It seems a little
obvious. If you expect to save for
retirement, you need something out of which to save. In the current state of society, that means
you need a wage system job . . . and those are disappearing in competition with
advancing technology or cheaper labor elsewhere.
The solution to
this conundrum is not, as Academician Walter Russell Mead proposed, to turn
everyone into a temporary or leased employee, with a high probability of
everyone being transformed into government workers rented to private sector
companies. This may sound good to an
academic, but not to real-life people.
So, what should
be done?
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| Pius XI: People, not the State, should take care of people. |
Well, certainly
not to let the State do more and more, and ever more. That is egregious misuse of a very powerful —
and dangerous — social tool. As Pope
Pius XI explained in § 78 of Quadragesimo
Anno,
When we speak of the reform of institutions, the State
comes chiefly to mind, not as if universal well-being were to be expected from
its activity, but because things have come to such a pass through the evil of
what we have termed “individualism” that, following upon the overthrow and near
extinction of that rich social life which was once highly developed through
associations of various kinds, there remain virtually only individuals and the
State. This is to the great harm of the State itself; for, with a structure of
social governance lost, and with the taking over of all the burdens which the
wrecked associations once bore, the State has been overwhelmed and crushed by
almost infinite tasks and duties.
We should not,
therefore, try to make the State into the universal landlord, the universal
caregiver, the universal employer, or the universal anything else. When it comes to providing for ordinary needs
such as food, clothing, shelter, education, healthcare, and whatever, the
individual and the family are the first resort.
The State is the
absolute last; it is not, as one enthusiast put it, “the sole intercessor
available to the poor.” Ironically, the
individual who said that — and we have quoted his exact words — accused the
Just Third Way of being “breathtakingly statist” due to the necessity of
Congress or some other country’s legislature adopting a Capital Homestead Act.
Which segues into
a better solution than the one Dr. Mead came up with: a Capital Homestead Act. And what is “Capital Homesteading” you ask?
A Capital
Homestead Act is a comprehensive legislative program of Kelsonian tax,
monetary, and fiscal reforms to make every citizen a shareholder in the
technological frontier. It is designed to connect every person to the global
economy as a fully empowered participant and owner of new technologies, by
dismantling structural barriers in our basic institutions and financing capital
formation through ownership democratization vehicles.
This economic
agenda for the 21st Century provides a blueprint for leaders committed to
restructuring the legal and financial system to grow the economy at maximum
rates with no inflation, in ways that build a Just Third Way version of
economic democracy as the essential foundation for effective political
democracy.
Capital
Homesteading for every citizen offers a private property and free
market-oriented alternative for saving the Social Security System as a national
retirement income security plan. At the same time, the Capital Homestead
Act offers a new national policy to foster life-long “capital
self-sufficiency” as a means to achieve true economic independence for all
Americans. If implemented, capital ownership would be systematically
de-concentrated and made directly accessible to every person, without reducing
property rights of the wealthy.
A Capital
Homestead program has three essential components:
1. Changing the Money and Credit System
Through a Capital
Homestead Act, access to asset-backed money and capital credit — which today
helps make the rich richer — would be enshrined in law as a fundamental right
of citizenship, like the right to vote.
Using its powers
under Sec. 13, para. 2 of the Federal Reserve Act, the Federal Reserve System
would create money for specific financially feasible capital projects. The new
money and credit for private sector growth would, however, be “irrigated”
through Capital Homestead Accounts and other economic empowerment vehicles.
Through a
well-regulated central banking system and other safeguards (including capital
credit insurance to cover the risk of bad loans), all citizens could purchase
with interest-free capital credit, newly issued shares representing newly added
machines and structures. These purchases would be paid off with tax-deductible
dividends of these companies. Nothing would come out of existing savings or
reduce consumption income.
2. Changing the
Tax System
Capital Homestead
reforms would simplify today’s overly complex and unfair tax system by
substituting a single-rate tax on non-exempt personal incomes from all sources,
while:
·
paying from general revenues all entitlements and other
government spending at present levels,
·
eliminating the payroll tax on workers and employers,
·
making dividend payouts deductible to corporations, and
·
balancing the budget.
A Capital
Homestead Act would re-write and radically simplify the existing federal tax
system to automatically balance the budget. Its tax reforms would keep more
money in the pockets of taxpayers from their initial earnings to cover their
own health, education, housing and other basic household living expenses. CHA
tax reforms would make Congress more directly accountable and responsive to all
taxpayers.
 |
| Capital Homesteading: A Better Plan |
While encouraging
corporations to issue new shares to finance their growth and pay out all
dividends on their shares, the Capital Homestead Act would eliminate all tax
provisions, personal deductions, tax credits, and exemptions (except for the
front-end exemptions for adults and dependents) that unjustly discriminate
against or discourage property accumulations and investment incomes for poor
and non-rich families.
A single tax rate
on all sources of labor or capital income over exemptions would be
automatically set to meet all Federal entitlement and other programs, and to
pay down past deficits. To meet personal living costs the basic incomes of all
taxpayers up to $30,000 per adult and $20,000 per dependent (or $100,000 for a
family of four) would be free from any income or payroll taxes. To increase
taxable income incomes for all citizens, corporations could escape from the
multiple tax on corporate incomes by deducting dividend payouts.
In contrast to
the present system, a single tax covering incomes from dividends, interest,
rents, and inflation-indexed capital gains would enable the over-burdened
Medicare and Social Security systems to be funded out of general revenues. The
single tax rate would drop significantly with a broadening of the tax base, as
all citizens begin to receive substantial dividend incomes through their
Capital Homestead accounts and as entitlements (constituting two-thirds of the
current budget) can be radically reduced after keeping all current entitlement
promises.
3. Changing
Inheritance Policy
Under a Capital
Homestead Act, the wealthy would be encouraged to break up the estates they
leave to their heirs, so that wealth would not keep concentrating from generation
to generation. Rather than taxing the estate, the recipient/s of the estate
would be taxed over a certain amount (say $1 million) on what they receive
through inheritance.
Thus the wealthy
person could avoid all estate and inheritance taxes if he or she left the
estate to many people, such as relatives, friends, employees, etc. The recipients could further
shelter their portion of the inheritance from taxation if they roll the assets
into their tax-sheltered Capital Homestead Account.
Surely this is a
better solution than making everyone dependent on government.
#30#