Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
The growing income gap between the top 1% and the other 99% is too large and is bad for America. The purpose of this post is not to discuss the myriad reasons why, but rather to focus on how the gap can be reduced, and whose plan reduces it best.
There are only two ways to reduce the gap:
A. Bring down the 1%
B. Lift the 99%
That’s it. There are no other choices.
With those two options in mind, read the following excerpts to see which Presidential candidate and which party you believe is headed in the right direction.
Obama, Romney tax plans for ultra-rich offer window on disparate economic views
By Jia Lynn Yang, Published: April 13
If Republican front-runner Mitt Romney reaches the White House, he will push for the top 1 percent of American earners to save an average of $150,000 in taxes, according to an analysis of his tax plan by the Tax Policy Center. In a second Obama administration, these Americans would pay about $83,000 more than they do now.
For the top 0.1 percent, the difference is even more stark. Romney’s plan would save them an average of $725,000. President Obama would raise their taxes by $450,000.
Obama has repeatedly called income inequality “the defining issue of our time.” He has proposed raising taxes on millionaires, saying on Tuesday that “broad-based prosperity has never trickled down from the success of a wealthy few.”
Romney, by contrast, waves off Obama’s talk of income inequality as the “politics of envy.” He says the best way to lift people out of poverty and raise wages is to help businesses become more successful. Ease regulations on businesses and lower taxes, Romney argues, and people’s fortunes will rise.
Neither candidate has a strong record of stemming a decades-long trend in this country of widening fortunes between the wealthiest Americans and everybody else.
Obama has overseen a recovery that has overwhelmingly benefited the wealthy. A recent study showed that the top 1 percent of Americans enjoyed 93 percent of the income gains from 2010, the first year of the recovery.
In Massachusetts, Romney did little to reverse the trend of income inequality that was happening in his state. And his work at Bain Capital embodied a pure distillation of American capitalism in which higher returns for investors, not worker pay, were the highest priority.
Bottom line: Obama wants to bring down the 1% by increasing their taxes. Since all federal tax increases have the same effect – they remove dollars from the economy – the Obama plan will punish not only the 1% but also the 99%. Removing dollars from the economy will serve as an anti-stimulus, depressing the entire economy. And as is always the case, when an economy is depressed, the poor are injured more than the rich.
Romney wants to reward the 1%, under the theory that the wealthy will create jobs for the rest. He ignores the simple fact that this never has worked and never will work. The growing gap itself proves that rewarding the rich doesn’t close the gap. Reward the rich and they simply will grow richer.
In short, neither Obama nor Romney advocates solution B, lifting the 99%, and both will oversee a growing gap. Neither of them understands or cares about the facts of Monetary Sovereignty, which understanding would help reduce income inequality.
In the unlikely event either party and either candidate ever wishes to help the 99%, rather than merely consolidating personal power, here is what they will do:
1. Eliminate the FICA tax. It impacts the middle and lower classes, not only directly, but also by making employment more expensive for potential employers. For the lower classes, FICA often is greater than income taxes.
2. Medicare for everyone. Medical expenses are far more traumatic for the 99% than for the 1%, who easily can afford health insurance or even self-insurance. This act also will benefit the states by making Medicaid unnecessary.
3. Increase Social Security benefits to the point where all retired people – not just the 1% — can enjoy a comfortable lifestyle. This has the byproduct of encouraging more people to retire, opening jobs for younger people.
4. Each year, increase the standard deduction on the income tax, so that annually, fewer of the 99% will owe any tax.
5. Send a population-based stimulus payment to each state, so that the monetarily non-sovereign states can afford to improve their infrastructures, education and police and fire protections.
As for Romney and Obama, don’t let them deceive you. Both their plans will widen the gap.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports