Mouprise.com

The Land of Personal Responsibility and the Last Chance

America has always sought to balance the opportunity for the individual to achieve incredible success while promising a minimal safety net for all of us. This leads to a society with 20-something billionaires and millions struggling to get ahead. I am not a politician, but if I were, I would do my best to capture the vote of the millions who are struggling to get ahead instead of the few who have risen to the top. After all, time and votes are the only things that we all share equally.

This election is turning into a discussion about Warren Buffet having a higher effective tax rate than his secretary. This choice should be focused on empowering people in the gap between median income and the poverty level. Every time the tax rate argument is mentioned, it’s in the context of “How can we get Mr. Buffet to pay more?” I have yet to hear, “How can we incentivize Mr. Buffet’s secretary to create more personal wealth for herself?” Warren Buffet has created wealth for himself through ownership of a company he founded. He is very good at what he does. Our country embraces excellent performance of any kind.

The fact that President Obama denounced Mitt Romney’s creation of personal wealth is a bit hypocritical considering that his American Recovery and Reinvestment Act (Jobs Act) contained a provision for a one-year amnesty on the 100% capital gains based on businesses started or acquired from September 2010 through January 2012. According to the IRS, the top 400 reported earners earned at least $77 million and nearly 46% of their income came from capital gains (property). The downside to this is that working for a salary, investing in bonds, or buying dividend stocks leaves you little chance of cracking that top 1%.

Cracking the top 1% is not something many of us aspire to. Our “Cake in the Sky” becomes “Food on the Table”. This year’s drought is sure to push up staple food prices by at least 15% over the next year. In fact, food inflation may be the only thing keeping our economy above deflation. Meanwhile, the Associated Press recently compared the current level of poverty to where we were in 1965. Low- and middle-income people are under pressure to lean more heavily on government assistance programs as we reach unprecedented levels. public spending precedents and we reached the proverbial profit glass ceiling. due to the turning tide in American job opportunities.

We as a country are moving to a new model of employment and compensation whether we like it or not. We will increasingly be compensated more for our individual performance than as a group of employees. Union membership has declined by about 35% over the last thirty years to less than 8% of the workforce. This is where the argument for the Oval Office should focus. The balance of power always swings from one extreme to the next.

The Industrial Revolution through World War II created too much wealth for too few at the human expense of too many. The Civil Rights movement and Lyndon Johnson’s War on Poverty provided the tipping point for the pendulum to swing back in favor of the working public. We are now paying the piper for the excessive movement of the pendulum due to the arrogance of our entire nation. Promises made 20 years ago by domestic manufacturers to union members simply cannot be kept if companies are to remain solvent. This is what Greece, Spain, Italy and France are facing now at the national level. This is also what blew up the auto industry in 2008 and most likely, the European Union in 2013. At what point can the employer and employee agree on compensation?

There are two main points to consider going forward. The first is ideological. Can we quantify how much individual top end we are willing to give up to shore up the bottom end of many? Currently, we arbitrarily institute an income-based tax rate, which will always create loopholes and traps. The higher the tax, the more the incentive for business owners and corporations decreases. An advert; remember that 40% of all new jobs come from startups. Therefore, the ultimate reward for taking the financial risk of starting a new business should be rewarding enough. After all, no one wants to give up their hard-earned money for something they created out of thin air.

We could also institute a Value Added Tax (VAT). This tax is based on consumption and is applied to the expenditure of an individual. It would apply at the federal level and pay for everything from soft drinks to legal advice. High-income earners would bear the brunt of this tax as their income is spent on higher-value items. Think in terms of imported cars, country club ownership, and professional services. This would result in a percentage tax paid by those who have more, spending more. Who spends more, pays more.

The second point is one of personal responsibility. Manufacturing jobs are not returning to the US in their former form. There are simply too many expenses associated with hiring American workers relative to the added value they bring to mundane tasks. However, there are great opportunities to sell our skilled labor at attractive prices to manufacturers in the European Union dealing with 30-hour workweeks, socialized health care and full 60-year-old retirement packages, regardless of profession. . However, Generation Y and Millennials must be able to demonstrate their intellectual competence. This must also be supported by government stimulus spent on rebuilding our infrastructure to bring products to market. This would also create domestic value-added jobs as the economy recovers.

The housing bubble, economic collapse, and federal deficit all go back to wanting more than we can afford. The United States may have the lowest personal savings rate of any developed economy. Unfortunately, not everyone can have a house, an iPhone, and a big-screen TV. At some point, we as the general public started buying what advertising agencies were selling. Whether it’s a new phone, a new car, or a new president, we all buy into the argument, and that argument has always been, “Buy now. Pay later.” Our personal savings rate peaked at 8.3% in May 2008, its highest level since January 1987, when the stock market plummeted. Time to balance the ledger. Invest more. Spend less. Instead of arguing about all-or-nothing extremes, let’s take an honest look at the middle and try to budget that needle back into the black, for our families, our country, and us as individuals.