“This is not just another political debate. This is a make-or-break moment for the middle class, and for all those who are fighting to get into the middle class.” — Barack Obama, via Obama: The conservative in 2012 – The Washington Post
Here are five ways we could rebuild the American middle class (and CREATE JOBS by giving people more purchasing power):
- [M]odestly shifting the tax burden toward rich people would help. (Modestly, not wildly. No one sensible is talking about raising top bracket income tax rates back to 70%-90% again. We can start by just nudging the top bracket back to, say, 39%, and raising taxes on dividends and capital gains).
- Wages as a percent of GDP.
- Reducing household debts through mortgage restructurings would also help.
- Rebuild our manufacturing base.
- And so would doing something that could be accomplished outside of government influence: Companies could voluntarily reduce their profit margins and pay people more.
[...] Wait, what?
Yes. Instead of continuing to increase their profit margins above today’s already record levels, companies could decide to shift their emphasis from “serving customers and increasing shareholder value” to “serving customers and increasing shareholder value and providing a good living to as many employees as they can.
Wow, that last one sounds crazy. But it isn’t. Our companies have become so phenomenally profitable and efficient that wages in our economy recently hit an all-time low as a percentage of GDP (see chart above). Perhaps it’s time our companies started voluntarily sharing more of the vast wealth they have created with their employees.
If the GOP gets their way and the top 10% are given even more tax cuts, loopholes and subsidies, how will that create any jobs? It won’t — it doesn’t matter how much more money the wealthy are allowed to amass, the bottom 90% still won’t be able to afford to buy anything, our middle class will continue to shrink and die, and our economy will remain frozen.