Equaling Out Income

The income imbalance is gigantic.  You may have see this before.  It is our income imbalance as seen in three perspectives… What it is… versus what we think it is,… versus what we would like it to be.

So what would it take to make it like we would like it to be?

Obviously we would take the top 20% down from 85% ownership to around 30%… a  drop by 55% of the nation’s wealth. That would be divvied up though not equally, among the other four 20%….

So what if we used those numerical principles to tackle income inequality?  Then instead of wealth, simply use the same alignment picked by most Americans to figure out a theoretical income distribution?

In 2007 prior to the Recession American families brought in $7..723 trillion dollars….  one half of that went to the two 20% with incomes over $100,000..

If our aim were to move the slider from 50% down to 35%… then this is how much a percent of national income, the top 10% would take…   From 50% to 35% is 15% and fifteen percent of $7.7 trillion is $1.1 trillion dollars each year…

So basically to get the middle class back to where it was in the past, we need to take $1 trillion a year from the top 10% and give it back to everyone else…

America is roughly at 315 million people. and they live in 123 million households… If we lop off the top 20%, we have 80% left which is 252 million people or 98.4 million households…

Giving us 25 million households giving up their $1 trillion to be split up with 98.4 million households.

The average given would be $40,000 given up by 25 million households per year. And if spread across America’s other 80%, it would average………………..$10,204……

The economic value of that total gets reflected by the memory that the wealthy don’t spend the $40,000 into the economy; they lock it away in stocks. But an yearly extra $10,000 in the hands of the stressed 80%, gives a big boost to economic demand.

And this does not get us to equal. It is just where Americans think the levels inequality SHOULD be.

In fiscal 2014, the federal government collected nearly $1.4 trillion from individual income taxes, making it the national government’s single-biggest revenue source. (Along with corporate income taxes and payroll taxes, other sources of federal revenue include gasoline and cigarette taxes, estate taxes, customs duties and payments from the Federal Reserve.)

WE are saying this now needs to be raised to $2.4 trillion with ALL that average increase borne by the top quintile… As a rough estimate (since they are actually paying near a 25% real tax rate now), because we need double the intake of income, doubling their rates up to the 50% level for the highest margins, would bring us close to parity. Exactly to the level to which Ronald Reagan cut taxes in his first term.

THAT, should give you an indication of where we were at one time, and how bad things have been allowed to slip away from the middle class.

I should add, there is only ONE candidate who is addressing this issue…All other candidates are pandering to those who already “have”…..

Politics 2016

As we approach the new year, the clowns will begin dropping out and all begin to take a serious view over who can be our next president.  By now a normal trend; it happens every four years.

The reason we have to put up with the clowns is  because across all of America, there is gross disenchantment over  the way things are.   A gross enchantment so huge, that unifies both the extreme right and extreme left into a larger classification.

These two opposite sides actually have a common denominator.  Both sides are both unhappy how the needs of real human beings are being trumped by those whom they have elected and trusted to serve them.

On the right it is the tea party types who are erroneously easy to dismiss as primitive forms of intelligence.  On the left is its those who exhale in triplicate just to hear themselves breathe, usually with complaints regarding how good programs are not good enough to their liking.

Or so each are characterized by the other side’s talk radio hosts…..

But in reality, both have a deep love of the America they grew up under and see it slipping away by the minute.  Both share the same vision that America needs to be great again, but simply differ on the approaches required to achieve that aim which can be characterized as such.  The left believes we need to change somethings in our system of governing; the right believes we have to change individual people one by one.

The common enemy in both parties surprisingly is the bloc of moderates spanning both parties who compromise too freely against their parties values and who seem  too prone to cater to business at the expense of individual constituent’s wishes and demands.  Rather bizarrely, we three parties, if you include this business class in the middle of both and only when two of the three agree, does anything get accomplished.

In Delaware this is played out in the opt out movement where the Governor (business party) used his veto and the head of the House of Representatives (business party) shows no sign of bringing it up to be overturned.. Enough votes (Dems and Repubs) are present to do so, just little procedural matter is all that is now boxing up the two wings wishes…’

Nationally the same scenario is being played out in that all the candidates are the same except one.  Only one candidate of either party is taking on corporate America.  All the rest are fortressed and supported by Corporate America marking all the differences actually existing between them as petty and insignificant when compared to the pressing needs at hand.

No matter who is elected, we can have no real change over the next four years unless that one who is different and from Vermont, wins.

So despite all the banter our main stream media is giving us, (whose staff is primarily and pathetically reduced to snooping on Twitter and putting that up as “real news”), the real question emerging as voters begin to look seriously, needs to be:  who will actually make that change that benefits me?

Only one.  Right now only one candidate’s platform can make the huge changes required to wean America off its penchant for developing profits, and turn America back to work on developing its people. Which is what the extremes of both right and left believe need to be done.

Because behind all the arguments about trade, abortions, shootings, and economics, the real solution to making your life better, is to put more money into your pocket as well as the pockets of the rest of the 99%.,…

Because you really aren’t politically free, unless you are also economically free. For unless you can quit that job you don’t like, can’t stand, or hate, and quickly find another one, you are not free.  If you have no choice but to work at that crumby job, you simply do not taste freedom.

Only one candidate’s platform will change that now;  it requires raising taxes on the one percent.

According to Fortune estimates, on this planet global households together have amassed over  $250 trillion in assets.   The one percent now owns 50% of that which translates into their ownership of $125 trillion in net worth. If this net worth were conservatively earning 7% per year in interest ($17.5 trillion), and the capital gains tax were raised to 50% marginal levels only on this select group, it would pump a lost $8.5 trillion back into the economy per year.

This is money that could be spent on combating global warming.  This is money that could be spent on making normal citizens earn more.  This is money that could be spent on ending hunger world wide. This is money that could rejuvenate cities providing great future for ones youth. This is money that could be spent on education.

And this money is absolutely free.

For the $7.5 trillion taxed and reinvested through governments around the world will offer (at minimum) a 2:1 rate of investment, meaning that the $7.5 trillion taxed and spent will generate a yield a $15 trillion return on that investment. Which since the wealthy own one half of all wealth, this means they get to re-pocket $7.5 trillion which they just gave up.  And if investment returns are higher, by ratios of 3, 4, 5,  even 10, they make out big time. Win, win, win.

Right now, only one person says he will do this.

Compared to this sea change, none of the other little things matter. If that yearly $7.5 trillion dollars through increased economic activity, is averaged out to all the 7.5 billion of this planets dwellers (of course it won’t be), it actually gives every single person a $1000 dollar increase of money they get to keep… They will see it in two ways; one they will see part of it in expenses going down and part of it in salaries going up.

Only one person across both parties fields has the wisdom take on Wall Street now knowing that it gets more expensive to do so by each hour.  OUT of all the candidates on both parties… ONLY ONE is not beholden to the interests of the top 1%.

You need to send him  money, whether you’re a Republican or Democrat. Both party’s networks are thoroughly tainted by corporate money. But one person isn’t…

In 2002 we gave the top one percent a loan from the American people which was to make us all wealthier over time.  They got their money, and kept it; we were polite and nice about asking for restitution. Apparently enough time has gone by, they think it is theres.  Meaning, it’s now past time we called back our loan which we originally gave to the top 1% via the Bush Tax Cuts. …

 

 

 

 

 

 

 

 

 

Full Employment And the kavipsian Economic Theory

Economic theory, which is basically bullshit, is often coached in mathmatical terms to disguise the fact that it is pure bull.  However there are some very simple concepts which make very good common sense, and if one looks at that, instead of how to use current data to justify one’s action politically, one comes up with obvious surprising results.

Labor Demand < Labor Supply

That is why so many people are out of work.  Now here are the players.

1. Workforce Market
2. Corporations
3. Commodity Market
4. Foreign Investments
5. Financial Markets
6. Households
7. Government

Government is our last option.

So our workforce if we compare the same counting today as was during the Great Depression, is running at 85% capacity.  Meaning 15% are unemployed.

Going down the list then,

Corporations are at their best ever. Corporate profit the highest percent of GDP ever.

Financial Markets also are at their best ever.  Dow Jones is at record highs.

Commodities are performing well, all indications are of a long term bull market.

Foreign Investment is at an all time high.  Never have we had this much outside money.

Real Household Income is declining.  We are headed downwards and are currently tied with 1994 as it rose out of the 91 recession, and prior to that, tied with 1984 as we were coming out of the 1982 Recession.

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Bottom line with government out our equation, we have the investment side of our economy all doing spectacularly well, and the household side going down.

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Proof enough that the free market system, or capitalist system does little for the good of any nation, just as little good it did prior to the legislation that became law after the crash of 1929 when Democrats swept the Federal Government.

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Government is the great equalizer.  For a fix, government needs to step up and side with We the people (or households), and as a referee would in any sporting event, make the playing field fair.

It can to it in either of two ways. It can impose necessary restrictions upon businesses which increase their demand for labor at the expense of their corporate profits.  For example, pass legislation to imprison CEO’s for malfeasance. Only then in order to keep their heads out of hot water, they hire environmentalists, social engineers, accountants, and other highly trained personnel whose prime function is to make sure the company is not doing anything shady.

It can also split the corporations into multiple smaller ones, each now requiring a new president, several new vice presidents, new HR’s, new financial planners, etc and with one fell swoop, increase the demand for labor.  This too, comes at the expense of corporate profits, which are currently huge primarily due to economies of scale.

And it can indirectly create demand by raising taxes.  When taxes go up on profit- earned, less profit gets earned by design; less “reported” profit, less money handed over in taxes.. Meaning the bulk of that money is now spent being reinvested into the business just so it can’t be taxed.  Building projects, higher wages, more R&D gets spent into the economy,  This too, comes at the expense of corporate profits on the books.

But that is why higher tax rates are actually the best alternative.  Higher tax rates tend to create less taxes, so government still needs to stay small.  The revenue collected is lower for the simple reason that if there was absolutely no tax, all the money earned would belong to me.  But if more of what I earn goes to you, then I will figure out a legal way to keep more for myself, and report less.  So whereas as tax rates go up, total tax revenue comes down;  the net effect is that more money goes into our economy thereby creating more demand.

The demand for labor then gradually rises to equal the supply and if it continues on its upward path, yes, yes, so there are more jobs than workers, then competition begins pushing the individual wage rates higher.

Which adds to the increased demand.

Using tax rates works best for now instead of the government interfering with day to day operations of all businesses, it actually creates an environment where each business can operate independently to its own best interest, and as they do, the demand for labor rises even more…..

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Anyone who argues for less government input into the economy is in the wrong century and can’t read economic figures that are plain as day.  So how does one interpret the cries for less regulations that are hurting corporate profits?  Easily. One realizes that sooner or later corporate profits have no choice but to fall, so our household income can increase. Loss of corporate profits is a “good thing”.

One should mention in the same breath, that labor’s percent of wages is deteriorating all across the world.  It is a world wide phenomenon.  The answer is simply that deference of all governments over the past decade and a quarter, has been given to those in charge of investment.

Policies favoring Investment must now take a back seat to those which put people back to work, which if done, raise the incomes of all of us… Even those of  the 1% , though not as much as they have been lately been accustomed.  But everyone still benefits.

Raising taxes is where we need to go.

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Business Tycoon Breaks Down Jobs Report

The tycoon wishes to remain anonymous because he is one of the most solid Republican monetary supporters.

But when asked how he reads this chart, here is his compelling answers….

“Aside from the obvious, that we have had 39 months of continuous private sector job growth, something not seen since the Clinton Era, I suppose the biggest question remains as to “why” the glitches. Why are there parts that drop down in the recovery and seem to go backwards?

Here, let’s just go through the time-line. Let’s start at the bottom of the inverted pyramid… The general climb out of the hole was due to TARP money which jump-started construction projects and the big infusions to banks which kept the economy from falling off the cliff into the pit of no return. It culminated with a big push of Census hiring in March of 2010. Most attention was on Obamacare at that time and with everyone’s lack of attention from the president, congress, and corporate, things languished for several months. Also one must remember that the Republicans looked like they would make big gains in 2010 and turn all Obama’s directives around. That would be very bad if it were so, and no one sank any money into investment until the election determined things.

Those who figured Obama would win, (Northeast and California) invested heavily in October only to be mistaken and with the Tea Party rattling their sabers upon their win, no one invested anything at all. We all thought the economy would crash and burn again. Up until the election we fully expected the Bush Tax Cuts to be eradicated, so our goals had been to move our funds over into areas where they would not be taxed, primarily investment into our own companies. As the tax laws became extended, many of us were not in the right zone at the right time to take advantage of the two year grace period that tends to better reward those investing in liquid assets as opposed to longer term job creating ones.

By 2011, in February we realized the Tea Party was nothing but a boil, a cyst, a sham, and things would hold current at a status quo. February, March, and April we made plans to go forward and grow. Then in May, the first debt crises occurred and shocked, we all pulled back. The Tea Party did not vote on its unceremonious raise and emergency measures were begun to be implemented by the Federal Treasury. In June, we rode our previous success fully betting that no one, not even the Tea Party would be foolish enough to destroy America’s credit rating for their own political gain. By July, we knew we were horribly wrong. We pulled back on every investment option we possibly could.

The Grand Design ($4 Trillion Budget Arrangement) never did come about. If it had we would have thrown everything into getting on the ground floor of the next boom. But by August 2011 we were confident enough to begin putting some of our extra money now trickling in over to self-investment and it continued straight through January 2012.

That was when Republicans began their Primary campaign in earnest and the Democrats were silent by having no primary or no opponent to which to reply; all bets were that the Democrats were very vulnerable. In fact, it looked like it could be a clean sweep of both Houses and the Executive. This would mean all new investment was futile. The Fed would raise interest rates according to all these Republicans against soft money, costing banks billions and overall investment would slow to a crawl. This slide lasted until the juxtaposition of the two party conventions back to back, which gave us all a clear idea of who would win. I mean who would you want behind the shoulder advising the policy of the next president:  Bill Clinton or Clint Eastwood? The fruits of our investments through Sept and Oct. paid off through November and December. Although we too had quite a scare after the first debate.

Then came the Sequester. It is hard to remember now that we really thought we were going off a cliff back then. Once settled, January’s hiring was alread done but February received the spike of top money shifting from taxable investments over to job producing non-taxable investments. The stock market jumped  as world money became content that America had finally finished with its infatuation that the top 1% carry the economy as a whole and should be taxed less, jumped back in. Problems in China and Europe made sure we were the world’s safest investment at the time.

Currently it appears that our entire economy has matured in 2013… if anyone looks at the chart, you see that the spike in February almost perfectly cancels out the dips in January and March, and that the average across all 6 months is very consistent, almost the same number.

In fact, we have plateaued. This is where our economy is right now, growing steadily with population growth and nothing more. There is nothing any more that anyone can do to increase private sector hiring.

Nothing will change I figure until the House of Representatives gets enough democrats and government hiring can begin anew.”

“Oh” I said, “so now you are a Democratic supporter?” lol.

“NEVER!” he responded. “However I’ll admit that Republicans are absolutely worthless when it comes to growing economies.”

And there, you have “the rest of the story….”

What Went Wrong With America And What We Can Do About It

A very interesting article came out now that Hostess has closed its doors. It was a diary from the Daily Kos and describes a Hostess employees world from 2005 to 2012…..

It was as if a window had opened up and one was able to see outside again.

The story starts with the first paycheck. Stapled to it was a notice of how well that company had done, how prosperous it was, and who rosy it’s future appeared to be. The next paycheck also had a note attached; that said “oops, we made an accounting error.” But not before all the execs had sold their stock at the inflated price.

This worker went from making… $48,000 through labor concessions, down to making $34,000 now. His pension, the reason for which he stayed, was stolen through the bankruptcy process. It went through a convoluted process to wind up in executives’s bonuses.

The current contract, which is being hailed by today’s Republicans as a really fabulous offer, “that’s what’s wrong with unions these days” drops his pay to $25,000 in 5 years…….

Over this same time, the new head of Hostess pocketed $4 million into his own pocket…

All of that money divided up between all 18,500 workers would have only given each of them, an additional $216 dollars over the course of a year. For most of America not living on either coast, that would cover utility bills for two months. There are 2080 work hours in a year… $4 million translates to a 10 cent hourly wage increase for every hour of every employee over the course of a year,

We’re here to look at the big picture. So let’s step back.

We have an industry that paid $48,000; now in 5 years it would be paying $25,000. That is a loss of $23,000 of purchasing power.

Assuming the same wage scale applied to all of Hostess employees, then 18,500 times $23,000 is a net loss to our GDP of $414 million.

Essentially that means that what used to be flowing through our economy in 2005, would be five years from now, be $414 million less. Just this one company.

Now to get a the total cost, if we assume $14 dollars an hour in 2005 was average, and that similar companies are asking for similar concessions so this trend affects all workers, then if we put this number to the total employed in the USA, (155 million) the amount of spending power differential, … is…. $3.5 trillion…

What that means is that per year, we could have $3.5 trillion flowing through our economy that is not flowing through it now. This is $3.5 trillion divided up among cinemas, restaurants, fast food places, convenience stores, grocery stores, gas stations, clothing stores, Wal*Marts, K-Marts, JC Penny’s, car showrooms, realitors offices, bank CD’s, motorcycle shops and marinas….

That $3.5 trillion bumps it’s way from one establishment to another and on its way, it boosts the spending confidence of whosever hand it touches…

In case you didn’t follow the math, there is no new money being created here. The total pie amount does not change. It is coming from the $8 trillion of corporate profits now recorded per year.

Currently that $3.5 trillion that was once part of our flow through economy before the Bush Tax Cuts were implemented, is now in the hands of those few at the top.

That $3.5 trillion in excess, is today what is used to buy various companies like Hostess from their original owners, only to fire their employees in order to then make profits higher. This process works so well for them that they can soon buy another company and do the same to them.

As a result, people accept less, get fired, or whatever, and there is now a shortage of $3.5 Trillion flowing through our economy being spent buying things.

No wonder there is a Recession…..

Ok, so now to fix it.

Somehow, someway, someone, has to start paying America’s workers more. We know who has the money. Corporate America: $8 trillion a year. We need a vehicle to move that money stuck at the top, back down to the bottom where it can rise again.

A. Raise their taxes. Once given a choice between reinvesting in their business (a gain to them) or giving money to Uncle Sam, most will wisely reinvest into their business.

B. Give Unions more power, and let unions increase their ranks. It use to be that a business policed itself adequately to keep unions at bay. But now they no longer fear unions, and for good measure, Today’s unions should picket Papa Johns, Denny’s and Appleby’s. The union needs to re-educate America that it was the threat of unions which kept up everyones wages. Hmmmm, what’s the average wage difference between New York and Texas?

C Political Power. One of the two major political parties, needs to get solidly behind unions and workers. Roosevelt did in the Thirties. The choice should be obvious as to which political party that would be….

D. Strikes. When was the last strike that inconvenienced anyone? Usually strikes are held, well, use Twinkies as an example… Will life go on? Yes. But in our parent’s past, coal production ground to a standstill. Trains refused to run. Mail was never delivered. Kids had to stay home from school… Yes, these do interrupt society.

But they do far less damage than having a working economy being run on $3.5 trillion less.

Wouldn’t you be mad if your gasoline purveyor, lightened your octane in your gas from 87, down to 54? And your car was barely able to put-put its way home? My guess is you’d be outraged.

Well, America. Get outraged.

The kavips Blue/Red Compromise

Republicans said they were fighting tax increases going to increased spending. The Democrats ran, and won, on taxing those making $250,000 or more….

So, the obvious answer, (which I think everyone would want to take back to their districts and brag upon before the next election), is to tax those making over $250,000 and earmark that extra money towards paying down the debt, not extra spending.

If taxes go up, and the costs of running our government comes down, every Congress person should win re-election in two years.

Obama’s Team Gets An A for It’s Handling Of The Economy.

In reality, there’s remarkable consensus among mainstream economists, including those from the left and right, on most major macroeconomic issues.  92 percent of top-ranked economists say the ‘stimulus’ lowered unemployment.

Here are 6 areas that economists agree on….

• The Recovery Act (‘Stimulus’) was a success, part of a historic turnaround.
• The American Jobs Act should be passed at once.
• The economy needs MORE federal spending, not LESS
• Repairing and upgrading our infrastructure is job 1
• Lower tax rates on top incomes make things worse, not better, as in:
• The income gap, which fueled this crisis, is a big drag on growth.

Every Republican who disses the Stimulus Funding is simply dead wrong.   Every Republican who does not even have an idea of what they are talking about…   Job growth went from -800,000 per month under Bush to an average net gain of 160,000. That’s a turnaround of nearly 1 million jobs per month! A historic achievement that gives tangible meaning to change we can believe in. 92% of economists or 100% of those NOT on Romney’s payroll, concur.

Moody’s Analytics estimated the American Jobs Act would create 1.9 million jobs and add 2% to gross domestic product.
The Economic Policy Institute estimated it would create 2.6 million jobs and protect an addition 1.6 million existing jobs.
Macroeconomic Advisers predicted it would create 2.1 million jobs and boost GDP by 1.5 percent.
Goldman Sachs also predicted it would add 1.5% to GDP.

Policy advisers to Presidents Reagan, Bush and Clinton, Nobel prize winners, IMF and World Bank analysts, private forecasters, Goldman Sachs, Forbes…The Consensus is clear: our economy needs MORE Federal spending, not LESS.   The world’s top economists warn austerity policies are pushing the world economy toward disaster.

The American Society of Civil Engineers is calling for a 5 year, $2.2 trillion dollar program to repair, rebuild and update our infrastructure, beginning immediately. That’s $400 billion a year, every $1 billion dollars of which will create 23,000 jobs. That translates into 9.2 million jobs a year.  Romney wants to spend the same amount on our military.  Our military is already larger than the twenty next armies combined….

Tax cuts on top incomes likewise produce no return. A study by the Congressional Research Service reviewed tax, investment and growth data beginning in 1945, the first year for which they’re available.  Their analysis showed tax reductions on top incomes do not increase investment or growth.  In fact, growth has consistently been more robust during periods when top tax rates were higher.
Instead of making the economic pie larger, the CRS found, reductions on top tax rates change how the pie is sliced, concentrating income at the top.  (ie the kavipsian Economic Theory)  Romney’s approach leads us on the road to Greece.

The effect of income inequality on economic growth is negative.  But inequality, especially of the U.S. variety, is bad for growth. The country grew faster in the decades after World War II — when it was also growing together, with all groups seeing increases in income. But those at the bottom were growing the most.  those in the middle, ordinary Americans who work for a living, let alone those at the bottom, are getting a smaller slice of a pie that is smaller than if we had continued growing as we did postwar. The net result is disheartening: Most Americans are worse off today than they were 15 years ago.”   Income inequality in America peaked in 1929 and in 2007 – just before massive economic contractions.  It is about to again and will, if Romney’s 5 Trillion tax cut is allowed to progress unimpeded…..

 

President Obama’s policies are as needed in our time as President Roosevelt’s were in his.  Roosevelt struggled for a time, too.  America didn’t toss him out and send Hoover back to Washington.

Politico Reports Even “Titians of Industry” are Pushing kavipsian Economic Plan

Politico is reporting that the titians of industry are lining up to parade through Washington in support of higher taxes. They know that higher taxes create stability, and right now, the lack of stability is disrupting the economy.

A. The reason taxes are low, is because of Republicans (Tea Party).
B. Democrats tried to raise taxes in 2010, but Republicans stopped it in the Senate.

Politico even comments that… where as one would expect the titians of industry to support low taxes, they don’t. Low taxes cause growth to stalemate and die. Higher tax rates actually create stability. Politico reports that their “aim is simple: Get a big budget deal that provides stability for investors by eliminating the threats of government shutdowns, credit-rating downgrades, debt ceiling disasters and wide fluctuations in spending and tax policy”.

Everything this Republican House has caused. government shutdowns; credit rating downgrades, debt ceiling disasters, and wild fluctuating in spending and tax policy, everything Republicans have stood up for, IS VERY BAD FOR THE ECONOMY.

And so they are lining up to parade through Washington…. to? As Politico puts it… they are lining up to: offer Republicans cover from backlash from tea party supporters and anti-tax advocates if they sign on to anything that includes increased revenue.

Yep. Low taxes are bad for the economy. High taxes are good. The big whigs are going to provide “cover” (ie. campaign dollars) to squelch the wrongness of the Tea Party and nuts like Grover Norquist.

Why?

Because kavips was right. Higher taxes will explode economic growth and you had better have both hands free to scoop up the prosperity. It will be like a rushing mountain stream tumbling into a desert.

We all know it is true. It’s been true ever since we’ve been born….

How To Grow Jobs….

Raise top marginal rate to 40%.

Remove all existing tax credits for corporations. Keep current corporate rate at 35%….

Hire 35,000 additional accountants for the IRS….. Just do it.$35,000,000,000.

Allow dollar for dollar, a one time tax credit over these next two years, for every dollar spent on new construction here within the boundaries of the United States. A small business making $60 million this year, .. times the corporate rate of 35% stands to pay $21 million in corporate Federal Income tax. But with the “kavips deduction”, it instead decides to build 4 new locations with a start up cost of $5 million each…. and pay NO FEDERAL TAXES that year.

Those four new locations, each pump $5 million into their respective economies, which as it changes hands, gets taxed over and over and over again. If each unit has sales over $2 million, at a 30% payroll cost, they over the course of a year, pump an additional $660,000 into each local economy… As that $660,000 changes hands, it gets taxed over and over and over again as well….

So what do we have?

Whereas we had no investment under Republican Tax plans, (all that free money was going to Chinese investment since they worked for $1 a day), now under the kavipsian tax plan, we have in the first year, $21 million invested domestically, and a combined $2.6 million each year in brand new jobs, flowing out through the economy……

That $2.6 million if all in one state with a top rate of 5%, puts $131,000 into the state treasury that was not already there. At 2.5%, it puts $65,000 back into local government…..

If the corporation choses to do the same for a second year… then, those amounts get doubled!

Now, here’s the beauty of the kavipsian tax plan…. Imagine, every business, corporate or private, doing this exact same scenario simultaneously…

Ironically, by raising the rate on the amount of taxes we take from the wealthy and/or corporations, but allow them to deduct dollar for dollar what they spend that year on physical capital (something that gets built) we force businesses to choose between giving the Federal Government more of their money…. or keeping it themselves.

We all benefit when they keep it .. themselves…