A Grand Bargain: Part 1

The modern economy is not perfect. Income inequality has become an issue of grave concern and these concerns are not misplaced. The solutions proposed for shrinking the widening gap between the rich and the poor are essentially the exact same answers that have been given for the better part of a century, more taxes and more government. We need new ideas and we need a new deal for the American people.

First we need to address both income inequality and wage growth. This can be done by abolishing the corporate tax and instituting mandatory profit sharing programs. The idea is to bring the profits generated by American corporations back into the American economy. However; this idea only works if the American worker isn’t left out. A plan to further enrich the billionaire class while leaving scraps for the rest of us is hardly a plan at all. These are my bold ideas for the future of American prosperity:

1. Abolish the corporate tax, throwing out our ridiculous corporate tax code would create a path to bring $2.1 trillion dollars back into the U.S economy.
2. Replace the corporate tax with a mandatory 20% profit sharing scheme for non management employees. This will make sure workers get their fair share of profits and that any increase in pay will be tied to actual performance. A mandatory profit sharing system will primarily lift wages of lower level employees but exclude managers who benefit from stock options as a form of compensation.
3. A lower overall tax burden for U.S. corporations would create economic expansion and allowing them to compete more effectively on a global scale. This would also encourage more foreign investment into the U.S Economy.
4. We must close tax loopholes for the wealthy, this will ensure that even if managers engage in creative accounting they can’t avoid paying taxes in one way or the other. If they pay themselves, they will have to pay the federal government as well.
5. We need to end of unfair subsidies that only benefit the wealthy elite, this will foster competition and cut cost.
6. Reform Social Security from an unfunded pension liability to a completely funded version similar to systems used in Norway and Singapore.

**The Corporate tax as it is now is a double tax on workers. They are taxed once as a group (i.e. The corporation itself) then are taxed individually by income (the individual income tax).

Secondly, we need to better address the needs of our poorest citizens. The current welfare system in the U.S. aims to reduce poverty but struggles to do so in real terms. We have thrown money at anti-poverty programs with little to show for it. However, this is something we could easily change with a minimum income.

We can set a minimum income rate to insure the poorest among us are cared for while not destroying the incentive to work. The minimum income should be set at between ½ and ¾ of the federal poverty line to insure the incentive to work remains. The minimum income should be funded directly from the treasury to avoid increasing the tax burden. The abolition of most welfare programs (as there would be no need for them) would reduce the strain on fiscal policy and free up resources. The minimum income should act as a quasi-monetary tool by central banks allowing manipulation of the minimum income during times of economic unrest. For example; Central bankers would be able to raise the min income to 3/4ths of the federal poverty line during a recessions and back down to ½ the federal poverty limit during times of expansion. This will give central bankers a restrained and limited tool to combat decline while shielding the most vulnerable of us during times of need.