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Guest Commentary / Income Inequality

Can we reward real job creators?

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By William Blanchard
I am sure everyone is well aware that income inequality has been a subject which has arisen more and more in our society as we see the rich doing well, the middle class declining and the poor struggling.
The Democrats say, "Level the playing field is by taxing the rich and using the government in order to re-distribute the income."
There are a number of problems with this solution, for instance: creating a class entirely dependent on the government as well as inefficient use of the funds collected by the government.
The Republicans say, "The solution is to lower taxes, decrease regulation and trust that the wealthy will use these savings to invest in America, increasing the number of jobs available."
There are problems with this solution as well; it seems many of the wealthy choose to invest their money in the stock market, which offers the lowest available tax rate and demands ever higher returns. Wall Street's appetite for profit results highly compensated executives answering to Wall Street's demands by, among other things, cutting pay and benefits of those working for the company they oversee.
A common practice in engineering is to break a problem down into its components in order to better understand the root of the problem and come up with a solution.
What is it that the middle class and poor want here in America? Generally speaking, it's a decent paying job.
Who can supply these jobs? Generally speaking, it's the people who have money to invest. What is it they want? Perhaps lower taxes, a return on investment, maybe some positive press for their contribution?
It seems reasonable that the middle class and the poor have an obligation to our society to contribute by working and producing something. To get something you have to give something.
Is it not then a reasonable assumption that the rich have an obligation to our society to create those jobs so the middle class and poor can work within decent conditions?
The wealthy that choose to use their money to directly create decent paying jobs for the middle and lower class could be directly rewarded with a tax rate equal to or less than what they would be paying in capital gains tax.
Lets take a step back to the time when a company was run by the owner who was also the president, who knew and cared about their employees … not a CEO who had to answer to Wall Street in order to keep their job.
A formula could be devised based upon the number of people directly employed and their rate of compensation in order to arrive at a fair tax rate for individuals who met this criteria.
It seems to me this could address both ends of the problem.
I'd be interested to hear what other folks think.
William Blanchard, an engineer, lives in Bothell.

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