Thursday, January 23, 2014
Winners and losers
According to one news story this morning Prez O'bama will again make income inequality a major issue in his upcoming State of the Union message. The fact that there is growing income inequality is irrefutable....the rich are indeed getting richer. The question is what, if anything, can be done about it?
I'm a compassionate capitalist. In theory I don't believe there is a lock on the door that prevents anyone from getting ahead. But facts say that it IS becoming harder, and IMO that's because there are special laws and tax advantages the government has granted to some at the expense of others. (Example: Allowing tax deductions for companies to shut down US facilities and move them overseas.)
In other words, the rich are to a large extent getting richer NOT necessarily by their hard work, but by the wink and nod they've been given by the government.
Consider this: In 2008 69% of corporations paid NO corporate income taxes at all, up from 24% in 1986. Successive administrations, both Democratic and Republican, through their policies and favors dispensed, have given special help to SOME businesses/industries (and individuals, too), primarily those who lobbied the hardest and made the largest political campaign contributions.
Their shareholder's "windfall" wasn't the result of working any harder, but due to government largess. If your company is still paying taxes, then you are at a competitive disadvantage. In other words, those who paid taxes subsidized those who didn't.
We need a level playing field, one where government can't designate winners and losers. That's what is happening now with special tax advantages and subsidies for some at the expense of others. Income inequality can largely be addressed by simply scrapping the old tax code (for both corporations and individuals) and replacing it with one that is fair to all. As always, the devil will be in the details.
*"Blasphemy!" said one fat cat to another*
Your ultimate success or failure will then be largely in your hands. Work hard, work smart....you thrive. Slack off....you lose. No headwinds, no tailwinds.