All the discussion about what income tax structure will stimulate the country while not reducing the incentives of America's wealthiest -- recall that 1% of us hold 1/3 of the net worth and 10% have over 70% of the net worth.
We're taxing the wrong things. We expend a lot of energy talking about
income tax brackets, ignoring the extent to which US income is
concentrated among a relative few of us.
We'd be wiser if we
started paying attention to how income has become so concentrated:
through granting of privileges such as the privilege of pocketing most
of the value of natural resources; the privilege of collecting what is
mostly land rent not building rent, both month by month or in the form
of "capital" gains upon sale of urban land; the privilege of using the
electromagnetic spectrum without paying one's community for the
privatization of this scarce resource; geosynchronous orbits; landing
rights at Laguardia and other congested and constrained airports; water
rights; rights to pollute.
If you're not familiar with the
statistics on how concentrated the benefits of such privileges are, read
the Survey of Consumer Finances data on Equity (publicly held stocks)
and "BUS" (the value of privately held companies) at LVTFAN. A few
percent of us own awesome percentages of these privileged assets and
reap what the rest of society sows through its labor and presence.
And our economics education neglected to mention this detail. (Should we be surprised?)
Life on a tilted playing field -- and we're so used to it that we don't even realize the tilt.
The
wealthy can be stimulated to do the things which create jobs and drive
wages upward for ordinary workers -- but it isn't through fiddling with
income taxes. We may need to fiddle with them in order to reduce the effects of our terrific income concentration and our need for revenue for legitimate common purposes, but it isn't the answer to stimulating the economy.
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