I couldn’t stop thinking about Ireland’s Great Famine — and hearing echoes across the centuries, right here in the United States, as the working class endures Year Seven of their Great Recession (while the elite are taking home more money than ever).
Apparently, I wasn’t the only one thinking along those lines. If you can take three minutes to read “Paul Ryan’s Irish Amnesia” you’ll see what I mean.
[In the 1840s] A great debate raged in London: Would it be wrong to feed the starving Irish with free food, thereby setting up a “culture of dependency”? Certainly England’s man in charge of easing the famine, Sir Charles Trevelyan, thought so. “Dependence on charity,” he declared, “is not to be made an agreeable mode of life.”
That Great Famine, of course, wasn’t the first time Ireland’s poor had been ravaged by economic conditions.
In 1729, Irish author Jonathan Swift (writing anonymously) tried to call attention to the plight of the poor — and the heartless attitudes of the rich — through his classic satire, “A Modest Proposal.”
The plight of the poor… versus the attitudes of the rich. Some things don’t ever seem to change.
I found an interesting chart on the website of the Federal Reserve Bank of St. Louis. It compares the amount of federal taxes paid by corporations (red line) with the amount of profit that corporations pay out to their stockholders as dividends (blue line).
And it looks like during all those decades when the American Middle Class was thriving, corporations were paying about the same amount in taxes to the federal government as they were paying in dividends to their stockholders.
- Corporate taxes help the federal government fund the various infrastructures that businesses need to thrive, including transportation (highways, bridges, ports); the court system (contract enforcement); public safety and law enforcement. These days, large employers like WalMart, McDonalds and the country’s biggest banks also depend on safety-net programs such as Medicaid and Food Stamps to supplement their workers’ low wages.
- Dividends represent the payout of corporate revenues which were not spent on wages/benefits or invested in expansion (new factories, new equipment, new product development, new employees). To the stockholders, they are “passive earnings” — similar to the bank interest most of us used to earn on money in our savings accounts — money that you get simply because you already have money.
All the way up until Ronald Reagan signed “The Tax Reform Act of 1986″, it looks like those two amounts were pretty much equal: what corporations paid as taxes, and what they paid out as dividends.
So I’d like to make a “Modest Proposal” of my own: let’s go back to that tradition.
From the chart, it looks like that single change would add about $380 billion a year in federal revenues: enough to fund the Food Stamp program four times over (and still have billions to spend other things).
Restore corporate tax levels.
MY “Modest Proposal” isn’t intended as a satire. And it would be a lot easier to swallow than Jonathan Swift’s.