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Vastly discordant wages

case for a fairer progressive Taxation


INTRODUCTION

This opinion piece would attempt to illustrate that Economic Justice and Fairness is morally as well as logically imperative. And that a reasonably progressive taxation, wherever feasible, as well as a living minimum wage,tied in with the per capita income is a good way to achieve that end. Although human compassion and conscientiousness prompt people with plenty to share their bounty with the less fortunate, there is also a logically compelling reason to do so. Further, such generosity has been grossly inadequate to ease the misery of the least fortunate. And in the midst of sufficient resources to go around, over the millennia, millions if not billions have perished from insufficient purchasing power.

The persistence of "abject poverty" anywhere in the world, especially in this day and age, is absolutely unnecessary, which must end, and very soon. Jim Yong Kim, the new World Bank president said on April 18, 2013 (PBS, News Hour), in one Indian state (Uttar Pradesh) alone, 8 percent of the world's poorest 1.2 billion people live! He remarked that this 1.2 billion are a "moral stain" on us.

Such horrible poverty, in such huge scale, in such a rapidly growing economy as that of India, is a most convincing example for what would happen when too much wealth, as well as power, is concentrated in very few - there are 54 billionaires in India, worth over $186 billion (out of a 'nominal' gross domestic product of about $1,900 billion, for all of 1.2 billion humans!) (Forbes, April 1, 2013), plus numerous multimillionaires, probably worth far more than that. From a 'Human Development Indices' perspective, so much wealth concentrated in so few, while so many live in abject poverty, and also dying in huge numbers from preventable diseases owing to lack of sanitation and clean drinking water, have a lot to do with the dismal collection of taxes from these tycoons and other affluent. Furthermore, the pervasive indifference to the suffering of the masses in India is far worse than the Apartheid in South Africa and the Slavery in the US, but not anywhere near what has been happening during the past 20 plus years in Congo, South Sudan and Darfur! 

Unlike many may feel, one cannot make huge sums of money, or accumulate vast amount of wealth without unfair exploitation, or (not fully deserving) inheritance. There are numerous examples depicting vastly incongruous remunerations for the quality/importance and quantity of labor. A most conspicuous example may be the humungous amounts many hedge fund managers have been raking in, and then (legally) paying too little in taxes. Their federal income tax rates have been far closer to 15 percent than to 35 percent, not that much higher than many sales taxes! Sales taxes are flat, the same rate for anyone who buys the item. The top 25 hedge fund managers together made close to $62 billion for the three years from 2009-to-2011. (Steven Cohen, whose SAC capital paid over $600 million in March 2013, to settle insider-trading charges with SEC, made $1.4 billion in 2012; he profited handsomely from his employees illegal activities, as four of them have already pleaded guilty; another two are indicted [New York Times, March 29, 2013]! Daily Beast writes, November 27, 2012, "If John Gotti was the Teflon Don, then in the off-the-record view of the FBI and prosecutors, Steven Cohen is the Teflon Trader, where the feds never have enough to charge him with anything, even as underling after underling at his hedge fund gets locked up for insider trading—five in all, three of them pleading guilty, two others acknowledging complicity, none of them implicating Cohen personally.") Further, Hedge fund managers' jobs generally have very little social value.

On the other hand, Tim Berners-Lee, the creator of the ubiquitous world-wide-web (www), didn’t try to make any money out of it; he probably could have made a fortune. Whereas, makers of related products made hundreds of billions, under the cover of patent protection - the "market cap" of Apple shot up 100-fold between the Spring of 2003 and the Fall of 2012; during the tech-bubble period of 1990s, the rise of Microsoft, Intel and Cisco was almost equally dramatic!

If Bill Gates chose to be like Berners-Lee, he couldn’t be worth $100 billion by the year 2000; true, unlike other billionaires, he utilized his enormous wealth, thanks to his exceptionally charitable wife, and father, for the good of the neediest of the world. But many others, including the most admired, 'ascetic' Steve Jobs, didn't show much interest in philanthropy. (Ted Turner, with his relatively modest wealth, publicly pledged $1 billion to the UN in 1997, creating a chain of events, which may have been the catalyst for the current push to cajole worlds’ billionaires to pledge, and successfully so, at least half of their wealth to charity!) Warren Buffett had been hunting for the best way to give away almost all his wealth to benefit humanity, as many others had, throughout history. But Buffett couldn’t spot the right "target" to aim his enormous firepower, until he came across his friend Bill (and Melinda) Gates’ foundation. However, most who have plenty keep almost all of it for themselves, leaving much of the world scraping by, or living, and dying, in misery. I would argue this situation is mostly avoidable, if humans behaved more rationally; most of us would immensely prefer not to witness misery around us, and we would be ecstatic if 'magically' all misery in the world is wiped out. The loss from sharing could eventually, if not readily be sensed as gain!

The later-life philanthropy of "robber-barons" could be compared with the profound sense of guilt of the Indian emperor Asoka (circa B.C. 304-239), who after eight years of rule, waged an extremely bloody war against the kingdom of Kalinga (today's Orissa), but was so horrified at the carnage he had caused that he completely renounced violence, adopted Buddhism, and spent the rest of his time promoting the non-violence of Buddhism throughout India, as well as abroad, as far as Greece in the West, in addition to China and rest of Asia.

Indeed, it is man's natural instinct, to be simultaneously selfish and altruistic. The loyalty, as well as viciousness of dogs is so profound that a Pit Bull would fight its master's enemy literally to death, while dogs, including, or especially, the Pitt Bull always would long to please their master. Similar loyalty and sacrifice, as well as viciousness have been displayed by numerous soldiers, as the most feared kamikaze pilots during WWII, over the millennia, as well as more recently by the suicide bombers. The brutality of Joseph Kony's child soldiers at his command, as well as that of Genghis Khan's army and that of the Khmer Rous may still stand out for their brutality towards fellow humans. Secret service agents and commandos as the bravery and readiness to sacrifice their lives as the Seal Team 6 who raided the bin Laden compound in May 2011, even bodyguards, show similar loyalty and sacrifice.

The "momentary" human greed (not that unlike the momentary heroic deeds of many risking their lives to save other lives), as the 0.0...1% now displaying, which is having a devastating impact on fellow humans, is so tenuous that it is "instantly" and completely reversible, but under the right circumstances (witness the current habits of the Gateses in news video clips while they frequently visit the poorest sections of the world, after building and still owning an ultramodern, 66,000 sq. ft. mansion, with vast technological sophistication!). If only we realized this, the world would be so much (more) free of misery!

Most of the perpetrators of the atrocities by the Nazis, and of the Khmer Roughs were not "natural-born" killers or sadists, but transformed into being so. (The pity is that the children, women and the old who become wrapped inside this, 'neither can stand the heat nor can they get out of the kitchen'! Healthy adult men who have been (most of) the soldiers, and also the "deciders," do not get this.)

I hope the "paradoxically cannibalistic," instead of healing culture of Big Pharma, as it has cost millions of lives in the Third World, especially in Black Africa of AIDS, in a span of many years, and also caused severe hardship for many in the US, would some day end for the common good. Their profit motive, ironically has largely been futile, as the stock prices of almost all major drug companies either remained stagnant or dropped substantially, as that of Pfizer, during the past 13 years, instead of doubling or tripling, as the stock-holders expected!

I would also challenge the popular, apparently unchallengeable assumption that intellectual effort, labor with brain compared with that of brawn, deserves vastly larger monetary reward. I feel this is not too unlike the practice of apartheid, or even paying workers based on their skin color and gender. Indeed, in Latin America, one way or another, light-skinned people occupy privileged positions, and are vastly wealthier: Racial and ethnic discrimination is common in Latin America where socio-economic status generally correlates with perceived whiteness, and indigenous status and perceived African ancestry are generally correlated with poverty and lack of opportunity and social status” (Wikipedia, accessed, August 29, 2012). This has been prevalent, maybe slightly differently in the US as well. The Chinese Exclusion Act, in force between 1882 and 1943, and the provisions of 1924 Immigration Act, curtailing the entry of Jews, Eastern and Southern Europeans and Orientals, and the 'Hindu Exclusion Clause' (excluding Hindus, Muslims and others, including Christians of South Asia) in it, all meant to solidify White Anglo-Saxon dominance in the US. Much less just than that, between 1929 and mid 1940s, nearly two million Mexican Americans were deported to Mexico, to make room for unemployed US workers. Many of them were US-born citizens! This plain fact is unknown to most Americans, whereas, most Americans are acutely aware of, and also ashamed of the World War II internment of the Japanese Americans, who have been way high in the totem pole.

I would also state that light-skinned people with plenty of exceptions are inherently much more industrious and resourceful, mostly a function of colder climate they have lived in and adapted to, by "moving" more, to generate heat to fight the cold weather, which very gradually, taking perhaps millennia, also lightened their skin color, along with "enjoying" hard work, as well as more cautious and disciplined, which was necessary to survive in cold weather (see Wealth and Poverty of Nations, by David Landes, 1999; also watch PBS documentaries on the building of the Hoover Dam and of the Titanic). This industriousness, or lack thereof, is not etched in stone, and can be altered, improved with a conscious effort, as the saying goes a handicapped employee is usually more productive. In tropical countries such as India, too many middle class men with inherited assets, who do not need to exert to lead a modestly comfortable life, do not do much, of any kind except reading newspapers, or go to a nearby place to hang around and chat; very few have any hobbies.

Although economic justice and fairness are necessary, Economic Equality is neither feasible, nor that important, as Inerasable Inequality is integral to humanity, based on age, gender, mental and physical health, social and verbal skills, race, looks and intelligence, as well as a nebulous and unusually important factor, Likeability, which may manifest itself as ‘charisma’ in natural leaders.

However, money has a unique value, as a currency to acquire other “happiness-generating” ‘stuffs’, which at least sometimes are illusory. And a “fair and balanced” disparity between any two individuals in a nation is within 100-fold in incomes (though a 50-fold disparity is more desirable), and 1,000-fold in wealth. Progressive taxation, along with an adequate minimum wage, ought to be structured to achieve that end. An analogous, but not the same disparity in incomes and wealth between nations also ought to be a goal for “international economic justice and fairness.                                                                     

Critical Role of Leaders toEFFECT CHANGES, INCLUDING IN TAXES

            An underestimated but critical role of leaders in shaping our future, nay our destiny needs to be stressed, but its complexity cannot be elaborated here. The casual use of a common phrase, “Nobody is indispensable,” is so wrong. A single leader with enormous charisma, as FDR, or Ronald Reagan, but not anyone at the helm, can “move mountains,” if and when they choose, and are determined. Not too infrequently, horrible leaders, the like of Hitler and Pol Pot also get power. Therefore, I would argue, the greatest blessing, asset or fortune, a nation, a group can have is to be led by an 'Apt' leader. Because of all this, as much as possible, citizenry ought to actively participate in shaping political processes, which is, however, easier said than done. (Ancient Greeks used the word 'idiot' to depict someone who had little interest in politics!) Unfortunately though, the best leader available, much less the one gets elected in a democracy, may be far from good, a sad reality, to be grappled with. In the US, citizenry is too indifferent to actively participating in electoral processes; many poorer and much less literate countries, such as India are much more involved, with much higher electoral participation. However, higher percentage of voting may not mean electing better ones among the available leaders.

            Economic justice, and the role of government have been on the decline since the Reagan era, after they were on an upswing path since the New Deal days of FDR, in the 1930s. President Reagan, who ironically started out as a Roosevelt Democrat, with his amazing persuasive skill, rivaling that of FDR, convinced the public, “Government is not the answer to our problems; Government is The Problem.” (The history of minimum wage in the US is a fair example to appreciate the ensuing “Revolution of the Right” - Fig. 1)

            Alan Reynolds of the Cato Institute writes, (Concise Encyclopedia of Economics) “[The] topic of marginal tax rates became the central theme of a revolution in economic policy that swept the globe. … By the end of [1980s], more than fifty nations had significantly reduced their highest marginal tax rates. Neither Karl Marx nor John Maynard Keynes had so much influence on so many countries [though the less fortunate there paid a heavy price for this] in so little time.” This has had a far more devastating impact on the less fortunate in the Third World countries, as their governments, one after another blindly, and often “gleefully” copied tax cuts of Reaganomics as most who set policies there personally gained handsomely by tax-cuts and associated economic reforms like lifting barriers for importing fancy consumer goods, at the expense of the poor masses, while recording impressive GDP growth.


 

Minimum Wage in Relation to Poverty line statistics. (If the initial trend from 1938 to 1968 continued, by 1990, the minimum wage could have touched, if not crossed the poverty line, and kept upwards, perhaps at a much slower pace, nevertheless upwards, similar to Northern European countries, relieving most from avoidable suffering! That would have been a model for the Third World, nay, even for the “Second World” – in Kerala, India, it has already been achieved over a decade ago, aided by a strong influence of the Communist parties!)

            For instance, in India, Global Hunger Index (GHI) actually rose from 22.9 in 1996 to 23.7 in 2011 (The 2011 Global Hunger Index Report), though statistics may show “more” people got out of poverty than at any time before the economic liberalization of 1991. “In India, 43.5 per cent of children under five are underweight [not too small a number of them, however, have a poor appetite, not necessarily poor], which accounts for almost two-thirds of the country’s alarmingly high GHI score. From 2005-2010, India ranked second to last on child underweight — below Ethiopia, Niger, Nepal, and Bangladesh” (The Hindu, October 12, 2012; the Per capita Purchasing Power of Bangladesh is only half that of India. In a few other Human Development Indices also, Bangladesh is ahead of India).

The widening (economic) inequality of late has been far worse in the Third World than in the US. The enormous disparity in residential amenities, or lack thereof for a family in the slums of Mumbai, and of Mukesh Ambani (net worth: $21.5 billion, down from $29B in 2010, Forbes (India), April 2, 2013), so close to them, in his $1.2 billion mega-mansion, the world’s most expensive residence ever built, is unprecedented, except may be in ancient times in rare places. The sad part is that the governments of Maharashtra and India permitted that to happen. Worse still, few in India are concerned about this blatant decadence. There is indeed, as said above, an indirect relationship between such decadence by a few and poverty for the masses. The commitment of governments to focus on the needs of the poor, ill-educated, lower caste people, even in urban areas is grossly inadequate. "Of the 2.5 billion people in the world who defecate openly, some 665 million live in India. This is of greater concern as 88% of deaths from diarrhea occurs because of unsafe water, inadequate sanitation and poor hygiene" (Betwa Sharma. "665 million Indians still defecate in open: UN". Rediff news; retrieved September 19, 2010; the number maybe less now). The oft-repeated argument, “It’s his [Ambani’s] money” is utterly wrong – 90+ percent of “his” money, belongs to all Indians, especially the poor, low caste and ill-educated, some of whom may be toiling (not for Ambani) along with their undernourished small children, as “bonded laborers,” a form of slavery mostly for the Dalits (untouchables) and largely in Northern parts of India, trapped for generations under arcane and conveniently crafted traditions, in clear violation of the PREAMBLE of Indian Constitution, adopted in 1949!

Though many unfair dealings are treated as illegal, too many could not yet be placed in that category. Again progressive taxation, if effectively implemented, could sufficiently mitigate, not eliminate the results of such unfair exploitation. Hence the concept of progressive taxation, as well as a living minimum wage, ought to be welcomed as an indispensable guiding principle.

Yet another quirk is that today’s exploiter could become tomorrow’s exploited. A good example for this is, when people trade stocks etc., invisible exploitation, continually takes place. When stockbrokers and commentators advice their clients and listeners, to buy or sell a stock for instance, they are essentially telling their audience to “stick it to others” who are not their audience at that moment.                                                                 

Current Taxation is Barely Progressive, often Deceptively Regressive!

            The top 25 US hedge fund managers together made an astonishing sum of $25.3 billion (with a ‘b’) in 2009, though less in 2010, 2011 and 2012 (not by the same 25). Their federal taxes may have been far closer to 15 percent than to 35 percent, as most of their income was designated as “carried interest” to be taxed at just 15 percent including on most of the $4.9 billion John Paulson made in 2010. (Paulson made his billions on the pain of so many, by betting against subprime mortgages, before 2008; Goldman Sachs also bet against subprime mortgage-derivatives, against many of their own clients' interests! [New York Times, December 24, 2009] Bloomberg News, April 11, 2013, reports, "John Paulson, who last month considered a move to Puerto Rico to lower his tax bill, is starting a fund to help investors reduce the amount they owe to [IRS]. ... 'He seems to be more focused on avoiding income taxes than on generating returns for his investors', said Brad Alford [of Alpha Capital]. 'It gives billionaires a bad name'.”) What Leona Hemsley famously blurted out, “Only the little people pay taxes,” is ever so true! (In the January 2, 2013 “fiscal cliff-deal,” the rate was raised only to just 20 percent – see “A Costly and Unjust Perk for Financiers,” New York Times, February 24, 2013).

Furthermore, some of what the hedge fund managers did had substantial negative impact on the financial system, by upsetting the equilibrium to varying degrees, more often, maybe, elsewhere than in the US. Whereas, what the US Air Flight 1549 pilot Capt. Sullenberger did by crash-landing at the Hudson river in 2009, saving perhaps all 155 aboard, was priceless. Or what numerous, nameless paramedics do saving lives on a daily basis may also be priceless. The list of similar heroes in hospitals, in the military and elsewhere is endless.

On the other hand, Adolf Hitler almost singlehandedly ended the lives of over fifty million, “unnaturally.” FDR and others stopped that carnage. What could possibly have happened had Hitler won the war, which was quite possible, is anybody’s guess.

Though far less than many hedge fund managers, the average Fortune 500 CEO’s compensation was $12 million in 2011, when the US President’s pay was only $400,000, plus liberal perks, but most of his perks are necessary for his job, which is seen as the most important in the world, as well as often quite stressful. Further, the US Supreme Court Justices’ pay for 2011 was only $213,900, with the Chief Justice getting $223,500, even if their job is far from stressful, as well as unusually respectable, until perhaps some years after Justice Scalia began his reign, with a 98-0 Senate vote. The “swing” justices’ vote, like that of Sandra Day O’Connor (who apparently regretted her vote on it, probably ever since) in “appointing” George W. Bush as the President of the United States of America, can be exceptionally crucial in altering the fate of so many (especially, of millions of Iraqis) for so long, in this case not entirely negatively, as Bush-43 may be saving millions of African lives from AIDS, with his huge $15 billion grant!

The general public also has a stake in the earnings of CEOs and other private sector employees reflected in the prices they pay for the products and services these firms provide. (See below a glimpse of how some highly paid executives manage to get such exorbitant remunerations at taxpayer expense.)

many high earners are for raising marginal rates substantially

Warren Buffett lamented about his lower rate of taxation compared with that of his secretary. Indeed there are many other very high earners who also want to pay at much higher rates, if it were to be levied on others like them as well (a handful of billionaires “donating” to IRS is ludicrous).

This cleverly crafted regressive tax code favoring folks with exorbitant incomes as well as assets, not actually earned, but accumulated by exploiting the system, is closer to the national average federal individual income tax rate of 13.6 percent for the upper half of US households with taxable incomes starting at $33,048 in 2010. In addition to that, most of them pay 7.65 percent of payroll tax (as per January 2, 2013 fiscal cliff-deal), on most of their incomes, as it is levied only up to the first $113,700 in 2013, thus quite regressive! A median wage earner making $40,000 will lose 2.3 percent in take-home pay, whereas, a couple making $200,000 each ($400,000) would lose only 1.8% in take-home pay, despite paying $1,350 in additional Medicare tax, due to "Obamacare," which the median wage earner doesn't need to pay (Forbes, April 8, 2013). For further comparison, the national average hotel/motel room sales tax rate was 13.73 percent in 2009 (USA Today, April 5, 2010). Further, the bottom fifth in incomes pays seven times more in sales taxes, as shares of their income, than the top one percent does – “In 2010 the [national] average combined sales tax bite rose by a full one percentage point [to partially offset the diminishing federal subsidies] to 9.64 percent” (Forbes, February 17, 2011), and 9.60 percent in 2011 (Forbes, Feb. 2, 2012).

This purports to show that flat tax-rates are too high, while progressive taxes are too low, causing people who struggle to make ends meet are burdened unduly by high taxes, while folks who have plenty of money coming in are taxed too low, which is too unjust and unfair. Furthermore, this situation is the main drag on the economy, as well as the principal cause of the continued high unemployment, deficit, and of the rising national debt, which ‘everyone’ is so worried about. The unnecessary "sequester cut" in spending, with ensuing further rise in public sector layoff of essential workers (in addition to the 'Air Traffic Controllers' who were promptly rehired!) is adding to about a total of one million job loss in the public sector, since the great recession began, though over six million private sector jobs have been created on president Obama's watch.  The “sequestration-aftermath” alone is likely to contract the economy with loss of hundreds of thousands of necessary public sector jobs, and consequent loss of private sector jobs, from decrease in demand, from the public sector job loss, creating even an unnecessary (unexpected) recession, similar to the double-dip recessions in Europe from too much "austerity," in perhaps, another (futile) attempt to taint president Obama, causing the whole nation pain and hardship.

I would add, if the Republican obstructionism to defeat Obama in 2012 hadn't taken place, the unemployment rate could have been at least a percentage point less now. And the Feds would have stopped printing money to prevent the economy from falling into another recession. No economic policy is inconsequential. And the current Federal Reserve Board policy, reluctantly undertaken by Ben Bernankie, to ease the stress of high unemployment, also has consequences. Since Obama has been reelected, if the Republicans quit "pushing the economy down," things would be so much better, easing the pain of millions of (unemployed) families. The unrealistic expectations of the Tea Party activists, who appear to have hijacked the Republican Party, are the principal threat to the US economy. Some Tea Partiers misperceived the current economic situation, and are aimlessly shooting in the dark. Grover Norquist has a radical agenda to which he is wedded; even if he realizes that his "No Tax Increase Under ANY Circumstances" stance is disastrous, he is too obstinate to relent, like a rigidly paranoid person whose sheer existence would be threatened, if he has to admit that his peculiar notion/belief has been faulty! As a paranoid person, Norquist is intoxicated in his perceived grandeur.

Nevertheless, Annie Lowrey writes ('The Incredible Shrinking Budget Deficit',New York Times, April 22, 2013), "Earlier this year, they lowered the [2013 fiscal year deficit] estimate to $850 billion. Now they have lowered it again, to $775 billion, or about 4.8 percent of [GDP]. ... Indeed, Goldman now expects the budget deficit to fall to just 2.7 percent of [GDP] by the 2015 fiscal year [a drop from 7.8 percent of GDP in 2012]."

In spite of the lopsided tax system that Flat Taxes are Too High, while Progressives Taxes are Too Low, Gov. Jindal (R-LA), after lecturing Republicans, “We must stop being a stupid party,” wants to repeal the 6 percent State Income Tax and replace it by higher sales tax! (See “In the South and West, a Tax on Being Poor,” New York Times, March 10, 2013). However, on April 8, 2013, he “parked” that plan. Other Republican governors are leaning towards such taxation. (If they didn’t, a Tea Party candidate might kill them in the next primary – they seem to be queuing up to pay homage to a mythical god who could be pleased only with evermore, draconian budget and tax-cutting promises!)

On the other hand, Gov. Brown (D-CA), almost miraculously, managed to raise state income tax on higher incomes by popular will (with a 55.4-to-44.6 percent margin) in 2012, to up to 13.3 percent on incomes over $1 million. (This not very widely known development is by far the best news since the Clinton tax-hike in 1993, for California, since 1978 'proposition 13'!) But a similar attempt failed in the Sate of Washington in 2010 – most people who voted against it wouldn’t have to pay a dollar more, but would have benefitted from such a tax increase, with better services, in addition to a better safety net for the deserving.

The idea of a broader federal tax base, with (even) “lower rates,” more like Ronald Reagan put in place in 1985, as too many are assuming to be a good thing is just bad - Ayn Randian Paul Ryan again proposed and the House passed just the same, lowering the top marginal rate to 25 percent! It is appalling that the journalists are taking the latest Ryan budget seriously. That is a most regressive tax reform. What we need is broadening of the middleclass economy, and an optimal safety net for the unemployable as well as for the legitimately unemployed. To be fair, despite the Republican attempts to squeeze the safety net programs, as of now it is still not too bad.

Figure 1a.

http://thinkprogress.org/economy/issue/      

Figure 1b.

 

As Shares of Income

Lower income groups are already paying too much in taxes (see Fig. 1), except in federal income tax. Owing to rapidly rising incomes in higher income groups, they do pay a much bigger chunk of the federal individual income tax. Moreover, the Bush tax cuts were indeed quite favorable to the lower income groups, and, unfortunately to the vey high-income groups as well, but the lower income groups pay substantially more as a share of their income in unavoidable local taxes (Fig. 1). Most of the lower income groups also need to pay 7.6% in payroll tax on almost all their incomes, which the higher income groups only pay for part, or a fraction of their incomes.

Nevertheless, because of huge deficits and debt at the federal level, more in the upper middle income groups also should bear some of the burden; they ought to pay at the Clinton era level, on taxable incomes over $75,000 (i.e., around $100,000 in gross incomes, when median income is about $40,000), which is a significant amount, but compared with the 2% additional pay roll tax by all with taxable incomes up to $113,700 is much less painful. Very few pundits were concerned about the 2% increase in payroll tax for those who have been struggling to make ends meet, rationalizing that it was supposed to be temporary (for two years). But the Bush tax-cuts were also "temporary," for ten years (originally).

Since there are many millions of households with taxable incomes between $75,000 and $450,000, this alone would add another $3 trillion or so in revenue in a decade, i.e., a total of about $3.65 trillion, compared with $650 billion when the Clinton era level is applied only on over $450,000, as per the January 2, 2013 agreement. The amount of federal individual income taxes collected, if Clinton era tax level is applied to all, would add only about another ten percent in revenue, which is not much, but too much for those who make under $100K; further, such a tax bite on the latter would be too much of a drag on the economy, from consequent disproportionately greater loss in demand.

Infrastructure Repair and Rehiring Essential Public Sector Employees

Much of that extra $3 trillion could be, rather should be spent on a second stimulus, with multiplier effects such as higher revenue from the newly employed workers’ taxes, repaired infrastructure, and starting construction on high-speed rail lines and so on. This would also cut the deficit and keep the debt at about the current level of Debt-to-GDP ratio, if not lower (see below), which would improve confidence in the US economy, more than enough to regain the AAA credit rating. Furthermore, as Bruce Bartlett writes (New York Times, February 26, 2013), “According to American Society of Civil Engineers, the nation is already in a net deficit position as far as building and maintaining its basic public infrastructure. The society estimates that the added costs to people and businesses from this underinvestment will reduce the aggregate gross domestic product by $3 trillion [!] over the next decade. The group recommends an additional $1.1 trillion of public investment through 2020 to what is currently planned, $157 billion per year.

I would further suggest that those who have very high incomes should pay at a 50 percent rate on over $5 million of taxable income, and yet another 70 percent rate on taxable incomes of over $25-to-30 million. (Until 1981, 70 percent was the top marginal rate on incomes over $1.5 million, or less, in today's dollars) All realized incomes from all sources ought to be treated as “earned income” and taxed accordingly. Furthermore, ideally, a modest taxation, starting at 0.01 percent, and steadily going up to 0.5 or even 1 percent, in about fifteen years, on estimated wealth at yearend ought to be levied. This wealth tax could eventually phase out inheritance (or the so-called death) taxes.

Partly at least correlational, but unlikely to be purely coincidental, when the top marginal tax rates were much higher, not only revenue but economic growth as well happened to be rising significantly, most of the time. In 1943, the top federal income tax rate was 88 percent, and the deficit was 227 percent of revenue and 28 percent of GDP (!), compared with a still substantial, but shrinking deficit of 46 percent and 7.3 percent, respectively, in fiscal 2012, according to Congressional Budget Office (New York Times, August 22, 2012).

RAPID FALL OF DEBT-TO-GDP RATIO: 112.7% (1945) TO 24% (1974)                             WITH HIGH MARGINAL RATES, NOT BY SPENDING CUTS

From 1942 to 1946, the average five-year-deficit was about 13 percent of GDP! Still, the top rate was raised to 94 percent in 1944 and 1945 for incomes of over $200,000 (about $3 million in today’s dollars). And yet, by 1947 there was a budget surplus. And the twelve-year average (1947-1958) net surplus was about 0.75 percent of GDP, largely owing to reduced spending after the war ended, while the top rate remained at around 90 percent until 1963, when the US prosperity flourished with a rapidly growing economy and an expanding middle class, unlike the shrinking one of today, with an anemic growth. The debt-to-GDP ratio dropped to about 45 percent by 1960, and dipped further to a trough of about 24 percent in 1974, but spiked back up during the Reagan years to reach above 40 percent in 1987 and 1988. It then kept creeping up almost touching 50 percent in 1993. Gradually it declined to about 32.5 percent in 2001, while the marginal tax rates were raised significantly with a top rate of 39.6%.

The Long Story of U.S. Debt, From 1790 to 2011, in 1 Little Chart,By Matt Phillips, The Atlantic, November 13, 2012

By the end of Bush-2 years, it crossed 50 percent. The Great Recession is carrying the debt-to-GDP ratio rapidly to about 75 percent. Without additional revenue and better employment status, with deficit financing of various development projects (rather than creating for the purpose of eventually destroying most of the war-related materiel) to employ north of ten million eager-to-work, competent, fully and partially unemployed people, the ratio is likely to creep up further, to dangerous levels as Carmen Reinhart and Kenneth Rogoff theorized in their treatise (‘This Time is Different’, 2011). It is difficult to comprehend why the Republicans, especially in the House, stand in the way of any sensible plan conceived and/or proposed by the president who cannot run again.

Indifferent taxpayers

The main problem with taxation is that the vast majority are indifferent, thus ignorant about how the complicated tax system is structured, except for a false notion that if any tax is cut they all benefit, and able to keep more money in their pockets, whether it is federal, state or local taxes. Sales taxes are stealth taxes; few care to look at them and compare them with the noise-making, federal individual income taxes. Sales taxes are often increased by less than half a penny on the dollar at a time; people grudgingly approve such taxes if it comes to a vote, whereas, an increase as a progressive State Income Tax on high earners would be defeated, as happened to the Bill Gates Sr. initiated state income tax hike in Washington, in 2010. Californians understood its advantage and voted for it in 2012. What more, they also voted against a half-cent sales tax increase in Los Angeles, on March 5, 2013.

As for the ignorance about (federal) income tax, after president Obama's 2012 tax return was released, with he and the first lady were paying at 18.4% in federal individual income tax, on their "adjusted gross income" of over $600,000, there was an unusually prolonged, heated discussion on "Morning Joe," MSNBC (April 15, 2013). It was astonishing that the pundits gathered there were about unanimous to depict a picture of a president, who was paying "too little" in income taxes. The same was leveled against Mitt Romney, before last year's election. Though the pundits did not mean to imply that the president did anything unethical, much less illegal, the impression a listener would gather was that the president unfairly, even unabashedly exploited the system! The president had indeed said, as Warren Buffett did, he was not paying enough in federal taxes. The most surprising fact was that none of the pundits did feel like explaining, even mentioning that our existing tax law allows anyone with similar incomes as the president, or Mr. Romney had, legally could and would pay at the same rates as the president or Mr. Romney did. It did not occur to any of the pundits, including liberal ones, to voice their concern and outrage, as Warren Buffett did, that it is the current tax law, with the vastly unjust and incongruous marginal rates, not honest taxpayers, is to be blamed, and that the rates need to be revamped and restructured more fairly, more progressively. Furthermore, if the Obamas make about the same amount in 2013, as they did in 2012, their federal income tax rate is unlikely to rise, from January 2, 2013 "fiscal-cliff-deal," as their taxable income may not exceed $450,000, even if they cut their donation to charities by 65 percent, instead of 24.6 percent of their 2012 gross income.

Federal subsidies at “fire sale” price!   

Although James Mulva of Conoco-Phillips testified in 2005 when crude price was $60 a barrel that oil companies did no longer need any subsidies, they continue to receive an annual subsidy of nearly $10 billion, $4+ billion for oil exploration and production, and another $5+ billion as ethanol subsidy, but most of which is for adding ethanol to gasoline at the refinery, and very little goes to the farmers (New York Times, August 7, 2011). This colossal waste of federal tax dollars is (figuratively) bought by big oil at a “fire sale” price of just $8.5 million in 2010, in the form of campaign contributions to members of Congress, two-thirds of which went to Republicans and the rest to Democrats. On top of this, despite raking in huge profits, rising with the pain at the pump, Exon-Mobil paid no federal income tax in 2009. Neither did Chevron. GE got a refund of over $1 billion in 2009! However, in other years, many of these corporations may have paid their fair share of the taxes, but the corporate tax system and rates also need to be revamped much more fairly. Somehow I felt, Airline companies have been taxed too unfairly, which may even have led to some of them at least go bankrupt.

In a letter (March 7, 2013) to his supporters, an unusually scrupulous and dedicated senator Carl Levin (D-MI) vented his profound frustration: “Years of bipartisan work by the Permanent Subcommittee on Investigations that I chair have shed light on tax avoidance schemes that are a major drain on our treasury. … Thirty of our most profitable companies paid no taxes over a recent three-year-period although they had over $150 billion in profits. Tax avoidance schemes that have no economic justification or purpose other than to avoid paying taxes may be legal but they should not be. These schemes add hundreds of billions of dollars to the deficit. They lead to cuts in education, research, national security, law enforcement, infrastructure, food safety and other important investments in our nation. And they add to the tax burden of ordinary Americans who have to pick up the slack and accelerate the economic inequality in our country.

I wish most Congress members were as scrupulous as Sen. Levin. And that they were paid about 1$ million (see below for an argument supporting this), plus liberal perks, such as a good personal assistant at all time wherever they go, a chauffer-driven luxury car for under 300 mile-trips, and first class plane tickets, including for the assistant, beyond about 300 miles, and a decent suite for each attached to the Capitol building, all paid for by taxpayers, in addition to all the current perks. Such treatment of the congress members by the taxpayers would yield good dividends for them. Some members now share apartments with one another; Joe Biden was commuting as a senator daily to DE by Amtrak; his asset, after 36 years as a US senator and four years as Vice President of USA, his net worth is now estimated as just $565,700.

Further, Exon-Mobil could afford to give a handsome retirement package of $400 million to its CEO, Lee Raymond in 2006. By comparison, the total taxpayer expenses on all four former US presidents together was a little over $3 million in 2011, including under $200,000 each as pension. Until 1958 when ‘Former Presidents Act’ took effect, after witnessing President Truman’s struggle to make ends meet, there was no federal pension for former Presidents.      The Congress members’ pensions vary, but even after a 25-year-service, it would be (only) around $100,000 annually, which may well be better than 98% of pensions. (Gerald Ford was delighted when he became Vice-president, because he would get a big hike in his pension!) But what the 535 Congress members do, I would argue (though most would disagree with me, because of their hyper-partisan bickering and ineffectiveness), is infinitely more important than what the Fortune-500 CEOs do. There are so many examples of laws with lasting impacts, both positive and negative, on American lives initiated by one or two Congress members, some with their names attached to those laws.

To cite an example, the 1993 Clinton Budget was hanging in the hands of Sen. Bob Kerrey (D-NE) for a while, as he was unsure of its merits. If he had finally voted against it, that bill might have died; it passed without a single Republican vote in either House. In all likelihood the 1993 Clinton budget was instrumental, not entirely from it, in reducing the deficit every year, since 1993, eventually resulting in surpluses; 22 million jobs also were created. But many Republicans, presumably much less than a majority, sincerely believed that it would only lead to loss of revenue. Bruce Bartlett, who was a senior economic advisor to both Presidents Reagan and Bush-41, now writes, “I would not argue that tax increases are per se stimulative. … But it is clear from the experience of the 1990s that they can play a very big role in reducing the budget deficit and are not necessarily a drag on growth” (New York Times, August 5, 2012). Furthermore, according to the non-partisan Congressional Research Service, “The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth” (Washington Post, December 13, 2012).

However, towards the end of Clinton Presidency, a horribly consequential legislation was also passed, with just one Democratic vote in the Senate, but many more in the House, and signed by president Clinton, repealing Glass-Steagall Act, in 1999. Former Sen. Byron Dorgan (D-ND, author of Reckless, 2009) was a vigorous opponent of that bill. As he then predicted (watch <http://vimeo.com/38552090>), in less than ten years, the worst financial crisis since the Great Depression occurred, resulting in the worst recession since the Great Depression with many million job losses, and contracting the economy by a staggering 9% in the fourth quarter of 2008! Had Sen. Dorgan been successful, the 2008 financial crisis could probably have been averted.

The 2007-09 recession could have been even more calamitous than the Great Depression, but for the prompt intervention by key players including (paradoxically) Henry Paulson and president Bush, despite vigorous protestation by Republican lawmakers.

When president Obama took office, in January 2009, the monthly job losses were about 800,000! As Bill Clinton explained at the Democratic Convention in September 2012, Obama stopped that bleeding, and began to reverse that trend, creating over six million private sector jobs so far, despite a determined Republican obstruction; they nevertheless succeeded in evicting some 600,000 public sector employees like teachers, police and firefighters, from their very important jobs to the public, unlike those of Wall Street traders.  Amy Bingham of ABC News (June 5, 2012) writes, “Since Obama took office, 636,000 state and local jobs have been cut. In 2011 alone, 113,000 jobs were cut in local schools, 68,000 jobs were cut in local government administration, and 78,000 jobs were cut in state government administration, according to a Commerce Department report.

Floyd Norris writes (New York Times, March 8, 2013), “For the 31st consecutive month, the number of government jobs in February was less than it had been a year earlier. [The recovery] … is confined to the private sector. The only comparable period in government data … came after World War II, when the government was shrinking for a very good reason. The year-over-year string of declines ended in December 1947 at 30 months. So we have a new record here [!] — a record being set largely because governments, particularly local ones, have been squeezed by a dearth of tax revenues. Year-over-year jobs have been down for 44 consecutive months in local governments. For the most recent 12 months, private sector employment is up 1.9 percent. Government employment is down 0.5 percent.”

A contrarian argument FOR a huge hike in salaries of Congress members

These examples also illustrate two underappreciated phenomena: Economics is extremely complex and too “slippery to be held” comprehensively, in mathematical equations, or even in the imagination of most thinkers. At the same time, the science of monetary issues is so crucial to the welfare of humanity. (Another about equally important issue to the welfare of humanity is behavioral science, which is also extremely complex, but behavioral scientists treat it as a little “too simple!”) Two, as Congress members’ jobs are so important, they deserve a much higher monetary reward, so that even the current, or a somewhat different crop of Congress members, would be more diligent and less corruptible, and would not be pawns, as very many have been, of lobbyists and campaign contributors (watch a short, most important CBS-60-minutes video <http://www.cbsnews.com/video/watch/?id=3108688n>) aired in 2007; expecting them to be independently wealthy and a lot more altruistic than most of us, is unrealistic as well as unfair. In that video, the "Big Pharma written" Medicare Part D bill was passed, which unnecessarily raised the cost of Medicare drugs by billions of dollars to taxpayers, compared with what the US Veterans Affairs Administration was paying, as the VA was allowed to negotiate for the best price, but Medicare was prohibited from doing so, as per that bill! The promoters of that particular bill had specific financial incentive for that unnecessarily very expensive bill, for taxpayers, to become law, as Rep. Billy Tauzin (R-LA), "who steered it through the house," among others involved in that bill, took a job as lobbyist for Big Pharma, on a $1 million plus salary! Had he been paid $1 million by the taxpayers, would he have engineered that bill that way?

To modify the mentality of Congress members, and other elected officials, complete public financing of elections ought to be in place; private financing, with unrestricted corporate funds, in the name of a spurious “free speech,” ought to be, if necessary, constitutionally banned. And many Congress members of either party would welcome such a reform, as they hate raising campaign funds, a main reason for some to leave their coveted jobs, which most of them enjoy immensely.                                  

FDR'S CALL FOR 'BOLD, PERSISTENT EXPERIMENTATION'

For many economic problems fully satisfactory solutions may not be possible, a disconcerting reality and a main reason for the wide disagreements among economists, besides their ideological bent. Then deliberate distortion by economists and politicians, to fit their economic philosophy, as well as for personal gain. During the late 2012 discussions on ending the Bush tax cuts on higher incomes, many progressive sounding ‘pundits’ from the East and West coasts wanted to limit the ceiling at $1 million, because they saw it as a threat to their own spending cash, disregarding that a far lower limit would give enough relief to the nation’s fiscal problems – those who make around $300,000 would have a taxable income of about $250,000; would it kill them if people above that income pay a few hundred dollars more?

Bush tax cuts of 2001 and 2003, and almost reckless spending, and the two unfunded wars, mushroomed the deficit, which still plagues the nation. However, president Bush may not have engaged in those policies, as few of his predecessors may ever have, for personal gains. It is easy to blame a president by the opposition. A decent way of criticizing a president, by exercising one’s freedom of speech, is by mercilessly attacking the current (and proposed) policies, while exercising a modicum of restraint on policies that are already committed and underway. All individuals, unlike advocates (lawyers) representing a client, must try their best not to sound partisan, and think a bit before shooting off their mouth, as the Fox news people relentlessly barking, attacking the president, usually with little justification.

Tellingly, at the depth of the Great Depression in May 1932, Franklin D. Roosevelt unflinchingly said, “The country … demands bold, persistent experimentation.... [Try a sensible method]. If it fails, admit it frankly and try another. But above all, try something.” That was a welcome relief when few knew what to do. And this “gut-level” statement of FDR probably is a great example of appreciating the great complexity of economic science. And as confident as well as persuasive as he was, he prematurely attempted to balance the budget, which led to a recession in 1937, in a slowly recovering ‘depression’, from the New Deal deficit spending. But he soon reversed course, and the economy began to recover again, in about a year, before World War II. That kind of flexibility, as opposed to blind stubbornness, president George W. Bush displayed, is the mark of a truly great leader. The public understands, may not always be that readily, and sympathize with a leader who admits a mistake and change policies.

(Economic recovery from a war is horrible, and a bad example for economic stimulus; there can be many other relatively innocuous ways of “wasteful” spending to stimulate the economy. The best aspect of war, if at all there is any, war generates an unusual sense of comradery and collective willingness to sacrifice, akin to the selfless display of toil, apprehension and then ecstasy of the [government] workers of NASA during the 2012 Mars mission, as well as of the Olympians from various countries in London. Whereas, in booming times recklessness, greed, narcissism and selfishness tend to flourish, as in the 1990s, leading to the outrageous, unconscionable impeachment of a president, for a “manufactured” perjury, a “perjury trap,” of “lying about sex,” and then culminating in the “unnecessary,” arrogant, disastrous invasion of Iraq, which conservative Pat Buchanan declared as "the worst strategic blunder in American history” – McLaughlin Group, July 27, 2012. Very many other pundits said more or less the same about the Iraq war.)

Most economic theories can only be partially, or at best mostly correct, including the uncannily accurate prognostications of Nobel laureate, Paul Krugman in recent years, and only in a given set of circumstances. The 1993 Clinton Budget far exceeded all expectations. But the repeal of Glass-Steagall Act in 1999, as said above was quite calamitous, though Steven Pearlstein, in his column (Washington Post, July 28, 2012) said otherwise, but Sandy Weill, who was among the most influential proponents to repeal the Act, now wants to completely reinstate it, and wants to break up the big banks! This recommendation of Weill probably was not out of any spite towards any one.     Frederick Hayek, a guru of the Chicago-school economists, in his December 1974 Nobel lecture said, “[A]s a profession we have made a mess of things.” He even remarked that economics, unlike physical sciences, was too imprecise to deserve a Nobel Prize. Similarly, in 2005, Alan Greenspan admitted that his support for the Bush tax cuts “in early 2001 unintentionally encouraged policies that helped swing the federal budget from surplus to record deficits.” Krugman criticized those Chicago School economists, including some Nobel laureates, who advocated unfettered free market system in a lengthy exposé, “How Did Economists Get It So Wrong?” New York Times, September 2, 2009.

The plusses and minuses of ‘Free-market’

Although the Free Market system must be promoted for its productivity and innovation, it should also be restrained as it can breed unacceptable inequality, and runaway ‘crazes’, as in the 2000-2006 housing bubble, and the stock market bubble of the “roaring twenties,” and the “tech bubble” of 1990s, resembling the “Dutch Tulip craze,” of 1636 – a rare, single bulb was priced as high as $100,000 in today’s money!

Stellar companies’ share prices dropped precipitously almost to a fraction, since 2000, but the total dollar amount of that fall was too small, compared with the bursting of the housing bubble, though the relative loss of real estate prices was substantially smaller than, say, the share prices of Cisco, Intel, GE and Microsoft; the dominance of these four companies are about intact at their respective fields, during the past 12 plus years!

Free-market system also creates unnecessary waste of non-renewable resources, further causing global warming, and avoidable pollution. Frantic competition among innovators and manufacturers also produce too much waste, even canceling out the benefit of rise in productivity.

Tax cuts have become unusually and unwisely popular, as the cure to any and all economic ills, especially since the Reagan era. The Reagan tax cut did not lead to higher revenue in the 1980s, though the public was led to believe otherwise, but the Clinton tax hike led to higher revenue, arguably, over and above the tech-bubble dividend. And President Reagan himself raised taxes eleven times, in an attempt to right the wrong though those tax-hikes have faded from “active” memory. Unlike his son, who seemed to have felt the answer to any economic problem was ‘tax-cut’, Bush-41 correctly called Reaganomics as Voodoo economics.

As said above, just as FDR’s personality influenced the development of a culture and ensuing leftward-bent economic policies for decades, Reagan’s personality has a lingering, profound influence in the opposite direction - Clinton could only effect a minor though significant dent in it, to be soon reverted back to Reaganomics, as eventually reflected even in the Bowles-Simpson “deficit-reduction” Commission Report, of a top marginal tax rate of “between 27 and 29 percent,” rather than the existing 35 percent (though raised to 39.6 percent in January, 2013, for taxable incomes over $450,000, which is far from optimum), let alone a desirable much higher rates, as several prominent economists advocate.

On the other hand, John F. Kennedy (unsuccessfully) pleaded with Congress to lower the rate from a “confiscatory,” and counterproductive top rate of 91 percent to 65 percent, but eventually set at 70 percent by Lyndon Johnson, which was in place until Ronald Reagan cut it in 1981. Even that cut to 70 percent might not have been possible, if JFK had not been assassinated, as both Democratic and Republican lawmakers were strongly opposed to it (see Bruce Bartlett’s “Economix” column, New York Times, January 22, 2013). Bartlett advocates a much higher top rate, closer to 50 percent, though he suggested, from a practical perspective to let all Bush tax cuts expire (Need to Know, PBS, March 9, 2012). According to the “Laffer-Khaldun curve,” the top marginal tax rates could be between 50 and 70 percent to maximize tax revenue, and that revenue would only fall beyond that arbitrary level. Robert Reich proposes a top rate of 70 percent on incomes over $15 million, which would indeed be quite beneficial to tackle the refractory fiscal problems, if more economists and leaders were to adopt and advocate it; indeed, until 1981, the top rate was just that, not for over $15 million, but for far less limit of about $2-4 million, adjusted for inflation!

Nevertheless, to be more palatable and lasting, as said above, a top rate 50 percent on incomes over $5 million at the current money value might be the optimum, which could temporarily swing in either direction as exigencies demand, like coming down during recessions, and going up beyond the 50 percent level during booming times. (French government temporarily raised the top marginal rate to 75 percent on incomes over $1.3 million though their highest court questioned its fairness) However, a surtax of, say 20 percent or a total of 70 percent should be levied on very high incomes (as legislating a “top income limit” is impractical and may be counterproductive) of over $25-30 million in today’s dollars – very high incomes ought to be viewed even as anathema. (This could add some $25 billion to the US treasury in just three years, 2009-2011, from the top 25 hedge fund managers alone! It is estimated that if hedge fund managers’ incomes were treated as ordinary income, and taxed at 35 percent, not 39.6 percent, it would add $15 billion in three years.) Such a surtax has an added advantage to the taxed as well in that it would strongly resist their temptation to operate at the edges of law, and thus substantially lowering their chances of ending up in prison as Michael Milken and others did, when the top rate was around 30 percent.

The desirability of Wall Street and gas taxes

A gradually rising “Wall Street Transaction Tax,” would strengthen ‘Wall Street’, and improve public confidence in it as a reliable venue to invest, rather than as a vehicle to trade. Computer generated, back and forth trading, in lightning speed, is sheer casino-gambling, and ought to be made illegal, and maybe necessary for long term survival of ‘Wall Street’. Jesse Eisinger of ProPublica, cogently arguing for such a tax, as many others have advocated, prior and since, writes, “On the New York Stock Exchange, turnover hit a high of 143% in 1928. Then turnover plummeted, staying below 20% from 1938, all the way to 1975. Since then, … it rose to 59% in 1990 and [215%] in 2007. Hedge funds account for much of this…. [The socially useless] market hyperactivity has been so enduring that hardly anyone notices, but the fact remains: The long-term investor is extinct[!](portfolio.com September 18, 2008). For the benefit of investors, market volatility should be minimal. A Wall Street transaction tax could bring down the turnover as well as the volatility. And Floyd Norris writes (“A Tax That May Change the Trading Game,”New York Times, February 21, 2013), “To the dismay of the United States government — not to mention Wall Street — much of Europe seems poised to begin taxing financial trading as soon as next year. … If Europe proves to be correct, it could turn out to be a seminal moment in the relation of governments to large financial institutions [!]”

Though most have realized who the culprits were for the recent economic meltdown, the big bankers carry on with a disgusting demeanor of their indispensability for the survival of the economy, claiming all the perks and privileges, very much as Dick Chaney does (See Maureen Dowd’s column, “Repent, Dick Chaney,” New York Times, March 5, 2013). (See “Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History,” by Matt Taibbi, 2011, and other Taibbi essays in Rolling Stone, for a thorough grasp of the culpability of ‘Big Banks’ and their enablers, as well as of the messy ‘bailout’, the “TARP;” also watch Taibbi's Taibbi appearance on ‘Bill Moyer’s Journal’, in the first week of February 2013 <www.rollingstone.com/politics/videos/why-bankers-dont-go-to-jail-taibbi-visits-with-bill-moyers-20130204>)

A steadily rising federal gasoline tax, to reach $2 a gallon in about five years is also necessary – Bowles-Simpson commission also recommended a 17-cent additional gasoline tax.

MINIMUM WAGE SHOULD RISE SUBSTANTIALLY WITH FEDERAL SUBSIDY, INITIALLY 

Minimum wage is only $7.25 an hour. Such a low minimum wage is too unattractive to the vast majority of youths over age 20, who are exposed to so much of expensive consumer goods, more so for inner city young teens.

Few of them see role models in their mid-twenties who are satisfied with the minimum wage, but they witness many who break the law to make a fast buck.Then they fill up the penal system, costing taxpayers so much more. Improving their education is a mythical solution. Further, even college education doesn’t guarantee a decent income, nowadays.

Though minimum wage is too low, millions don’t have anything other than that to live on, even supporting a family of two or three, probably with the help of food stamps and earned income tax credit, when family comes in the picture. For the time being, without federal subsidy, minimum wage cannot be raised. Gradually, the subsidy could be phased out.

Thus, only effective progressive taxation, wherever applicable, could mitigate the dangerously growing inequality. Extreme inequality with widespread suffering, in a populace, which is non-aversive to violence, when equipped with a unifying, apparently level-headed, and unusually charismatic leader with good oratorical skills, the like of Fidel Castro, Lenin and Mao Zedong, is a powerful recipe for a revolution, though it appears extremely unlikely for the US. But once the conditions reach a “tipping point,” anything is not impossible!

Marxist revolutions have unfortunately been disastrous, with ensuing calamities as in Stalinist Russia, Pol Pot’s Cambodia and Kim dynasty’s North Korea, though Karl Marx actually only wanted to see a society/world where economic justice prevailed, more like what is prevalent in the Scandinavian countries. Indeed, Mikhail Gorbachev’s ultimate goal was also just the same, which the impulsive and feistier Yeltsin, who was often inebriated, ruined for good, with the blessings of the West. True, Cuba so far turned out to be a beacon of hope for a Communist revolution, and Venezuela under democratically elected Hugo Chavez, as it has been in the democratically created, for the first time in the world, Communist government in the Southern Indian state of Kerala, but not in West Bengal, could be seen as exceptions.                                                 *A psychiatrist by profession, now mostly retired.                                                    

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