Changing the Narrative

Somehow we must change the narrative and the path our country’s middle class is headed. That’s toward extinction as we once knew it. As I grew up in and what allowed me to break out and grow into a success in my life. Hard work, intelligence and an education. Those usually added up to a successful life in the middle class of America. Today that is simply not the case.

Where I’m Coming From

I’ll start with my father. He was a 1^st generation America, a Cuban-American. He lived about 10 years of his young life in Cuba. When he returned to America for good, he didn’t speak much English. He struggled in high school, ultimately got his GED (high school equivalency in the day). He joined the Navy after Pearl Harbor, then the Marines. He saw little action, though his company was one of three that stormed Iwo Jima. He came home in 1946, got married, bought a home via the GI bill, and started a family.

He bought a duplex that needed a lot of work. Ultimately he fixed it up, rented half, which paid his mortgage. He wanted to move to the suburbs, so he put it up for sale. He walked away a few thousand richer, and bought in the new development of Kendall Park, NJ.

That’s my dad standing by the front door of his new house. It wasn’t ready yet, but he was sure proud of it. He died in that house almost 50 years later.

The education I received was top notch. Public schools, you see, paid their teachers and we were taught all the things we needed to know. Parents ensured their kids learned because they knew how important it was.

What has Changed?

So what’s happened since then? We have nearly starved and destroyed our public education system. Kids graduate high school needing remedial education to succeed in college, and we are also starving our higher education system by constantly cutting public financing.

Further, CEOs and other C-level people expect to receive 8-9 figure compensation. That sucks the life out of a corporation to move that much capital to the top. It has to come from somewhere, it comes from the employees. Further, profits are measured on a quarterly basis, leading to decision making at inflection points rather than for overall success of the organization. And worst of all, every way to cut costs are used. Whether that is to use cheaper parts, more automation, or offshoring or all of these together. The bottom line is the key, and employees and their paychecks take the hit.

A chicken in every pot and a car in every garage.

This was a Republican slogan when Herbert Hoover was running for president in 1928. He won, of course, and the great depression followed a year later. Coincidence? Who knows, but today we have Democrats promising free college, Medicare for all, $15 minimum wage (currently $7.25) and any number of other things that are unlikely. However, the idea is that the American middle class is aching for a change and some help out of the economic doldrums.

Tax The Wealth!

I’d propose another way, the campaign slogan, perhaps is: “Tax the Wealth!”

What does that mean?

There is tremendous wealth in this country that goes year after year and is never taxed. An example is when the CEO of Oracle went to build his massive showcase home. He didn’t have to sell his stock in Oracle to do so, no, he just used it as collateral to borrow money. So he didn’t pay taxes on that stock sale. We fix that kind of wealth building with Mark to market taxes.

What is Mark to Market? It means, at the end of the year, your holdings in stock are measured against their value at the beginning of the year, regardless of whether you sold them or not. So your stock gained $10,000,000 in 2018, you pay taxes on that gain. If they lost $10,000,000 this year, you have that as a loss. Just like you and I have to pay taxes on our interest earned in our CDs or savings accounts. Every single dollar is accounted for. Regardless of whether we realized that gain or if it is still stuck in the CD unrealized yet. We pay taxes on it. That’s fair right?

We can’t allow the Republicans to get away with calling inheritance taxes “Death Taxes.” They aren’t, they are taxes to cover the accumulated wealth over the years that hasn’t seen the light of day. Very few families have enough wealth that they will be taxed on inheritance. We absolutely need to retain this.

Eliminate the loopholes that wealthy have in transferring their wealth to their heirs in the form of trusts. Trusts are a tax scam to avoid inheritance taxes.

Tax Excess Earnings!

Not the earner, but the corporation paying the compensation. This would be on gross compensation, wages, stock options, stock grants, etc. If your C-level staff make more than 50x the average pay in your corporation, there is a 100% luxury tax on that excess amount.

That means if the average employee at XYZ Corp makes $50,000 the C-level can’t make more than a combined average of $2,500,000, every dollar over that average, is taxed at 100%. So your $80,000,000 CEO salary now is costing the company $157,500,000 because of the $77,500,000 luxury tax. Watch those compensations come into alignment really fast.

That will also cause employee wages to rise because a company will want to stay in compliance to avoid the luxury tax. And your CEO wants to make as much as s/he can. That tax is essentially wasted funds for the corporation, better to pay employees than the government.

Ban Non-Compete Agreements for Employees

These are basically nonsense for most employees. Clearly there are some employees of a corporation that are key to the functioning, have intimate and vital information for the company, and they must not be allowed to use that with a competitor. However, does a Starbucks barista really have information like that? No. We must allow people to change jobs and create a competitive environment for employees again.

We must not allow corporations to limit the mobility of the workforce. That limit has created a stagnation of wages. For example, if a school said to a teacher, you can’t teach math again for two years after leaving this job, what would a math teacher do? Teach Gym? No, they would either be unemployed, violate the terms of that agreement and hope no one cared, or be sued for breach. Crazy right?

Encourage Unions

One of the things that leads to income inequality, particularly between men and women, is the necessity we have of bargaining for our own wages. Some people are really good at that, some are OK, and some are terrible. Some people also job hop to increase their wages. By having unionized wages that pay based on seniority and experience, all that ends. Women ultimately could end up making more because they tend to be more loyal employees than men. They are less likely to leave because of job security reasons. That would be rewarded in this scenario.

Legislate Tax Laws Must Be Revenue Neutral

The fight between the Democrats and Republicans has always been who pays the taxes and how much. Fine, let’s define a revenue base and then require taxation must remain revenue neutral. Tax laws need to change from time to time to catch up with changes in the economy. But the last one we had took a huge near trillion dollar chunk out of the tax base. For the government that was the equivalent of taking at least a 10% cut in pay. We need to make our taxation steadier, less capricious and more equitable.

Health Care

This is the 700 pound gorilla in the argument. So many people of lesser financial means suffer terrible financial hardship with healthcare. We need to fix that with universally available healthcare.

I call for Medicaid for all who are not covered. The federal government needs to take this over and administer it. With Obamacare and the available insurance from companies, most people are covered. If you refuse to buy coverage, you will be assessed a tax to cover your Medicaid coverage.

Medicare for all is a terrible idea as it will put poor people at serious risk. The 20% deductible that is owed by the patient is untenable for the poor. Further, the compensation doctors receive from Medicare is not sufficient to run their practices. It’s time to stop pushing this rock up the hill. Bernie Sanders blew that one out his butt and we need to just bury that stinker once and for all.

Last Thoughts

There will be poor always. Try as hard as we might, people will be left behind for one reason or another. We can’t fix that. Because they are insane, stubborn, proud, whatever, they are poor. But we can make sure we as a society take care of them the best we can. Allow those who work hard to achieve the American dream.

Let’s reawaken the potential. I see it today in many of our presidential candidates, I’m hopeful once again. Thanks for reading!

Joe