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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic sides of our lives. Jobs, incomes, debts, our own, our children's. And I'm your host, Richard Wolff. I want to talk about today about the economic plans and programs announced by the new Biden administration, and particularly by the economic team of advisors gathered around him. And I want to talk about it in relationship to inequality. And that for two reasons. Number one, I think millions of Americans voted for Mr. Biden because they want less inequality in the United States than we have. That has been confirmed by many public polls indicating overwhelming support for less inequality in our society. And the second reason is that as an economist, I can assure you that economic inequality is a very profound shaper of pretty much everything else that goes on in our society. And if you're troubled by some of the directions our society is taking, economic inequality has to be part of what you are concerned about. So let's begin. The Biden team has talked a great deal about an enormous spending package, usually in the area of $2 trillion, more or less, that they propose to spend on a variety of thingschecks to individual Americans, improved unemployment benefits, funding for cities and states that have been starved of federal help under the Trump administration, and so on. And how is this 2 trillion going to be paid for borrowing? Why do I know that? Because the team proudly tells us they're not going to have to raise taxes. Well, if you're going to spend 2 trillion more and you're not going to raise taxes, the way you solve that problem is by borrowing money. And let me drive home what that means. Who do you think the government borrows from? Well, it doesn't borrow from mostly you and me because we don't have enough money to lend to the government. The bulk of the lenders to the government of the United States are wealthy institutions, wealthy people, both domestic Americans and those abroad. So most of the money goes right where you might expect, into the hands of those who need it least. And if you borrow all that money, you're going to have to shovel future monies into the pockets of those who need it least. What's an alternative? Well, you could tax the corporations and the rich. If you did that, you would raise the money needed to help the 2 trillion you're going to spend. But you wouldn't have to borrow it and therefore not have to pay interest to those lenders who, again, deepen the inequality by collecting all that money into their hands. So let me talk a little bit about what the taxes are that the Biden Administration should be talking about. Well, the first one is income tax. Make the income tax more steep, more progressive. Go after those at the top. Let me remind you, in the 60s and 70s of the last century, a time when the American economy had less unemployment than it does now and was growing faster than it does now, we taxed corporations and the rich much, much higher than we do today. The argument made over the last 30 years that by reducing taxes we would stimulate our economy faults. What we actually did is produce an economy with more inequality, less growth, and more unemployment. Much of the time, therefore, the argument doesn't hold. Nor is it equitable, nor does it reduce our inequality to not tax income at higher rates for those at the top. And here's another guess about what we could do and should do. Wealth tax. Let me explain, because so few Americans understand this. Do we tax property in the United States as opposed to income? We do tax income. We don't tax it all at the same rate. The rate applied to people who earn their income by labor is higher than the rate we apply to people who earn their income by charging rents or, or getting dividends or capital gains. And that's another story for another day, but very unjust. No, I want to talk about whether there's a tax on the value of your property, which is a separate question from taxing income that you earn. Do we tax property? Well, the answer is yes and no. And therein lies an enormous part of the inequality of the United States. We do tax property in the form of your house, your land, your automobile, certain kinds of tangible things like that cities and towns live by taxing property whether or not your property earns an income. If, for example, you have a house and you rent it to people, you pay an income tax on the rent you get, plus a property tax to your town for the property you own. But here's something you may not have. We do tax land and buildings and business inventories. We do not tax in the United States property held in the form of stocks and bonds. If you have a $100,000 house in a community in America, you pay a property tax to that town. If you sell that house and use the $100,000 to buy $100,000 worth of stock in some company, you know what your Property tax is? 0. There is no property tax on stocks and bonds. And who owns the bulk of stocks and bonds in our society? Here's the the 10% at the top own 80% of the stocks. This is an enormous tax exemption for people who qualify for it because they're rich enough to buy stocks and bonds, which most Americans aren't. The inequality and the injustice of this tax system is stupefying. And what ought to be done is to get two birds with one tax, income and wealth. Use it to help the mass of people. That's what the situation in this country requires. That's why millions of people hoped that by voting for Mr. Biden, they would get something like that. It is very disheartening to hear that they're going to spend money to help people at the bottom. Good enough. That's good. But they're not going to use it as an opportunity to. To undo the inequality that has gotten so extreme. They could do it. They should do it. And we're waiting, but we're not terribly hopeful. In the 1930s, when Roosevelt took much greater steps to help the mass of people, he did pay for it in large part by taxing corporations and the rich. That's why the tax rates were so much higher in the 60s and 70s. As I began this conversation. Okay, I want to now turn to another act being proposed by the team around the new president, and that is to create an increase in the minimum wage, the federal minimum wage in the United States, to $15 an hour. And I want to remind everyone when you do that, you don't just change the incomes of the people at the bottom, the people who are getting less than $15 an hour. You affect many other people's income because many jobs pay a wage based on what the minimum is. So they pay the minimum plus 10% or the minimum plus an extra $3 an hour or however they calculate it.
