Presidential Debate Fantasy
by Fred E. Foldvary, Senior Editor, 22 October 2012The debates between the two major candidates for President of the USA have been, in my judgment, rather superficial. The candidates have dwelt on who said what and whose fault is which, rather than digging into the fundamental moral and economic issues.
Here is a presidential debate fantasy on how the candidates could engage in a more basic way. Included are Green and Libertarian Party fantasy candidates, with the tax position of the Libertarians based on that of the 2012 candidate rather than the platform, since the candidate is not following is partyís free-trade platform. Also included is a fantasy candidate of the Free Earth Party.
Democrat: Rich people often pay a lower income tax rate than middle income folks. The tax cuts of a decade ago favored rich people whose income comes from dividends and capital gains. To reduce the deficit and pay for medical care as well as investments in new technologies such as solar energy, we need to raise the tax rates on the rich. It wonít hurt them or the economy to pay a bit more.
Republican: High tax rates on the additional income of corporations and small business reduces investment, employment, and growth. We should eliminate many of the deductions, credits, and exemptions on higher incomes while reducing the tax rates. Economists agree that lower tax rates on a large tax base would have the supply-side effect of more investment and employment. The Democrat demand-side policy of more spending and bigger deficits has not worked.
Green: The poor should not pay any income tax. There should be high taxes on wealthy individuals and corporations. There should also be a transaction tax on trades of stocks, bonds and other financial assets, because this would reduce speculation and trading that does nothing for the economy. The rich can also be taxed more by eliminating the cap on Social Security taxes. Also impose a wealth tax on the very rich. Greens also advocate taxing pollution and land values. We also want to tax unhealthy foods.
Free Earth: Itís great that Greens favor taxes on pollution and land value. The Free Earth Party says that these should be the limit of taxation. Government should not tax the rich just because they are wealthy. What matters is the source of their wealth. Land value taxation would prevent fortunes from natural resources and community-created land value, while untaxing all labor and capital would promote maximum employment and economic growth. We get the most economic justice from sharing nature while honoring individual self-ownership.
Libertarian: All taxes on income should be abolished. Instead, there should be a national sales tax. That way, savings would not be penalized. It is OK to penalize borrowing for consumption, because that reduces excessive debt. Also, we allodial libertarians, in contrast to the minority geo-libertarians, believe that any tax on land violates private property rights. We are also not keen on taxing pollution, because we donít think it does much harm. A sales tax is the least worst tax, because it does not tax savings, and does not violate the sacred right to own land, which is a higher right than the right to freely engage in trade. Much of sales tax revenue comes from rent or is at the expense of rent anyway, so it does tap some of the land rent, and the fact that a high national plus state sales taxes would have a lot of tax evasion does not bother us, since we donít like paying any kind of tax.
Democrat: I will ignore the views of the Libertarians, Greens, and Free Earthers, because they are minorities who donít matter. We Democrats support allowing the decade-ago tax cuts for the wealthiest, for those making over $250,000 per year, to expire. We want a minimum tax on the rich so that no millionaire pays a smaller share of income in taxes than do middle class families. This wonít hurt growth, because millionaires will hardly miss the money.
Free Earth: The conventional policies of both the Democrats and Republicans created the Crash of 2008, the high unemployment, and slow recovery. Only a radical tax shift, replacing taxes on wages and enterprise to taxing pollution and land value, will eliminate the subsidies that promote pollution and economic trouble. The fair tax share of the rich is the land rent they receive from governmentís public goods; tax that, and not their enterprise and investment. Our economic woes come from ignoring sound economics, even if they are minority viewpoints.
Republican: The reason the minority parties are minorities is because people reject their kooky policies. Taxing land value would confiscate the value of real estate. We donít need fancy new taxes. Just flatten and broaden the income tax.
Libertarian: But the reason the income tax has become complicated and convoluted is that special interests can lobby for tax favors. Thatís why we need to replace the income tax with a flat national sales tax.
Free Earth: Libertarians need to read Professor Mason Gaffneyís writing on sales tax suicides. We favor property rights, but not subsidies. The rent generated by communities and public works is not a proper individual property right. To the creator belongs the creation, and the creations of communities belong to communities, not to conquerors and subsidy seekers.
That ends my presidential debate fantasy.
-- Fred Foldvary
Copyright 2010 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
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