Conservatives want to reduce taxes on the rich in order the shrink the size of government. Liberals want to increase taxes on the rich in order to increase the size of government. Both conservative and liberals use convoluted arguments that purport to show their own idea would help the middle class. Neither argument is very convincing.

There’s really only one way to help the all-important middle class demographic. Not with think tank theories or indirect down-the-road hopes. This better way is direct and simple, and would allow our national economy to escape its endless doldrums.

This better way is to tax the rich more, and use the extra revenue generated to reduce the tax burden on the middle class. Not an overall tax increase, but a dramatic shifting of the tax burden.

There are many ways to do this. Flatten the payroll tax, for example, and expand its reach to all incomes, earned and unearned, thereby allowing a payroll tax rate of 4 or 4.5 percent for all taxpayers, rather than the 6.2 percent currently levied just on the middle class. A similar approach could be applied to income taxes, raising the top rate from 39.6 percent to 43 percent, while lowering middle class rates of 25 percent and 15 percent to 22 and 12 percent respectively.

A transaction tax on stock market trades that would hit Wall Street’s high frequency traders, who account for more than 60 percent of all trades these days, could generate revenue used to reduce middle class tax rates of 25 and 15 percent further. A higher inheritance tax that takes more from wealthy heirs and passes on still more tax savings to 25 and 15 percent taxpayers. Many other possible tax transfers are out there for anyone bothering to look.

And what would be the effects of all this tax transferring, this shift in the tax burden? More spending power for the middle class that is this country’s spending engine, currently in deep sputter mode. More jobs created by this spending. Fewer people falling from the middle class into poverty, reducing the need for more government subsidies. Smaller government deficits as the economy speeds up. Larger profits for companies selling goods and services. And on and on.

The present conservative idea about taxation is cruel, economically destructive, disruptive to our social stability. The present liberal idea about taxation is outmoded, unsustainable, a threat to investment and innovation. Neither idea is what’s needed today.

It’s time to get out of the tax hole both our major parties have dug. Time to think new again. Tax the rich more. Tax the middle class less. Save the economy.

Let’s do it.

(Murder At Bernstein’s, a novel by the author of this piece, is now available from Amazon.)

MICHAEL SILVERSTEIN, Wall Street Columnist
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slamfu
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slamfu
3 years 4 months ago
What no change in cap gains? All those are really good ideas, which is exactly why they will never be implemented until we have a full scale meltdown circa 1929 style. There are a LOT of stupid people that frankly either can’t be bothered to understand how things work or can’t understand if they tried, neither of which reason stops them from having intense opinions about it. The fact is its really easy to tell people that taxes = bad and makes sense at a gut instinct level. Despite the historical evidence to the contrary. Increasing taxes to the point… Read more »
dduck
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dduck
3 years 4 months ago
Look, it only takes a certain amount of money to have a “nice life” with all the necessities and plenty of luxuries. So my suggestion is that we create a Panel, call it Shift Half of Taxes Upon Pigs, or SHTUP. The panel would determine what the “nice life” would cost in each geographical area and adjusted for the number of dependent children under 26 and would come up with the dollar amount that would cost per month and call that the SHTUP Income Threshold Income (SITI). Any excess (extra) income, including the income that could be derived from taking… Read more »
Today
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Today
3 years 4 months ago
First, I will say, “it can’t work for a million reasons”. However, in my humble opinion, the only Fair Tax is the Same Tax on every person, rich, poor and corporations(remember, corporations are people,too). Every person and corporation would pay the Same Percentage Tax on every dollar that flowed through their hands. For example, if the Same Tax Percentage is set at 10% this year and you made $10,000,000, then you would pay $1,000,000 tax and keep $9,000,000. If you made $10,000, then your tax would be $1000 and you would keep $9000. NO Loopholes, NO Tax Deductions, NO Refunds,… Read more »
slamfu
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slamfu
3 years 4 months ago
Flat taxes RUIN economies. They rapidly funnel money to the top, the people who can afford to save, and take no account of the fact that the people at the bottom paying the same percentage have to devote a much higher percentage of their income to simply living. Flat taxes are one of those ideas that sound simply and fair but in reality are horrible when actually implemented. I’d like to see one case of a country with a flat tax that doesn’t have massive income inequality, to the point of a failed economy, and any middle class at all.
petew
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petew
3 years 4 months ago
Perhaps it is my ignorance about economics, but It seems to me that Mr. Silverstein has already agreed with a large part of the Democrat’s agenda. However, do Democrats want most of this added revenue to go only into increasing the size of government? Haven’t the President and other Democratic leaders repeated frequently that some ideas coming from the GOP about streamlining government, are indeed valuable and will be considered, when determining the budget. But, I also think that using taxes to create certain government bureaucracies is often a good idea and a necessity. If Wall Street continues to be… Read more »
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