Let’s Talk About What We Really Want From Tax Reform

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Let’s Talk About What We Really Want From Tax Reform

The Trump/Republican tax cut proposal is an opportunity to discuss how to redistribute wealth and power.

Despite impressive growth in the overall economy, the bottom half of U.S. households have seen virtually no income gain. (Photo: Spencer Platt / Getty Images)

As Donald Trump and the Republicans turn national attention to their tax reform agenda, we confront a debate defined by familiar questions. Will the proposed tax code changes spur growth and job creation? How will they impact the deficit? Who will benefit? One less familiar question: How much will the Trump family save?

The Republican Party’s fiscal policy has long been driven by the premise that the rich are society’s wealth creators. Their consumption of big-ticket items like expensive homes, cars, boats, and private airplanes drives growth. Their investments create jobs. As they benefit, we all benefit. Or so the familiar story goes.

The current Trump/Republican tax cut proposal seems a good time to engage a national discussion of what is really at issue in the plan:

· It advances wealth concentration and thereby wasteful and non-essential forms of consumption in an environmentally overstressed world in which billions of people are being pushed into lives of growing desperation.

· It rewards economic predators at the expense of the people whose productive work creates real wealth.

We surely know how to get it wrong. To get it right, we need a conversation grounded in recognition of two defining realities of a U.S. economy that has doubled in size over the past four decades:

Wealth Concentration: Despite impressive growth in the overall economy, the bottom half of U.S. households have seen virtually no income gain. In 1970, the bottom 50 percent of U.S. wage earners averaged $16,000 a year in current dollars. By 2014 their earnings had risen to just $16,200. During the same period, the incomes of the top 1 percent grew from an average of $400,000 to $1.3 million. One-third of U.S. workers earn less than $12 an hour. And 1 out of every 7 Americans lives below the poverty line. The proposed tax cuts will further widen the already obscene gap.

Overconsumption: As growing numbers of Americans live under increasing physical and psychological stress, U.S. material consumption has grown to exceed what the natural systems of our national land mass can sustain by 127 percent. Consumption above the capacity of our soils, forests, and fisheries to regenerate depends on a combination of depleting that capacity while expropriating the generative capacity of other nations through imports of their output of food, water, and timber. Our release of carbon faster than the ability of our own natural systems to resequester it represents our national contribution to the global atmospheric pollution that is destabilizing Earth’s climate. The bulk of the benefits of this national assault on nature flow to the already richest 1 percent.

Wholly contrary to what the proposed Trump/Republican tax cuts will do, we need to reduce total consumption while radically equalizing the distribution of our national share of the world’s natural wealth.

So, what of the claim that the 1 percent are our national wealth creators? Here’s the catch. Money isn’t wealth. Money is a claim on wealth.

A few of the 1 percent make their money in ways that create real wealth. They deserve a fair return consistent with their personal needs and contribution. Most, however, are simply making money in a manner unrelated to creating anything of real value. Often this is through financial fraud, manipulation, speculation, deception, abuse of monopoly power, exploitation of nature and labor, and inflation of asset values in the face of growing scarcity—all of which represent forms of theft that reduce actual well-being for the rest of us. They are claiming wealth they contributed nothing to creating.

The egregious power imbalance is unearned, unjust, and must be rebalanced.

So, who are the real wealth creators? They are the people whose mental and physical labor meets real needs and creates real value. They toil in the fields to grow our food. They teach and care for our children. They clean our homes, streets, and public facilities. They care for the disabled. They maintain the infrastructure on which we depend for essential services like water, electricity, and waste disposal. They care for our forests and fisheries. They build our homes. They produce real and essential goods like clothing, bedding, and household furnishings. They operate the small businesses that create real jobs and build real community wealth. They staff our public agencies, nonprofits, and public interest media.

Seduced by the story that legitimates a corrupt system, many among those who reap outsized rewards for their service to a corrupt system know not what they do. Even so, the egregious power imbalance is unearned, unjust, and must be rebalanced if there is to be a viable human future.

Let those of us who recognize the truth of our situation use the occasion of the Trump/Republican tax cut proposal to engage in an essential and long overdue national discussion of a legislative agenda—including much needed tax reform—that would advance the essential redistribution of power and wealth and move us toward a future of material sufficiency, spiritual abundance, and democracy for all.

David Korten

David Korten

Dr. David Korten is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group, a founding board member of the Business Alliance for Local Living Economies, president of the Living Economies Forum, and a member of the Club of Rome. He holds MBA and PhD degrees from the Stanford University Graduate School of Business and served on the faculty of the Harvard Business School.

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