Higher income tax rates upon rich people and businesses could serve the public interest beyond bringing in revenue. If government had higher base rates but then allowed generous deductions for public service activities, it would encourage rich people and businesses to be good citizens while relieving them from taxation. Capitalism could once again serve mankind instead of enslaving us.
That is how it was done until the government adopted the neo-conservative trickle down policies that we have these days. It used to be that businesses and rich people could escape the erstwhile higher tax rates by doing things that served the public interest. But now with blanket low tax rates for businesses and the rich, and a zillion loopholes, businesses have no incentive to do anything but pay dividends and buy back stock for the sake of their investors (and, of course, to contribute to politics to keep it coming). Note that both dividends and capital gains are taxed at special rates that are lower than taxes upon salary and wage income. These days the public interest nowhere enters into business and investment decisions. It doesn’t have to.
Government must reclaim its leadership role in shaping the economy through judicious tax policy. And the government needs to carefully appropriate from those who have it the money it requires to rebuild our infrastructure, to educate our kids and to foster basic scientific research, for those are the foundation of our future. If not, we shall continue to decline as a nation.
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