Good Column By Friedman

Finally, a column by Tom Friedman that I can agree with. In today's NY Times, Op-Ed Columnist: Coulda, Woulda, Shoulda argues for a dollar per gallon gasoline tax. This happens to be an idea I suggested many years ago, for the same reasons: we would send less money to our adversaries overseas, we would have a better energy policy, and a great source of government revenue.

Of course, I would like to see some of the revenue used for nuclear fusion R&D and building more nuclear fission power plants. (I would also like to see the United States exit the World Trade Organization and put tariffs on goods and services of nations which do not trade fairly with us, such as China, but that is a different - though related - issue.)

The gasoline tax would be similar to a tariff, and that is good, because American tariffs add to our federal treasury, as opposed to the treasuries of the countries we import from. The latter still make a lot of money off the American consumer, but tariffs would also favor American producers of goods and services.

A quote from Friedman's column:

“Think about it,” says Phil Verleger, an energy economist. “We could have replaced the current payroll tax with a gasoline tax. Middle-class consumers would have seen increased take-home pay of between six and nine percent, even though they would have had to pay more at the pump.

End quote.

That is another idea I favor. I have often called for eliminating the payroll tax and making the federal income tax more progressive. The payroll tax is the opposite of progressive: it is regressive; it hurts the middle and lower classes more than the upper class. This would not be "class warfare"; class warfare is what we have now, with the upper class waging war on the rest of America.

I like to call a spade a spade. So today, I applaud Tom Friedman's column.

Congress and Taxes

Re Senate Democrats Facing a 'Pay as You Go' Problem by Edmund L. Andrews in today's NY Times:

It is both amusing and infuriating to watch the weasels in Congress. It seems that one of the requirements of office there is to have no backbone.

The other thing that catches my eye is how the private equity and hedge fund managers give big bucks to both political parties (obviously their way of buying access) yet the millions they give amount to only a few hours of their collective earnings. So, they spend about two cents to buy a dollar's worth of extra after-tax earnings. Amazing.

Of course, the solution to our fiscal travesty is simple: start with a basic flat income tax with no deductions, and then make it progressive; the income points where the tax rate changes should be indexed for inflation.

Then the "pay as you go" rule would require either a direct reduction in funding of other programs or an increase in the base income tax rate, or some combination, which results in no increase in the national debt.

A Quick Way to End the War in Iraq

The fastest road out of Iraq would be for Congress to simply not pay for the war. At some point, Bush would blink and then the troops would come home.

Not quite so fast, but still quick, would be for Congress to impose an income tax surcharge to pay for the war. For example, after all the computations to arrive at the final tax, add one more: multiply the tax amount by 1.3 (a thirty percent surcharge).

If this war is really necessary, then it ought to be worth actually paying for. After all, Congress, in effect, has been asking young people to die for the benefit of Iraqis. So Congress should ask other (generally older) Americans to pay for the war with higher taxes. Otherwise, we are asking our young to pay for the war twice: first with their blood, and later, when the money borrowed from China and Saudi Arabia has to be paid back, with higher taxes.

This means that we should pay for the war now, as opposed to borrowing the money (as the Republicans prefer to do).

OK. So what does this have to do with ending the war? The very people who got us into Iraq and don't want to "cut and run" are the ones who would mostly have to pay higher taxes. This puts them in a bind: they hate taxes, but they want us to stay in Iraq.

I am guessing that their fiscal ideology of "borrow and spend" (i.e., "no new taxes") would outweigh their neocon ideology of nation-building. In other words, when faced with the prospect of higher taxes, the Republicans would vote in favor of ending our war in Iraq.

Welfare

Re Death Reveals Harsh Side of a 'Model' in Japan By NORIMITSU ONISHI in today's NY Times:

A quote from the article: "As a widening income gap has pushed up welfare rolls in recent years, struggling cities like Kitakyushu have been under intense pressure to tighten eligibility."

War is not the only example of man's inhumanity to man. The way modern, industrialized nations like the U.S. and Japan handle income inequality is another.

As the article depicts, some indigent persons have starved to death in Japan, because their welfare programs are, in a word, stingy. But at least the income tax system in Japan is very progressive.

Whereas in the U.S., our welfare programs are generous, but our income tax system is not progressive. (Just witness the low 15% tax rate on billionaire private equity and hedge fund managers.)

The fallacy which undelies the ideologies in both the U.S. and Japan is that the rich are entitled to their wealth and the poor deserve their poverty.

The missing idea in all this is that technology is the real underpinning of all modern wealth creation, and the fruits of technology should be shared because without government-sponsored education and research, technology would not be as advanced as it is today.

Just one small example proves this point. How much lower would aggregate world GDP be were it not for the American government's role in creating the internet?

Therefore, a large portion of the fruits of technology belong to the governments which paid for the research and development of the technologies, and which subsidized (directly and/or indirectly) the educations of many of today's billionaires.

That being said, modern governments should get a return on their investments by taxing the "winners" at a high rate.

One of the outcomes of technology is producing more goods and services with less labor. Therefore, governments (which helped create modern technology, directly and/or indirectly) have an obligation to help the "losers" in today's advanced economies.