Involuntary wealth redistribution and taxes levied on income and wealth "If the tax system, however, forces citizens to share their income with government – if the money they receive from their work gets confiscated, or if it gets taxed at the same rate as their wealth – then we’ll see a dramatic decline in self-help efforts, and a corresponding expansion in the state’s role as dispenser of other people’s money." This is the key point. And the key insight, as I was reading on, was that it was not so much that a progressive tax would not only reduce incentives, it would reduce the incentive to save and invest. One would not be so much opposed to a progressive tax system if one understood this point. But the progressive media are now telling us the opposite. We have a progressive tax system now. I have a progressive tax bill. I have other progressive tax bills waiting to be voted on. It's up to you. So get to work. The Progressive Press The progressive media are telling us the end of the world will come if we allow the super-wealthy to keep their money. But one point I was wondering was this: How does a progressive income tax increase economic growth and create jobs when in fact it was done at the height of the Depression when growth was weak? The Progressives in the 1930s were the ones who pushed for a progressive income tax. In 1928 Roosevelt said this: "A progressive tax is the most equitable and efficient means of taxation. There is no difference in principle, so far as efficiency goes, between a progressive income tax and a progressive inheritance or progressive excess-profits tax." It is ironic to see progressives trying to preserve the status quo. They don't want us to look at that history. But it's time to learn from history. We need to learn how a progressive tax might actually work. The United States of America has the most progressive tax system in the world and it failed during the Great Depression. It was the same type of progressive taxation that was in place before the Great Depression. There was one other country in the world that did not have this kind of progressive taxation system. It was Russia. The Communists in Russia took over and they did not raise the progressive tax rates. I find it interesting that the Russian government only used half of the revenue that the U.S. government had to pay for government services, and the people in Russia were much poorer than the people in the United States of America. And yet the Russian government provided free education for all of its citizens. Can you imagine if we had that tax system here? For progressives to say that somehow there would not be enough money for government services and therefore people would be left on the streets is complete nonsense. It is the current tax system that is creating a divide in America between the rich and the poor. The lower income and middle class are not getting their fair share of the economic pie. It is the current tax system that's making it harder for people to get ahead. We see job growth in occupations that paid very little and the real income of the middle class is declining. For us to move forward, we need to start thinking about this system differently. We can and should be looking at other countries to see what kind of tax system works. We can and should be looking at Europe, and Australia and Canada. And we need to come up with new ideas to solve our problems. It is not all about the economy of the middle class. It is also about taking care of human capital. It is about keeping our society civil and safe. If we only focus on jobs, economic growth and our standard of living, we're leaving behind all of the other things that make America great. We are failing to take care of all of the opportunities that we have for our nation. Now it is time for us to have a real debate. I want to give my opinion. There is no way I'm going to be able to solve all of our problems in this interview. However, I have this strong conviction. I think we need to start thinking about what the role of government is and how we fund it. If we are going to have a progressive tax system, it needs to be equitable and efficient and equitable. Some have said this is just to soak the rich and it will be terrible. But here's the reality: if we tax wealth, there are two ways that you can do it. Either tax wealth, which will force people to share their money with the government, or make capital gains subject to income tax. If we don't raise taxes on capital gains, capital gains tax will not cover the deficit. Let's say that we put a percentage of wealth that is over a certain amount into an account and we call it the Wealth Stabilization Fund. We make it a progressive tax. Let's say that we create a percentage of wealth over a certain amount into an account and let's call it Wealth Equalization Fund. Let's say that that will go back to the poor and the middle class as we tax wealth. I'm suggesting we create this and what we will see is that the rich will be willing to pay more taxes. There would be less capital formation. The wealthy would pay more taxes. There would be more income tax paid and more value added tax. The wealthy will be willing to pay more taxes. We need to look at how the wealthy would benefit and ask ourselves whether it's a good thing to give them a lower tax rate. We have no national income tax now. We tax investment and saving. I think we need to create a way of using capital gains that is progressive. But most importantly, it is the wealthy who control politics, because it is the wealthy who have more of a vested interest in the way that the government works. It is the wealthy who have more control over our system. They can buy elections. We need to find ways to deal with this and I think this is one way to do it. If we do not have a stable government, we will have an unstable world. The global economy depends on America remaining stable. We will see much higher inflation, much higher interest rates, much higher oil prices and the globalization of America's economic crisis will only make the situation worse. If this recession turns into another Great Depression, it will be catastrophic. But it won't be a financial catastrophe. It will be an economic catastrophe. And we can only have a sustainable recovery if we use fiscal and monetary policy to control this crisis. I am going to continue to argue for a fiscal stimulus that is larger than what we have been doing. I'm going to push to allow people who are receiving unemployment compensation to receive their benefits retroactively. I'm going to push to allow people on extended unemployment compensation to get that money even if they have not been looking for a job. I'm also going to be fighting for this to be part of a general fiscal stimulus plan. I think we need a stimulus package that will increase the money supply, encourage investment and encourage more liquidity in the market place. And I think we need to bring our spending and revenues closer to balance by 2012. We also need to strengthen our economic infrastructure, especially our infrastructure that deals with natural disasters. We need to think about new ways that we can build America's economic growth. We need to look at ways that we can use new technology to enhance our productivity. The private sector will create this wealth and we need to start using our resources in the public sector. Let's look at this through the prism of a global economy. In any global economy, a country's competitiveness is based on the quality of its human capital. If people don't have access to quality education, they will not be able to compete. And if they don't have the proper infrastructure, they will not be able to compete. We have a high rate of high school dropouts in this country. We have people without basic reading, writing and computational skills. So if you asked the Chinese if we are behind in science and technology, they would say we are 10 or 15 years behind. If we are behind in science and technology, we will fall behind the world in everything. We need to change the way we look at technology. We have never seen the end of Moore's Law. Moore's Law was the principle that computers were getting smaller and cheaper and more powerful every year. It could