the government.

Kinda rambling now, so I'll stop. Needless to say, our current system leads to a great disparody of wealth; which is definately not fair (not that I'm complaining about that) but also leads to an unstable society. I'm sure the rich don't want the economy to get so bad that the poor riot en masse.


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