19. Is fair taxing for the common good actually possible? You bet it is!

Chapter 19: Reapportioning America’s common wealth for the common good



Wallace recommended revamping the tax structure to give economic incentives to businessmen willing to “expand production and create new industry.” He proposed federalizing incorporation law to prevent “charter mongering” by states with weak statutes such as Delaware. And he suggested reform of the patent system so it would not “be used as a weapon of oppression by large aggregates of wealth.” Capitalism itself need not be scrapped, Wallace said, but “perversion of its instruments” must be remedied. There “are other ways to cure a headache than by decapitation,” he wrote.
                        John Culver and John Hyde: American Dreamer: A Life of Henry Wallace




*   *   CaFMaC Fixes [almost] Everything   *   *


Section 64.       (of the Capitalist Free Market Corrections Act – CaFMaC)

Plain English for the Voting Citizen: 1) Our fellow Americans:  We are going to have a new and very fair tax system in the USA. It is a self-evident truth that our government, which is all of us, must collect enough money to pay the employees we must hire to implement the laws we Congress people enact in your name, and you must willingly pay your fair share of that money – but no more more, and not less, than Your Fair Share. It’s quite a bit of money, and there are considerably better ways to divvy up who pays exactly how much as fair shares of it than the hare-brained way we’ve been doing it. 2) Not one of us has political freedom unless we first have economic freedom, and that means having enough income to buy yourself a reasonable minimum of the necessities for a decent life. Not a lot, but at least a reasonable minimum. The unfair economic system we’ve been using, along with a taxing system that’s just a total mess, plus our fast growing population, has been making it harder and harder to live a decent life in the USA. We are going to level that playing field now. 3) We seriously recommend that you read all the blather on this subject. It couldn’t be more important to the future of our nation – and to each of our personal futures. All for one and one for all.


The Congressional blather version:                Tax changes defined in this Act, hereinafter known as The New IDeal Tax Structure (NITS), shall be closely monitored and, as necessary, amended annually to ensure ongoing consistency with the broad policy intentions of this section. The structure of the United States tax system shall henceforth reflect two self evident realities, these being 1) that no U.S. citizen can be reasonably expected to meaningfully exercise the blessings of political liberty without having first attained at least minimal economic living adequacy at a level reasonably consistent with known costs of living in the United States, and 2) the increasing overpopulation of our nation inevitably results in over-consumption which is too quickly depleting our nation’s common wealth of natural resources, increasing imports of desired commodities and worsening of our trade balance, while said over-consumption also inevitably adds disproportionately to global warming and intolerable disruptions of the natural earth environment upon which we all mutually depend, whether some know it or not.


Congress moreover intends that the reasons for levying taxes, and the structure of the United States tax system, shall be sufficiently self evident and comprehensible to be understood by the average literate citizen, that the tax structure shall be fair and the fairness shall be self evident, and that the tax system shall be widely understood to have four (4) goals of equal priority which are: 1) to help achieve at least basic economic adequacy for every living American; 2) consistently balanced federal budgets; 3) permanently eliminated national debt; and 4) adequate annual funding to enable all federal government agencies to meaningfully implement and maintain the protective and proactive purposes of government for which our ancestral founding fathers, on behalf of We The People, long ago constituted our own government under the timeless concept of the social compact.


No federal, state, local or other tax which fails to support these intentions, priorities and goals shall be permitted to stand. Congress hereby acknowledges that 1) the greatest sustained prosperity and relative equality of economic wellbeing in the nation’s history occurred under a highly progressive tax structure during the period 1946 through 1979; that 2) the high levels of relative adequacy of income and reduced inequality of wealth among U.S. citizens during that period will not be regained, nor will presently growing gross inequalities be reversed, without a significantly revised tax structure consciously designed to work, in tandem with other federal policies and initiatives, toward regaining these ends; and that 3) the very high levels of national economic growth which occurred during that thirty-three-year period, and were presumed eternal, are unlikely ever to be regained.


The Congress hereby acknowledges the need for public policies to establish a steady-state national economic model, wholly independent of false and misleading perpetual-growth assumptions, because of the major depletion of so many of our domestic natural resources over recent decades, abetted by the shift of priority during those same decades from basic research to short-term profit-seeking applied research, both operating within a profoundly changed and systemically unregulated global financial marketplace wherein U.S. commerce has functioned increasingly since 1980.


That functioning since 1980 has reflected increasing subordination of governmental taxing goals in favor of private profit seeking by increasingly internationalized extremely large and monopolistic corporations which actively promote overconsumption and consumer debt while controlling more wealth than many whole nations. Uncommitted to the national interests of any nation and decreasingly subject to U.S. laws and regulations that were promulgated to protect the public from their excesses, the uncontrollable operations of these megacorporations have become a clear and present danger to the wellbeing and prosperity of United States citizens and to the democracy for which we stand, a circumstance compounded by blatant greed manifest in corporations’ mounting depletion and export of vast quantities of the nation’s natural resources while avoiding their fair proportionate share of taxes, all this being further compounded by the impending tripling of the nation’s population since 1950.


The Congress hereby: 1) repudiates forever the ludicrous economic “invisible hand” silliness, along with its corollary and demonstrably failed concept of relying on a mistakenly presumed benevolence of free market profit-seeking self interest to provide adequate taxes for the nation’s needs, much less address our nation’s worsening social stratification and income inequalities; 2) acknowledges that expecting never-ending economic growth on a planet of finite resources is a self-defining form of dementia; and 3) reaffirms the self evident common sense that the governments of nations, just like households and businesses, must make plans, that the concept of central governmental planning is not an exclusively communist prerogative, that the free market intrinsically does not and never will plan anything, and that sensible nations must proactively steer their course if they would avoid drifting onto the rocks and shoals represented by said invisible hand silliness propounded, as if it were real, by economists and corporate lords.


Now is different. Both the US and the world as a whole have passed a fundamental crossroads characterized by increasing scarcity of energy and crucial minerals. Strategies of growth that worked reliably in the mid-to-late 20th century… have reached a point of diminishing returns.
Richard Heinberg, The End of Growth


Section 65.        (of the Capitalist Free Market Corrections Act – CaFMaC)

Plain English for the Voting Citizen: 1) Retail sales taxes are inherently unconstitutional and therefore are abolished in the United States of America. Dead. Gone.


The Congressional blather version:                Pursuant to the Fourteenth Amendment of the United States Constitution, all retail sales taxes at every level, local, state or otherwise throughout the United States are hereby abolished, and the levying of a sales tax by any entity hereafter is prohibited.


With this measure it is the intent of Congress to: 1) eliminate the longstanding and obvious inequities which result from highly disparate state and local sales taxes, herewith recognizing in law that consumption-based sales taxes are inherently regressive and fall most burdensomely on low-income Americans, forcing them to pay a disproportionately higher percentage of their low income for sales taxes on unavoidable consumption of subsistence food, clothing, shelter and the other basic economic needs than is paid by wealthier Americans for purchasing the same needs at a much lower percentage of their much higher incomes, and all this to arbitrarily different measures of inequality of sales taxes in different states and even jurisdictions within a state – six percent here, twelve percent there;


and 2) to acknowledge herewith that retail sales taxes inherently violate the due process and equal protection clauses of the U.S. Constitution’s Fourteenth Amendment, which mutually protect citizens from unequal treatment by federal, state and local governments, hereby affirming that the Fourteenth Amendment’s equal protection provisions apply to equal economic justice for all citizens as fully as they apply to equal racial equality, equal social justice and other civil liberties for all citizens, given that economic justice in attaining at least a subsistence level of food, clothing, shelter and the other essential Economic Rights defined in this Act intrinsically is prerequisite for economic liberty before a citizen can attain or enjoy any meaningful level of political or other liberty.


Section 66.       (of the Capitalist Free Market Corrections Act – CaFMaC)

Plain English for the Voting Citizen: 1) A wholesale value tax, to become known as Tithe for the U.S. Common Good (TUSCG), is levied on all consumption in the USA. 2) The purpose of the tax is to ensure that those who consume more will fairly pay a proportionately greater share of this tax, and those who consume less will pay less of it.


The Congressional blather version:                Beginning one (1) year after passage of this Act the United States Internal Revenue Service shall levy, on all entities doing business in the United States, a uniform tax on all domestic consumption to be known as the Wholesale Value Tax (WVT) on the quantitative output of goods and services by business entities. The wholesale price of every product and service sold at retail in the United States shall be defined as the true materials and/or labor cost of creating the product or service, and exquisitely simple annual reporting of that true cost shall be enforced by the Internal Revenue Service (IRS), with appropriate penalties. True cost shall expressly include those frequently-unrecognized costs known to economists as externalities, such as the hidden costs of carbon dioxide emitted by vehicles which are not now included in the price of the vehicle or the price of the fossil fuel it burns, or such as the cost of CO2 storage forfeit when Brazilian rainforests are cut down to make way for grazing cattle for export to the U.S. beef market. Household-level arts and crafts shall be exempt from the WVT.


The Wholesale Value Tax shall be set initially at five percent (5%) of the wholesale price per manufactured item or service, and shall increase one percent each year to a maximum ten percent (10%) per item or service by the fifth year, at which time it shall be re-titled the Tithe for the U.S. Common Good (TUSCG). This tax on consumption being thus embedded within the retail price of all goods and services, the share of this tax burden borne by low income citizens in order to attain a reasonable minimum of food, clothing, shelter and other Economic Rights, as a higher percentage of their lower income, shall be directly factored into the federally-computed adequate minimum Living Wage that co-ops shall pay to their lowest-paid employee(s) as required by this Act.


With this measure Congress acknowledges the self evident truth that those U.S. citizens who consume a greater than average share of their nation’s resources, as members of a commonwealth, owe a greater than average recompense to the nation whose common resources they have the privilege to consume. Congress hereby declares its intent that directly taxing disproportionate consumption, along with eliminating the economic inequality of retail sales taxes which fall most burdensomely on poor citizens least economically able to bear that burden, is a prerequisite first step in establishing a more fair and uniform tax structure which logically correlates with income adequacy for every U.S. citizen by virtue of the mandate, specified in this Act, for required minimum adequate remuneration of working Americans at levels correlating to federally computed basic living costs in each U.S. region and sub-region, respectively.


Section 67.        (of the Capitalist Free Market Corrections Act – CaFMaC)

Plain English for the Voting Citizen: 1) Spending of TUSCG tax revenues will be dedicated to restoring America’s essential public infrastructure, such as roads and  bridges, which have been allowed to become obsolescent and in many cases dangerous to those who daily use them. 2) This huge initiative to restore the nation’s vital infrastructure – federal, state and local – will create countless thousands of good new jobs, and a great many of those jobs will be permanent as the task moves to properly maintaining our infrastructure as should have been done all along.


The Congressional blather version:                Revenues generated by the Wholesale Value Tax and its successor TUSCG shall be exclusively dedicated to maintaining all levels of the nation’s Essential Public Infrastructure (EPI) as defined in this Act. Initially, one-fourth (1/4) of TUSCG revenues shall be reserved for federal government expenditures to maintain interstate Essential Public Infrastructure, and the other three-fourths (3/4) shall be assigned to the states, based on a formula devised by the Department of the Treasury and administered by the Department of the Interior which computes each state’s maximum amount to be proportional to its percent of the U.S. population, and accommodates equitable sub-distribution among in-state jurisdictions for their respective maintenance of essential local public infrastructure. Under a use it or lose it rule, the revenue share or any portion of the revenue share of any state which declines to fully avail its proportional share shall be forfeit to the United States Treasury. The Department of the Treasury in collaboration with the Department of Labor shall revisit the formula and revise it as necessary every two years.


With this measure it is the intent of Congress to end the chronic neglect of Essential Public Infrastructure at all jurisdictional levels, to ensure that all such infrastructure is safe for public use, to secure resulting benefits in the form of countless jobs created and permanently maintained thereby for the common good of the nation and of equal treatment and opportunity for all U.S. citizens, and to ensure moral civic investment in and for the future wellbeing of ourselves and our posterity.


Section 68.        (of the Capitalist Free Market Corrections Act – CaFMaC)

Plain English for the Voting Citizen: 1) The President, at the end of the third year in each term of office, will inform the people and the Congress of our progress in using the TUSCG tax to restore our essential public infrastructure, and of what we need to do to keep the good work going.


The Congressional blather version:                The President shall at the end of the third year of each four-year term of office advise, first the public in general and second the Congress in detail, on 1) total revenues produced by the Wholesale Value Tax/TUSCG on goods and services, 2) how those revenues have been used in maintaining the nation’s Essential Public Infrastructure, 3) what has been accomplished, 4) the quantity and nature of permanent jobs created by expenditures on Essential Public Infrastructure, 5) the current status and future maintenance needs in every major category of Essential Public Infrastructure, and 6) the President’s recommendations on whether to maintain or change the progressive graduated scaling of federal taxes on income and wealth, insofar as the President judges the revenue from all federal taxes, combined, sufficient to maintain Essential Public Infrastructure and to fully meet all other governmental fiscal obligations, while at all times simultaneously maintaining a balanced U.S. budget and permanently maintaining elimination of all national debt.


With this measure and the related tax measures in this Act it is the intent of Congress to maintain a continuously fair and equitable tax structure in the United States, based meaningfully on Americans’ ability to produce, their need to consume, and their respective abilities to pay appropriately proportional shares of the cost inherent to guaranteeing rights and privileges which attend United states citizenship. Recognizing that low national economic growth rates in combination with constantly incrementing growth in the capital returns, power and influence of large accumulated wealth invariably and exponentially increase inequalities in distribution of wealth among U.S. citizens, the structure of all federal taxes assessed on individual persons shall henceforth be equitably benchmarked to 1) distribution of per capita income at each percentile, 2) total personal wealth at each percentile, and 3) relative personal ability in every financial tier of the U.S. population to purchase subsistence food, clothing and shelter plus other Economic Rights defined in this Act – all to the common good of the nation and of equal treatment and opportunity for all U.S. citizens.


Section 69.        (of the Capitalist Free Market Corrections Act – CaFMaC)

Plain English for the Voting Citizen: 1) All taxes presently based on income are hereby abolished. 2) They are replaced by a new Earned Income Tax (EIT) which applies a simple graduated scale to both individuals and organizations. 3) EIT taxes are simply computed based on gross income, period, and the infinitely manipulated concept of “adjusted gross income” is abolished forever. The right to calculate your own tax bill, simply and without costly consultation, is as fundamental as the right of free speech. 4) An individual’s tax (but not an organization’s) may  be reduced for the cost of raising a child, for up to two children – but not more than two. Having two children replaces the two parents, so the cost of having more than two children will be borne by the parents, not by the public treasury.


Plain English continued

5) The IRS will set nine levels of income taxes. The lowest tax rate will be zero tax for income less than $30,001, the lowest income computed to be consistent with the present cost of purchasing basic Economic Rights in the USA. See 7) below.


6) The ninth and highest tax rate will begin at $1 billion income, for which the tax is $877,961,500 plus 96% of all income over $1 billion. See 7) below.


7) Free and clear take-home pay that remains, after taxes, for spending on life’s little daily necessities, thus is up to $30,000 on the low end and at least $122,038,500 (with no upper limit) on the high end. The blather follows. We recommend you read it.


8) America’s eight basic Economic Rights are spelled out in detail about five paragraphs below. We strongly recommend you read them too – then read them again – carefully. In brief, they are: 1) food; 2) clothing; 3) shelter; 4) health care; 5) dependable transportation; 6) insurance required by law; 7) moderate savings or the cost of education, but not both; and 8) adequate retirement income. Income and wealth above the cost of these minimum rights is not a right, it is a privilege of being an American citizen living in the USA (which is great and has always been great, notwithstanding a few sorry episodes), and all such privileged income will be taxed.


The Congressional blather version:                The various forms of the income tax heretofore levied by the United States are hereby abolished in toto and are replaced by the Earned Income Tax (EIT) which shall be applicable to all individuals who receive income and to all commercial enterprises which sell anything, including and not limited to NIPS co-ops, not-yet-abolished corporations, and to all other commercial organizations of every nature. Earned income, which is hereby distinguished from unearned income, primarily includes, and is not limited to, income received from wages, salaries, bonuses, retirement income of every nature, and from the sales of goods and services by individuals and organizational entities, as defined by the Internal Revenue Service.


The Earned Income Tax shall be computed directly on simple gross income, prior to any computation of net income remaining after subtraction of costs. The concept of “adjusted gross income,” heretofore amended, jiggled and ropadoped for decades to make it more amenable to near-infinite machinations intended to contrive a lower taxable amount while promoting the unintended consequence of converting honest citizens into gamblers and felonious tax evaders, is hereby abolished. Only after simply establishing the straightforward tax on total gross income may one single allowable deduction be made, and that deduction, self-evidently applicable only to human taxpayers and not to organizational taxpayers, shall consist of a cost-of-living reduction of tax commensurate with the cost of raising a child. The per-child cost-of-living reduction of tax may be taken for each child up to two children, the demographic replacement rate for two parents, and no further deduction shall apply for more than two children.


Subject to annual review and modification by Congress, with recommendations from the President as specified in this Act, the top end of the bottommost income bracket is hereby raised to the Living Income level of thirty thousand ($30,000) dollars; the low end of the topmost income bracket is hereby increased from the present paltry $457,600 to one dollar more than one (1) billion dollars; and between the bottom and top brackets, respectively, seven (7) intermediate brackets shall be progressively graduated on an exponentially ascending scale as follows:


   Total earned income                       Tax

  1. Less than $30,001                           No tax
  2. $30,001 to $110,000                    $1 + 10% of income over $30,000
  3. $110,001 to $200,000                 $8,000 + 15% of income over $110,000
  4. $200,001 to $500,000                $21,500 + 25% of income over $200,000
  5. $500,001 to $1 million                 $96,500 + 37% of income over $500,000
  6. $1 million to 10 million                 $281,500 + 52% of income over 1 million
  7. $10 million to $100 million        $4,961,500 + 70% of income over $10 million
  8. $100 million to $1 billion            $67,961,500 + 90% of income over $100 million
  9. More than $1 billion                       $877,961,500 + 96% of income over $1 billion


After-tax disposable income, meaning free and clear take-home pay, remaining to meet the costs of personal living expenses and whatnot in each of the nine brackets, respectively, shall thus be:

  1. Up to $30,000
  2. Not less than $30,000 nor more than $102,000
  3. Not less than $102,000 nor more than $178,500
  4. Not less than $178,500 nor more than $403,500
  5. Not less than $403,500 nor more than $718,500
  6. Not less than $718,500 nor more than $5,038,500
  7. Not less than $5,038,500 nor more than $32,038,500
  8. Not less than $32,038,500 nor more than $122,038,500
  9. Not less than $122,038,500, and with no upper limit


With this measure, and herewith reaffirming that that no man, woman, LGBT or child is born an island and that we’re all in this together with mutual responsibility to help each other as we mutually swim to the other side, it is the intent of Congress to distribute the assessment of organizational and personal taxes on earned income equitably according to ability to pay and with due consideration for individuals’ after-tax income remaining to pay for personal living needs, particularly at the low end of the scale, and to halt utterly the increasingly extreme concentrations of private wealth in ever fewer hands among the top few percentiles of the U.S. population and in large organizations’ coffers.


Notwithstanding any other consideration whatsoever, personal after-tax income in all circumstances shall be sufficient to purchase the eight basic living needs, which Congress hereby declares to be Economic Rights for every United States citizen. These eight rights include personal income not less than the cost of: 1) food adequate to ensure healthful nutrition; 2) clothing adequate for all seasons; 3) shelter, including utilities, of adequate size and quality for individuals and families, respectively as applicable; 4) health care including preventive health care, curative treatment, a little recreation for mental health, and hospice; 5) dependable transportation according to need; 6) insurance that is required by federal, state or local law; 7) during young adulthood, moderate savings or the cost of education, but not both at the same time; and 8) during retirement, adequate retirement income as provided elsewhere in this Act. Congress hereby acknowledges that income and wealth attainments beyond the minimum attainment of these eight shall be known as privileges, not as rights, and that such privileged income may be moderated by taxation accordingly in the common best interests of all the citizens of the United States in mutual aid and support of each other.


Recognizing that the costs of obtaining these economic rights vary substantially in different regions and sub-regions of the United States, this Act requires that income tax scales, and particularly after-tax minimum remainders, shall logically correlate with regional and sub-regional living cost differentials for a single taxpayer, and for a spouse and family members as applicable, as annually recalculated for each U.S. region and subregion by the federal government, and that such correlations shall be reflected in the Living Wage required to be paid to employees in each subregion.


Moreover, basing income taxes simply on total income for individuals and on simple net income for organizations, rather than on the traditionally meticulously convoluted “net taxable income” calculations involving labyrinthine dozens to hundreds of ambiguously-defined exclusions, interpretable exceptions and potential deductions, is expected to save taxpayers in aggregate some hundreds of millions of dollars annually paid for specialists of highly uncertain tax law training and expertise to compute taxes heretofore found incomprehensibly difficult to calculate by the taxpayers themselves. It is hereby declared the sense of Congress that the right to calculate one’s own tax bill, simply and without costly consultation, is as fundamental as the right of free speech.


The magnitude of the required increase in the tax rate points to the fact that reduced inequality cannot be achieved solely through fiscal measures, a conclusion that is reinforced once we take account of the likely impact of such a tax hike on incentives. This is why many of the policy measures proposed in this book are directed at making the distribution of… incomes less unequal. It is also why a radical policy to reduce inequality has to engage the whole of government [many government functions, not just taxes]. But for the moment we can see that we are facing a major challenge.
Anthony B. Atkinson, Inequality: What Can Be Done?, 2015

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READERS COMMENT: Your ideas are invited for dealing with the issues addressed in this post. These posts attempt to present new perspectives – THIRD OPTIONS – to move beyond the conservative-liberal divide that is so poisoning our national sense of shared community. New and wiser options are always available to make life in America better for all the people. What are yours? Be concise, use up to 200 words. Have a swell day.


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