The Biden team has talked a great deal about an enormous spending package, usually in the
area of $2 trillion dollars, more or less, that they propose to spend on a variety of
things: checks to individual American, improved unemployment benefits, funding for cities
and states that have been starved of federal help under the Trump administration, and so
on.
And how is this $2 trillion going to be paid for?
Answer: borrowing.
Why do I know that?
Because the team proudly tells us they're not going to have to raise taxes.
Well, if you're going to spend $2 trillion more and you're not going to raise taxes,
the way you solve that problem is by borrowing money.
And let me drive home what that means.
Who do you think the government borrow from?
Well it doesn't borrow from mostly you and me, because we don't have enough money to
lend to the government.
The bulk of the lenders to the government of the United States are wealthy institutions,
wealthy people, both domestic (Americans) and those abroad.
So most of the money goes right where you might expect, into the hands of those who
need it least.
And if you borrow all that money you're going yo have to shovel future moneys into the pockets
of those who need it least.
What's an alternative?
Well, you could tax the corporations and the rich.
If you did that you would raise the money needed to help the $2 trillion you're going
to spend, but you wouldn't have to borrow it, and therefore not have to pay interest
to those lenders who, again, deepen the inequality by collecting all that money into their hands.
So let me talk a little bit about what the taxes are that they Biden administration should
be taking about.
Well, the first one's obvious: income tax.
Make the income tax more steep, more progressive, go after those at the top.
Let me remind you, and the 60s and 70s of the last century, a time when the American
economy had less unemployment than it does now and was growing faster than it does now,
we taxed corporations and the rich much, much higher than we do today.
The argument made over the last 30 years that by reducing taxes we would stimulate our economy:
false.
What we actually did was produce an economy with more inequality, less growth, and more
unemployment much of the time.
Therefore the argument doesn't hold.
Nor is it equitable.
Nor does it reduce our inequality to not tax income at higher rates for those at the top.
And here is another guess about what we could do and should do: wealth tax.
Let me explain because so few Americans understand this.
Do we tax property in the United States, as opposed to income?
We do tax income.
We don't tax it all a the same rate.
The rate applied to people who earn their income by labor is higher than the rate we
apply to people who earn their income by charging rents, or giving dividends or capital gains.
And that's another story for another day, but very unjust.
No, I want to talk about whether there is a tax on the value of your property which
is a separate question from taxing income that you earn.
Do we tax property?
Well, the answer is yes and no.
And therein lies an enormous part of the inequality of the United Stats.
We do tax property in the form of your house, your land, your automobile, certain kinds
of tangible things like that.
Cities and towns live by taxing property, whether or not your property earns an income.
If, for example, you have a house and you rent it to people, you pay an income tax on
the rent you get plus a property tax to your town for the property you own.
But here is something you may not have understood.
We do tax land and buildings and business inventories.
We do not tax, in the United States, property held in the form of stocks and bonds.
If you have a $100,000 house in a community in America, you pay a property tax to that
town.
If you sell that house and use the $100,000 to buy $100,000 worth of stock in some company,
you know what your property tax is?
Zero.
There is no property tax on stocks and bonds.
And who owns the bulk of stocks and bonds in our society?
Here's the answer: the 10% at the top own 80% of the stocks.
This is an enormous tax exemption for people who qualify for it, because they're rich enough
to buy stocks and bonds, which most Americans aren't.
The inequality and the injustice of this tax system is stupefying.
And what ought to be done is to get two birds with one stone: tax income and wealth, use
it to help the mass of people.
That's what the situation in this country required.
Thats why millions of people hoped that by voting for Mr. Biden they would get something
like that.
It's very disheartening to hear that they're gonna spend money to help people at the bottom
(good, that's good), but they're not going to use it as an opportunity to undo the inequality
that has gotten so extreme.
They could do it, they should do it, and we're waiting, but we're not terribly hopeful.
Footnote, in the 1930s, when Roosevelt took much greater steps to help the mass of people,
he did pay for it in large part by taxing corporations and the rich.
That's why the tax rates were so much higher in the 60s and 70s as I began this conversation.