To all who care about our country, our economic security, and the future of our children:
Please consider the following issues:
The U.S. tax system, which has remained virtually unchanged for 20 years despite dramatic tax reforms abroad, strongly discourages companies from locating operations and jobs in the United States or otherwise investing here. It places U.S. companies at a significant competitive disadvantage in comparison to foreign rivals. For a given level of pre-tax profit, earnings from foreign-based operations may be 54% higher than from U.S. based operations - in other words, our tax laws create a situation in which a company can increase its profits by 54% simply by choosing to locate good jobs abroad, rather than here at home. The resulting lack of investment in the U.S. limits the bargaining power, productivity and wages of American workers. In fact, the real earnings of 80% of working Americans have remained stagnant over the past three decades.
Without drastic tax increases and benefit cuts or economic growth at a rate that has not been seen since World War II, the federal government predicts that increases in the cost of current retirement and healthcare benefits for our aging population will cause spending to exceed tax revenues as early as 2017, and the imbalance will only get worse in subsequent years. Yet the U.S. tax system effectively discourages working Americans from saving for college and retirement, making them even more reliant upon social safety nets that are not safe. The tax system imposes a hidden 35% tax on pension investments, investments that people think are protected from tax.
Our federal budget deficit and national trade deficit continue to grow, and the funding for this increasing debt comes, in significant part, from foreign governments that gain political leverage from our dependence on their money - over 9 trillion dollars ($9,000,000,000,000) worth that could be withdrawn at any time.
Intellectual capital and innovation are more important drivers of economic growth and prosperity than ever before, yet America's technical superiority over other nations is gradually but indisputably declining. Unlike many foreign tax systems, the U.S. tax system does not encourage the development of a knowledge-based economy that would make us less susceptible to competition from low-wage countries. The one advantage that has protected the strength of our economy is fading quickly.
The U.S. tax system is premised upon the concept of progressivity -- that is, through a graduated rate structure, the more an individual earns, the greater share of income taxes that individual pays. This principle ensures that the burden of maintaining our society is distributed based on ability to pay and on the relative benefit that persons have received from living and working here. However, progressivity is compromised all too often under our tax system. For example, recent news about "carried interests" revealed that individuals who are making fortunes investing cash for pension funds and the like pay tax at only a 15% rate, much less than what many middle class workers pay on their wages.
If any of these facts disturb you, please visit the additional pages here at www.sharedeconomicgrowth.org to learn more. This web site describes all of these issues in further detail and explains a simple tax reform proposal that would address them all. The proposal would greatly strengthen the U.S. economy, while ensuring that the benefits of that strength would flow to Americans from all walks of life. Briefly, the proposal would allow corporations to deduct all dividends they pay to shareholders. It would fund this benefit by raising the special favorable tax rates that individuals pay on capital gains and dividends received, eliminating a tax exception that allows permanent avoidance of tax on gains if individuals hold on to investments until death, and imposing an additional 7.5% tax on individual adjusted gross income of $500,000 or more per year. The proposal would raise the average effective tax rate of persons in the highest bracket to only 34% and the top marginal rate to 47%. (As the main paper explains, this actually raises and extra $36 billion per year more than is needed to offset the corporate tax revenue, and other sensible offsets are available, so there is room to address any real issues anyone may raise.) That's all there is to it, but the benefits Shared Economic Growth would provide to the U.S. economy would be extraordinary.
Why haven't you heard of such a proposal before? It would put corporate tax lobbyists out of business, it would require Democrat and Republican lawmakers alike to set aside the limitations of traditional party solutions, and it would impose some amount of additional tax on people who earn over $500,000 a year. But the benefits would flow preferentially to the quiet majority of working, saving Americans who tend not to have any group speaking up for their interests.
The proposal is valid. While the numbers included in the proposal involve certain conservative estimates, they are based on IRS and Federal Reserve data. They are fair and reasonable.
The proposal is viable, but it will not go anywhere unless citizens spread the word and contact their government representatives demanding action. The politicians do not believe that we are smart enough to understand these issues. We need to tell them that they are wrong. You, together with your family, friends, and neighbors, have the power to make this happen if you are willing to act.
Please take the time to review the additional information provided at www.sharedeconomicgrowth.org to find out more about the proposal and, if you agree that it is good for our country and you, to find out what you can do to make it happen.
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