Forum Post: Can tax reform help even out economic imbalance?
Posted 12 years ago on Dec. 13, 2011, 3:02 a.m. EST by Wulfe
(3)
from Redmond, WA
This content is user submitted and not an official statement
I have been considering the root cause of our current economic imbalance. Of course the answer is greed, but what are the solutions? You can't change greed, especially in a corporate entity who answers only to shareholders, who are only shareholders for the profit potential. So given this, how would the government influence corporate policy?
Make it more profitable to have employees and make it even more profitable to treat them equitably. A major expense of any company is taxes, especially employment taxes. Even small businesses are penalized by the current tax structure for having an employee by paying more taxes on top of the wages and any benefits they provide. Why not turn that around? Raise corporate taxes on assets and income, and provide tax deductions and credits for having employees, and additional tax benefits for providing retirement funds, medical benefits, and child care proportional to the value of these benefits. I'm sure the IRS could come up with a tax schedule that would ensure corporate entities and small businesses alike would actually benefit from maintaining quality employees and providing for them.
Scaling the deductions to provide the best benefit for jobs that provide between 50K and 100K would provide a "target income bracket" to businesses. Reducing the deduction for larger salaries or removing it altogether after a certain point, and excluding the rediculously large bonuses some CEOs get would give Corporations a reason to reduce the pay inequality that is creating an steep and aristocratic class gap. These deductions could also scale for the size of business based on income so that small businesses can compete without being penalized for being small.
The IRS already uses tax advantages to socially engineer America. We are provided deductions for being married and having dependends because the government wants us to be in neat little family units that it feels are healthy for society. We are provided with educational deductions because it wants our country to be capable and respected. The government taxes imports and exports at different levels to engineer what comes into and leaves the country. Why not use this same social lever to help alleviate the burden of welfare, medicaid and social security by making it easy for businesses large and small to provide jobs and benefits?
I don't have access to all the relevant numbers required to galvanize a tax reform of this scope, but someone does. Working with the government to present these kinds of solutions is the only way to make real change.
The tax system should be like going up in stairs. Poorest people at the bottom and richest at the top. People in between should be in the steps in between. We need a tax reform to remove all the loopholes that allow people at the top to pay like people at the bottom.
We also need to spend much more in education to even out the social inequality. Not only the poor pay much more, they are barred from the best schools and in some cases barred from schools altogether. We need quality education to be accessible to all.
Note: This tax change proposal is my idea to support economic growth by freeing employees to attempt owning a small business. Thanks for your post.__I suggest an employee recieve 100% of his wages. The employer, has no reason to be our tax collector, except that law requires it. The employer has no reason to be in the healthcare business, except that its discount insurance program can prevent an employee from quitting the company. Benefit packages are used to lure and keep the best employees. The production of a product or services is what the employer should be spending their work time on. Witholding bookeeping requires expertise, planning, and time. The penalties are great if done wrong. By paying the employees a check with 100% of their compensation, the employer's organization, especially "mom & pop" companies, could eliminate a considerable burden. Eliminate sales tax collection by retailers. (If necessary have it automatically paid, electronically from the buyer's bank card, used for the purchase). The government would have to oversee the tax payment when the payroll check was deposited into the person's account. The other benefits desired by the employee could be offered as a cafeteria plan. Insurance, retirement plan, education savings, charities, Christmas club, etc could be opted into. (except where mandated, such as fed, state and local tax, which could vary according to salary and plan chosen) These purchases would be deducted from the deposit, and the automatic payments forwarded. Why would this be difficult? It would be opposed by insurance, tax prep corporations, and of course the corporate employers, who stand to lose many employees, without their offering superior benefit packages. Everyone would be taxed on their income. It would require legislation. There would be opposition. Politicians would show their allegiances. Some large organizations would have layoffs. (perhaps a retraining package could be provided for their employees) Without being responsible for the tax witholding, insurance premiums and accounting associated with them, a person would be more able to quit the job they have and start a company. They would not lose their benefits and health insurance. They could start a company, knowing they can hire employees who can provide their own benefit package. All employees would have to be lured with better pay and a more desirable job. As an employer they would be required to pay theirself as an employee, with the same cafeteria plan. Reinvestment into the business would be after these taxes. A 5% tax on cash, (if currency is required), of amount over $100 per week taken from banks. (to deter black markets) The advantage of this plan would be an exponential growth in the number of new business owners. The gross national product would explode. Employees would be in demand. Cooperatives would benefit. This is basically a plan to grow our economy out of its depression, it's not about the morality of tax, money, wealth, or world trade. It does enhance the ability of anyone to try using their own ability to make a living, on a more level playing field.
Have you read through the suggested List Of Grievances in the 99% Declaration? Several of these types of things are dealt with.
http://www.nycga.net/groups/the-99-declaration-working-group/docs/the-ninety-nine-percent-declaration