8.Do we have a fair taxation system?

Few would dispute that under an equitable tax system, the contribution we each make toward funding the services that our governments provide for us should be roughly commensurate with our ability to pay, our financial means. A household’s financial means is largely determined by its wealth - its net worth - probably to a greater extent than its income.

As the country emerges from its latest financial crisis, it will need to increase revenues to pay for the various financial bailouts; our two wars; and investment in the long-neglected and interrelated priorities of education, accessible health care for all, medical research, energy independence, environmental protection, economic infrastructure, financial industry regulation, domestic security, and international aid. The private sector has little incentive to fund these priorities because the return or payoff on such investments takes many, many years to be realized and is spread diffusely throughout society. Therefore, these priorities require funding from government, that is from all taxpayers

Even with the elimination of wasteful government expenditures, failure to increase government revenues would underfund these priorities, leave the United States a debtor nation, further enrich competing, often hostile nations that are servicing our debt, reduce credit available to the private sector, and burden future generations with our debt. Our nation would decline further as a force to advance human rights and foster prosperity here and throughout the world. In short, billions of people would suffer.

However, we need to take care in how we go about increasing taxes. Increasing taxes on the middle class would likely decrease consumption and so trigger a slide back into recession. Continuing current tax policy that favors investment income and gains over income from work and savings and promotes wealth concentration in the top few percent will result in a continuing string of investment bubbles and the recessions they cause. As demonstrated in the remainder of this essay, increasing the taxes of the wealthy, while decreasing taxes the middle class, would move us toward and equitable tax system, improve the economy and strengthen the nation.

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