Before we cut social security, decimate union health plans, or force workers to postpone retirement long past the onset of arthritis, can we at least have real tax reform that addresses the reality of early 21st century America?
Let's tax corporations and extremely wealthy individuals based on whether or not they are putting their capital to productive use.
Right now, we are a wealthy nation but not a prosperous one. Having avoided worldwide bank failure, we've come to the point (thankfully) where there actually is money to spend. The problem is, that wealth is being horded rather than invested.
It's sitting in the assets of corporations, the accounts of investors, and the portfolios of hedge fund managers. If that money were being put to use, a lot more people would have jobs, pay taxes, and reduce the deficit.
Instead of waiting around for something as chimerical as "investor confidence," let's offer a real tax break.
Corporations and financial institutions should pay a low rate for productive use of their funds and a far, far higher rate for speculative investment.
Similarly, executives who are paid beyond a benchmark (a multiplier of the highest salaried worker or a percentage of their companies payroll or net worth) should jump from the 33 percent bracket to a 90+ percent bracket.
In effect, we would be telling corporate and financial America: use it or lose it. If you invest in new housing, you'll pay a low tax rate. If you speculate in refinanced mortgages, we'll tax most of your gain.
We wouldn't tell companies how to use it. They could raise salaries, do research and development, lower their prices, increase production - anything that results either in more jobs or in more income to those who would immediately spend their money.
But those who are taking money out of the economy would pay an extremely high penalty.
It's a two-tiered system, one that corporate and financial America (who are great fans of two-tiered salaries) should immediately understand.
Is it using the tax system to achieve social ends? Of course it is. Any tax system is an expression of policy. The mortgage deduction was created to move the middle-class out of rental apartments and into housing. Taxing capital gains at a lower rate than earned income encourages investment.
For the past thirty years, Democrats and Republicans alike have strenuously created policies that have moved income away from the majority of Americans and into the hands of the top 1 percent.
In effect, we are the victims of a cold class war waged by the extremely wealthy who then have the chutzpah to turn around and argue that any attempt to restrain their thievery is "class war" against them.
Would dividing wealth into productive and non-productive use require making distinctions? Sure. So is dividing expenses from outlays and investment from savings. We rate bonds and adjust for inflation.
Businesses love tax incentives. For years, they've lobbied for enterprise zones, exemptions for moving their businesses to a particular location, or making movies in their states.
So let's create a real tax incentive -- create jobs and spread the wealth and you'll be rewarded in your tax rate. Put your money into purely speculative instruments whose only purpose is to create more unproductive wealth and you'll suffer the consequences.
What we can't afford is a continuation of our current financial policies. Nations with an abundance of wealth but no prosperity eventually explode. A tax policy that distinguishes between productive and speculative use of capital is a hedge against an untenable future.