#Kamala Harris Needs this Economic Policy for a Landslide Victory
First: Since Trump’s supporters believe everything he says, no matter how ridiculous, it is imperative that Harris and Walz convincingly rebut his accusations of being “communists”. They must point out that Trump is either ignorant, not knowing what communism is, or lying, by explaining that “communism” means nationalizing the means of production and not having a free-market free-enterprise economy, which they are completely against and have never proposed. In fact, to highlight their point, Harris and Walz should immediately sue Trump for defamation. They must declare that they are not even “socialists”, or anti-business, or anti-wealth, recognizing that wealth is essential for investment, without which no country can prosper. They must qualify the Biden statement that “unions built America”, by praising management and entrepreneurs. They must explain that solving social problems is not being socialist or communist: it is intelligent policy, benefiting capitalist, free-market free-enterprise nations such as ours; it doesn’t require higher income tax rates, and it leads to lower tax rates.
Second: A big pro-growth step Harris and Walz should take to prove they are not socialists or communists and to ensure a landslide electoral victory, is to eliminate long-term capital gains taxes, whereby, for example, middle-class citizens selling their homes end up with much less money to buy a new home after paying capital gains taxes. That is grossly unfair and holds back existing home sales, a big reason housing prices are so high. Eliminating capital gains taxes would significantly stimulate sales of existing homes, increasing their supply and thereby lowering housing prices. Furthermore, long-term capital gains are often due to inflation, and therefore should not be taxed. In any case, it should be understood that capital gains are not personal income, such as salaries, interest and dividends, because they derive from sales of property. And sales are subject only to sales taxes, by states and cities at their sales tax rate (payable by the buyer, not the seller). There are no federal sales taxes. (Harris should reject Elizabeth Warren’s proposal to tax unrealized capital gains as absurd, economic suicide, and unconstitutional, driving many voters to Trump.)
Harris and Walz should explain that eliminating long-term capital gains taxes would unlock enormous amounts of capital immobilized by the capital gains tax, leading to an investment and consumption boom, to much higher economic growth, to lower unemployment and higher wages, and to higher income and sales tax revenues, offsetting the loss of capital gains tax revenues by an enormous amount. The whole nation benefits. Who cares if the wealthy do too? Only the envious due to an inferiority complex, not having been properly loved by their parents.
Third: As for the housing affordability problem, in addition to eliminating long-term capital gains taxes which would dramatically increase existing home sales and lower prices, Harris and Walz should propose the only sustainable solution: a major investment in high-speed rail out of urban centers towards rural areas with much lower housing costs, providing rapid daily commutes of even 100 miles from new satellite towns, and reducing urban congestion.
Fourth: Harris and Walz should explain that contrary to mainstream leftwing thought, our problem is not wealth or income inequality, it is poverty and low incomes. And that both poverty and low incomes are mainly a function of a low level of education. It follows that the only sustainable solution to low incomes and poverty is a major upgrade of our public schools, having them run as the best private schools with strict class discipline, lots of homework and study hall, school uniforms (the psychological value of “dress the part” should not be undervalued) and, of crucial importance, with an enlightened high school curriculum which includes a four-year psychology course accompanied by group therapy and good parenting workshops, along with individual attention for students with academic or psychological difficulties. The curriculum must provide a solid, broad educational base necessary for success in the advanced, complex, highly competitive global economy. (With truly excellent public schools, Appalachians would never have been poor even as coal jobs disappeared, as they would have qualified for jobs other than in the coal industry. With well-educated Appalachians transitioning out of coal-related jobs, many companies would have had the incentive to make non-coal investments in Appalachia.)
Fifth: Harris and Walz must explain that since truly excellent public schools are in the national interest, the Education Department should subsidize them whenever necessary (with QE financing, not tax increases), in particular to overcome the problem of poor localities not having the funds to make their public schools truly excellent.
Sixth: Harris and Walz must propose that the Education Department institute a tough, prestigious national high school graduation exam, in order to stimulate schools to properly educate their students with an enlightened curriculum, and in order to ensure a uniformly high level of public education nationwide.
Seventh: Harris and Walz must state that they do not want the Democratic Party to be the party of small-minded envy, of ignorant class warfare, or of high tax rates. Instead, it should be the party which solves serious social problems, such as poverty, addiction, violence of all sorts (including gun violence), abuse, crime, high numbers of mentally disturbed citizens, high numbers of undereducated citizens, and the lack of true, real equal opportunity for every single youth. All that depends on having truly excellent public schools, not on soaking the rich. As for tax equity, that requires eliminating tax shelters, not raising income tax rates. (Depreciation and interest deductions are legitimate, not tax shelters which have the sole purpose of reducing taxes while being economically unproductive, a misallocation of capital.)
Eighth: Harris and Walz should stop demagogically accusing businesses of being greedy and of price gouging. Whether they like it or not, the laws of economics, similar to the laws of physics, do not bend to ideologies. They should therefore acknowledge that reality and assert that the free market economy is the best system, and that inflation resolves itself through competitive free market forces. They should also acknowledge that raising the minimum wage has had a significant effect on inflation, since it is normal for businesses to raise their prices to cover cost increases.
Ninth: Harris and Walz should explain why they reject price controls, which are always counterproductive, inevitably leading to shortages and ultimately even higher prices. That has been the experience with housing rent control everywhere in the world, as it was with oil prices after OPEC’s expropriation and nationalization of its oil fields in 1973 and the resulting end of the price controls unofficially imposed by the U.S. since the end of World War II, leading to an overnight 600% increase in the price of crude oil, from $2 a barrel to $12 a barrel, and our first stagflation experience.
Tenth: Harris and Walz must explain that costs and prices rose sharply starting in mid 2020 when Trump was still president due to Covid supply-chain disruptions, and then after February 2022 due to Russia’s invasion of Ukraine which drove up oil and gas prices along with grain prices. And that Biden’s big Covid stimulus in 2021 was absolutely necessary to avoid a depression, even if it meant that there would be a temporary imbalance in supply and demand due to income maintenance (thanks to the Biden stimulus) not matched by supply maintenance (due to Covid supply-chain problems). The unavoidable trade-off decision Biden had to make was low inflation along with a severe depression due to no major stimulus; or swift economic recovery due to a major stimulus with a temporary rise in inflation. Harris and Walz must make sure all voters understand that.
Eleventh: To further prove they are not socialists or communists, Harris and Walz should include in their policy proposals, contrary to liberal ideology, the need to eliminate the estate and gift tax, for two reasons. First, since an estate’s assets are acquired with after-tax income, for that reason the estate tax is not just unfair, it is also illegal double taxation. Second, the estate/gift tax is unconstitutional being in violation of the 5th Amendment’s “no taking” of private property clause, the very reason the federal government does not and cannot tax real estate, since it is property. Eliminating the estate tax would guarantee them a landslide victory.
Harris and Walz must also acknowledge that the unpopular estate and gift tax is a fraud perpetrated on the American people by Congress which intentionally circumvented the 5th Amendment’s “no taking” clause by asserting that the estate tax is not a tax on property, rather that it is a tax on the transfer of estate property. The intentional fraud of Congress is revealed by the fact that if the estate tax were truly a transfer tax, the tax would be calculated on the value of the assets at the time they are transferred, not on the value at the time of death; and by the fact that the tax would be due at the time of transfers, not within nine months of the date of death, even in the absence of any transfers! The unfairness and unconstitutionality become even more apparent when one considers that commercial transfers (i.e., sales) are taxed only by state and local sales taxes, never by the federal government, and furthermore that estate and gift transfers are non-commercial transfers. Also to be considered, sales tax rates never exceed 10%, whereas estate tax rates are comparable to income tax rates, which can exceed 40%.
Harris and Walz should also explain that the reason local real estate taxes are not unconstitutional is that those are not really taxes on property. Rather, they are essentially fees for services rendered by local governments to real estate properties, such as road and sewer maintenance, garbage collection, public schools, public parks, police and fire departments.
As for fallacious, demagogic and invidious arguments that eliminating the estate tax would lead to higher budget deficits and even greater wealth inequality, Harris and Walz must explain that the very wealthy largely avoid estate taxes through legal tax shelters (though they are economically counterproductive). Furthermore, that whatever the wealthy do with their money is good for the economy. When they use their money for consumption, that is good for economic and employment growth, and when they invest, that is good for technological advances, infrastructure improvements, and economic and employment growth. All that in turn results in higher income and sales tax revenues, more than offsetting the loss of estate tax revenues. Harris and Walz should point out that most investment is made by very wealthy individuals and highly profitable companies. Where would investment and high tech venture capital be without very wealthy citizens and highly profitable companies? Without many wealthy citizens and profitable companies our nation would simply be backwards and poor!
Twelfth, Harris and Walz should explain to the voters that highly profitable companies and wealthy citizens contribute much more to society than the income taxes they pay (even when their effective tax rates are low because of legitimate depreciation and interest deductions). How? By creating jobs through their investments and consumption, which in turn generate sales and income taxes of other companies and citizens.
Adopting all the above logical proposals would appeal to many “normal Republicans”, leading to a landslide victory for Harris, Walz; to enormous economic and social prosperity; and to the end of misguided, dishonorable, seditious, autocratic MAGA.
© Edward Sonnino 2024
August 29, 2024
