When President Bush talks about an "ownership society" it is sufficiently vague to mean many things to many people Mr. Bush has provided few details. And yet, when he says "ownership society," a wage tax is exactly what Mr. Bush is driving at.
- In tax terms, "ownership society" means only one thing: the further reduction, if not the elimination, of taxes on savings and investments, including taxes on dividends and on capital gains on stocks, bonds and real estate.
That, in turn, means, by definition, a shift in the tax burden onto wages and salaries - or, put more simply, a wage tax.
The regressive results would be appalling.
The richest 1 percent of Americans earn just about one-tenth of total wages and salaries, but almost half of all income from savings and investments - income that would be largely, perhaps entirely, untaxed in an "ownership society." In contrast, taxable wages and salaries make up almost all of the income of most Americans.
The Bush camp has been floating the idea that what the president is getting at is a consumption tax. But the administration is not talking about a true consumption tax, which would apply to spending regardless of where the money comes from - from your paycheck, cashing in your stocks and bonds, selling your house, or borrowing. It is, in effect, talking about a tax on wages.
In the past nearly three years of economic recovery, the distribution of economic growth has become more skewed than at any other time in modern memory.
- Currently, 47 percent of growth is flowing to corporate profits, by far the largest share than that in any of the other eight post-World War II recoveries.
- Fifteen percent goes to wages and salaries, the smallest share of economic growth in more than 50 years.
- To make matters worse, the share of compensation that is devoted to health and pension benefits is far larger during this recovery than in any other, representing a further squeeze on the wages and salaries of ordinary Americans.
In 2004, take-home pay as a share of the economy dropped to its lowest level since 1929, when the government started keeping records. (The lesson to be learnt is that, despite this grim reality of the "aam aadmi," 45 days before the national elections Mr. Bush seems to have a comfortable over his Republican Challenger John Kerry.)
All of this would make the drive for a wage tax laughable, if only it were a joke.
