FRED BASER
Independent file photo/Steve James

This week’s writer is Fred Baser, a Bristol resident who is a retired financial adviser and former state representative.

Income inequality is often used to illustrate what is wrong with our country. Our capitalistic economy is often thrown up as the major cause of the income gap between the rich and not so rich. I think that is a bunch of bunk. There is plenty of evidence to suggest capitalism works as an economic system. Socialism, the alternative suggested by Bernie Sanders and other Bernieites, has not proven to be a successful alternative. 

The headline solution put forward to leveling the income field is increased taxation on wealthy Americans. Tax policy is complicated. There are consequences to every major policy change or additional tax. Vermont’s and America’s current income tax system is progressive. The wealthy do pay most of all income tax collected. Yes, we hear the stories on how little a few wealthy Americans pay, but these examples are the exception to the rule.

What about Denmark, oft sited as an economic example we should emulate. Denmark has a flat tax on incomes slightly above our nation’s household median income, according to the Talent.com Income Tax Calculator and the Tax Foundation. A Danish household making $100,000 in U.S. dollars has the same marginal income tax rate, 48.6%, as a Danish household making $500,000. Plus, Denmark has a significant Value Added Tax, which we call a sales tax. Sales taxes are viewed as regressive by many American policy makers. Denmark’s lifestyle successes come from a very vibrant Capitalistic economic system and the Danes willingness to be heavily taxed in trade for social programs that benefit all Danes regardless of income. In a quote from denmark.dk, Denmark’s official site, “The Danish welfare system is built to facilitate the capitalistic market economy in which the Danish society is an integrated part.” Keep the economy growing and income rising, and you grow the dollars for social programs that benefit everyone.

So, if Capitalism isn’t the culprit in creating income inequality, and raising taxes on the rich isn’t in and of itself a solution, what can we do?

Here are some steps we could take in this country to elevate the opportunities for those that are struggling economically. Some of these ideas do require additional dollars to make them work. Some ideas emulate programs that exist overseas, like in Denmark for example. However, many of the following ideas do not require large sums of capital. They are likely to require political leadership, compromise and a vision of the future. Here we go:

1. Invest in resources that focus on early childhood development and put special emphasis on working with the children of the disadvantaged. Nobel Prize-winning economist James Heckman has written extensively on the importance early childhood experiences and their effect on a child’s future.

2. Pass immigration reform (both political parties want to) that clears the way for thousands of people who want to make the U.S. their home. Help our immigrants learn English.

3. Provide greater support for mental health programs, especially for youth.

4. Make paid family leave a priority, especially a provision for 12 weeks of leave for new mothers. 

5. Support child and dependent care tax credits.

6. Continue to support and bolster the earned income tax credit.

7. Revise rules surrounding the building of affordable housing to provide the greatest financial incentives to mixed income developments. In other words, blend family economic circumstances in the living environment. Today, federal and state programs are the most generous when housing projects are substantially lower income oriented.

8. Capitalize on the community spirit and family strengths found in smaller often more rural communities. For example, zoning in smaller communities should reflect common sense and be minimalistic. Property taxes in Vermont could be reduced by putting a greater emphasis on income taxes. 

9. Support people running for office who emphasize education, especially early childhood development, and place the family and programs to support families as priority goals. Creativity, innovation and invention thrive in societies that are accepting, open, and reasonably regulated. Vote for candidates who believe America can be, and in many ways, is such a place, and work to keep it that way.

10. Embrace A I (artificial intelligence) and its potential to create new types of well-paying jobs for all people.

Here’s another thought on this subject that is difficult to assess. It has to do with religious faith. I’ve read over the years that people who practice their faith and go to church, temple or the mosque etc. tend to live happier lives. In faith communities there is support among friends, songs and music, special holiday celebrations, welcoming of new people to the faith community, outreach to the disadvantaged or a family in grief, a belief and hope in a happy end. In recent decades practicing religion has markedly decreased. Church attendance, in my hometown of Bristol, would confirm this statement. Reversing this trend would be a positive thing in many ways, including how content people are regardless of income.

Income inequality headlines and criticizing the rich helps no one. Focusing on how we can give hope to people who have lost it will make for positive change. Let me repeat that. Give hope to all Americans. If you believe there is opportunity for you ahead, your actions are far different than if you believe there is no future. My immigrant grandparents and great-grandparents had hope, despite their lower incomes, and they passed it on to their kids.

As this piece is published the American economy is growing. Wages are rising, not because we’ve changed our economic model, but because our economic system is flexible and changes itself … usually for the better. Too many people of all political persuasions have glasses that are half empty. We need forward-looking leaders with a plan, and who deliver it with conviction.