Hughesair (Inflection Point)

Retired physician and air taxi operator, science writer and part time assistant professor, these editorials cover a wide range of topics. Mostly non political, mostly true, I write more from experience than from research and more from science than convention. Subjects cover medicine, Alaska aviation, economics, technology and an occasional book review. The Floatplane book is out there. I am currently working on Hippocrates a History of Medicine and Globalism. Enjoy!

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Monday, December 10, 2012

Taxing the Rich

This is a non-political blog. There is no place anymore on the political spectrum for an Eisenhower Republican. However, a comment about the budget debate seems timely. There is a big smokescreen out there telling us that the moon is green. Having watched politics for a long time, Both parties lie through their teeth when they are out of power. It is a total Machiavellian world for the minority party. Anything to get that power back; country, family and ethics be dammed. Worse yet, this time there is no right answer, just opposing sides. If we extend the national debt, we face a solvency risk. If we cut the federal budget, we wallow indefinitely in stagnation and run the risk of an even greater depression.
Unfortunately, the maldistribution of wealth complicates the already insolvable problem – and may indeed have caused it.  According to the New York Times based on 2010 data, the taxable income of the top 1% averages over $380,000 while the wealth of that 1% adds up to an average 8.4 million, totaling about one third of the nation’s wealth. Other estimates are higher, like 90%. There exists an incredibly powerful shadow lobby waging a PR campaign to convince the public that only this top 1% provides jobs and invests in the economy. Nothing could be further from the truth; it rather sequesters wealth reducing economic activity and thus Domestic Product.
As for small business, the lobbyists would have us believe that increasing taxis on small business would cost jobs. The truth is that only a small percentage of small business will be affected by the tax proposals at all. Counter intuitively, we should lower corporate tax rates to a level lower than other governments’ corporate tax rates.  That would do two things. It would bring the overseas money home and it would discourage the obscene salaries that top executives award themselves. That is if the executive’s own tax rate were to be higher than the corporate rate.
Productivity, hard work and growth offer the only way out of this double bind that we are in. Achieving that productivity requires education, research, development, growth, human resources and advanced infrastructure on a massive scale – so much for cutting spending.
Taxing the 2%, all 6.232 million of them, at the proposed 39.6%, would generate by current estimates 1.3 trillion in tax revenue. On the other hand we could all divvy up $7,920 and be done with it – almost worth it to end the squabble. The wealthy have more ways of avoiding taxes than the rest of us. A two or three million salary should not result in a three hundred and eighty thousand taxable income.
Arguably, one might end the, all but the spousal exemption, to inheritance tax. In other words, make it a new game for all the children. You then recirculate the sequestered wealth. No society has ever survived this level of stratified wealth. Such stratification has always lead to revolution. Our ancestors founded this country on a reaction against aristocracy. We should not replace it with a plutocracy. 



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