Issue Position: Economic Fairness

Issue Position

Our working people have struggled following the collapse of the economy in the final months of the Bush administration, while those at the very top have continued to separate themselves from the rest of our society. As our economy has recovered from the Great Recession, the stock market has nearly tripled, from 6443 in March of 2009 to more than 17,000 as of today. At the same time, study after study shows that real income levels among working people have suffered a steady decline since January of 2009. And not only for our workers -- according to the Wall Street Journal, loans to small business owners, who traditionally have been the backbone of the American success story, have decreased by 18 percent since 2008, while overall business loans have increased by 9 percent.

The growth of our economy has been increasingly reflected in capital gains rather than in the salaries of our working people. In many cases, the corporate headquarters and financial sectors are here, while the workers themselves are overseas. Many of our younger workers here in the United States are subject to complicated hiring arrangements that in many cases don't even pay health care or retirement. Corporate success is measured by the increase in the value of the stocks, and corporate leaders are paid accordingly. When I graduated from the Naval Academy the average corporate CEO made 20 times the average worker's pay. Now it's closer to 350.

This is not a global phenomenon. In Germany -- which has the highest balance of trade in the world -- the average CEO makes about 11 times what an average worker makes. Many of our brightest economic analysts, high among them Ralph Gomory, point out that this disparity came about not because of globalization, but because executive compensation became linked with the value of a company's stock rather than the company's actual earnings. Investors would hardly complain. And our workers -- the most productive work force in the world -- have been the ones left behind.

If you make enough money to buy stocks, you're probably doing OK these days. If you're working in a successful company that provides stock options or bonuses in stocks, you're probably doing pretty well. But it you're spending all your income paying rent and putting food on the table and clothes on the backs of your kids, you're probably living on the outer edge of the American Dream.

I would agree that we cannot tax ourselves into prosperity. But we do need to reconfigure the tax code so that our taxes fall in a fair way. It is possible to simplify the tax code, including reducing the corporate tax rate in exchange for eliminating numerous loopholes, and to examine shifting our tax policies away from income and more toward consumption. We did not even have a federal income tax in this country until 1913. The loopholes and exceptions that have evolved have made a mockery out of true economic fairness. I would never support raising taxes on ordinary earned income, whether it goes to a school teacher or a nurse or a doctor or a film star. But we need to find a better way.

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