IMAGINE: The Elephant Party and the Donkey Party have split and broken up. The new Goat Party has won a landslide victory and I, its standard bearer, am installed in the White House. Following my speeches on Korea, and the Mideast, I have turned to domestic policy issues. After announcing a New American Spring, I now take up the subject of personal income taxes.
My fellow Americans,
We have much work to do to bring our country up to par in the areas of roads, bridges, sewers, grids, rails, housing, environment, healthcare, education, science and the arts, among other areas. We’ve fallen far behind. We need to catch up and move ahead to a leading position in the world. To do that is going to take a great deal of dedicated, passionate work by many, many people. And it is going to take money. Lots of it. Where are we going to get it?
As I pointed out the last time I spoke, in my talk on the New American Spring, we are winning significant amounts of money by seizing the ill-gotten gains of the corrupt coterie of elite billionaires and mega-millionaires who have been looting the nation’s wealth. We are also saving major amounts of money by ending two dead wars and by moving toward peaceful resolution of world hotspots. But that won’t be enough.
Fortunately, there is an enormous pool of money sitting idle and unused in our country’s banks, and abroad. So much that some banks are charging the depositors rent for storing their money, instead of paying interest on the deposits. The total sum sitting idle is estimated at north of 10 trillion dollars. Even more sits concealed in banks abroad, but we know where it is. This money consists mostly of corporation profits that the corporations do not know what to do with. They have armies of advisors constantly hunting for opportunities to invest this money at a juicy profit, but few such exist, outside of speculation, mergers, and acquisitions, and so the money sits idle.
Idle money, especially in large amounts, is a luxury our country can ill afford. Idle money means idle investors not creating jobs and it means idle workers. Idle money is a vice worse than sin, an illness worse than addiction, a rot on the body worse than gangrene. Corporate profit is the fruit of many people’s labor, and in a healthy economy it is constantly reinvested to create jobs and build projects. It flows and circulates. But we do not have a healthy economy. With us, the money sits and festers and swells up like a gigantic boil. We need to lance that boil and restore a healthy circulation. Toward that end, we are going to impose, effective immediately, the Idle Profits Excise Tax.
The Idle Profits Excise Tax, In a nutshell, will tax away liquid assets sitting for longer than twelve months without being invested in new plant, equipment, or other productive facilities that will create jobs. The rich men who control these idle dollars frankly don’t know what to do with them, but we do. We will invest in roads, bridges, sewers, grids, rails, housing, environment, healthcare, education, science and the arts, among other areas. We will set millions of people to work doing useful things and making good money. We can do that. The IPET, along with other measures to be announced, will make it possible.
The IPET is only one part of a comprehensive tax reform package that my administration is moving forward. The second part is called the Back to Prosperity income tax schedule. It draws its inspiration from the years when American prosperity and American productivity were at all-time highs, namely the closing years of World War II and the postwar boom.
The income tax rates of that period were a matter of bipartisan consensus. President Truman, the Democrat, and President Eisenhower, the Republican, signed the necessary legislation. The personal income tax rate on high incomes in 1944 was 94 percent; it was 91 and 92 percent in 1951-1954. This was a period of unparalleled growth not only for business, but also for the average wages and incomes of working people. Those high rates enabled us to win a world war and then to build a massive interstate highway system and other projects of great public importance.
America started to go downhill just about the time that the tax rate on high incomes was lowered. We’re going to correct that and return to the prosperous times. We are now moving forward on a new tax bill that will bring the tax on high income earners to 90 percent for individual incomes of more than $100,000, and 100 per cent for incomes over $500,000. We see no public purpose being served by individuals taking home more than half a million dollars a year.
This measure will clear the deck for the third element of our tax reform package, namely the elimination of all taxes on individual incomes below $100,000. If you earn less than $100,000, you will receive an email, a text, or a postcard from the IRS asking you to verify that, in truth, you made less than this ceiling. If true, you will answer “true.” With that, your tax obligation is finished. There is no withholding, no payroll tax, nothing else to file. You owe nothing. Done.
We sometimes hear the objection that low income people who don’t pay much in taxes are not contributing to society, that they’re parasites, and similar terms of contempt. This is not a well informed argument. Our Gross National Product is the product of working people. Its value is currently around $20 trillion per year. Yet the share that these same working people get in the form of wages and salaries comes to a fraction of the value they produce.
More than half, on the average, is taken away. In some industries, such as mining, technology, and some others, and also in most low wage occupations, around eighty percent of the value that working people produce goes into hands other than theirs. We don’t call this a tax for the technical reason that the people who collect it are private owners and not the government. But what really is the difference?
It is perverse to ask the working people to pay a tax to the government on top of the enormous de facto tax that they already pay to the people who own the means of production. So if we are going to speak of parasites, we need to look first and foremost at the people who do no work but amass wealth in the many millions and billions. That is where the tax burden must fall.
In conclusion, my fellow Americans, these are the three main points of the individual tax package that is moving forward as we speak: the Idle Profits Excise Tax or IPET, the Back to Prosperity tax rates on high income, and the abolition of all taxes on incomes less than $100,000. These are modest and prudent measures, with a strong moral content and ample precedent in our history. In a future address, I’ll talk about the measures we will undertake to get our economy moving again.