A wealth tax is key to the perception of countering China

China and the U.S. are the two strongest world powers. Instead of working together to make the world better, each country is trying to prove that their system, American capitalism or Chinese socialism, is the best for most countries. Will the Chinese manage to convince the citizens of other countries, that China is more serious than the U.S. in improving the well-being of more people around the world? What is the U. S. Message to other Countries about Why American Capitalism is the better System? The U.S. does not pursue a mission of “common prosperity.” In American capitalism, the rich continue to get richer, the middle class continues to get smaller, and the huge number of poor people remain poor with huge debt. The U.S. government does provide assistance in the form of social security, food stamps, health insurance, aid to the poor and a large number of other social programs. In addition, many of the rich donate money to good causes to improve education, health and other services to the middle class and poor. At the same time, it can be argued that the great need is to get more money to flow into the hands of the working class. Today the rich only pay 37% of their top bracket income to the government’s needed revenue. Proposals include establishing a more progressive income tax system, adding a wealth tax, closing tax loopholes, and taxing capital gains income at the normal income tax rate. The U.S. offers to the rest of the world a different message than China. The U.S. is the land of freedom and opportunity. For people living in countries with poor opportunities or with little freedom, the U.S. remains a hope for such people. They would rather move to the U.S. than move to China. They could hope to live a better life in the U.S. and even have a chance to become a millionaire. Many immigrants come to the U.S. and they, or at least their children, will end up living a better life and with more freedom. Migrants come for more opportunities and freedom that are not available in their countries. Should the U.S. Strive to Make Everyone Prosperous? Historically, the U.S. favors making the cake bigger and worries less about how the cake is sliced. Capitalists argue that the benefits of a bigger cake flow down to the working class gradually in the form of more jobs and possibly higher wages. More wealth will “trickle down” and “All boats will rise.” But the wealth never really “trickled down to the poor.” If anything, the wealth trickled up” to the rich. The rich used their lobbyists in Congress to write rules that create tax loopholes that benefit the already affluent. The rich put their money in stocks and bonds and they live on capital gains earnings that are taxed at a lower rate than labor earnings. American Capitalism provides jobs but many are not receiving livable wages. The vast majority of Americans must use credit to achieve a livable standard of living. The ordinary credit card pays for their groceries, new clothing, doctor bills, college education and sundry other items. Credit has been the key to America’s economic growth! If we did not have credit, our economic growth would be limited to our actual incomes. People would buy far fewer cars, appliances, and vacations. Some people would be more likely to protest or rebel. Credit is the miracle that allows Americans to live a good life beyond their actual income. The major cost is spending a significant part of their income to pay interest on the debt. If they fail to pay interest, they must give up their car or home or declare bankruptcy. The business community benefits by achieving a much higher level of sales by extending credit. The business community benefits in another way. Businesses can continue to pay unlivable wages! If citizens couldn’t get credit, they would either live without the good things in life or protest or rebel. The availability of easy credit prevents a worker uprising. Credit makes it possible for poor people to have cake and eat it too. People can live a better life because the credit card is available. Credit makes it possible for consumers to have more than their income allows but at the cost of high indebtedness and high interest charges. Americans today are living with 24.5 trillion dollars of debt. They won’t ever be able to liquidate this debt. Nor does business want the debt to go away. Businesses and banks depend on the steady flow of interest to keep moving into their accounts. As workers see the growing debt and the gap between their lives and the lives of the rich, some might press for organizing unions and demanding higher pay. Some unions will strike for high wages. They will oppose CEOs being paid 320 times more than the average worker. In the past, businesses would use legislation and the police to stop workers from organizing or striking. But today’s citizens and employees will press legislators to protect unionization. If workers organize and win higher wages, some companies will make lower profits unless their productivity increases or they move to lower cost areas. Some companies will have less money to invest in R&D and grow their business. Some companies will close down and unemployment might increase. Hopefully, there might be a middle way. The basic remedy lies in tax policy. The taxes on the rich are too low. The rich in the U.S. pay 37% on the top bracket of their income. The rich in the Nordic countries pay 60–70% on the top bracket of their income. The Nordic countries use the higher tax revenue to make healthcare free, higher education free, and child and parent benefits freer, along with substantially longer vacations than the two-week vacations in the U.S. The remedy is straightforward: raise the income tax rate on the rich, pass a wealth tax and raise the estate tax. These measures would hardly affect the lives of the rich while at the same time would bring more education, healthcare and childcare to the vast majority of citizens. Critics say that the Nordic countries are smaller and more homogenous and agree to these higher taxes because they can see the benefits that it brings to their countries. They argue that the U.S. is too multi-cultural and divided politically to pass Nordic level taxes. The question is whether the Democratic party might want to embrace the goal of “common prosperity.” Clearly the left wing of the party with leaders such as Senators Bernie Sanders and Elizabeth Warren would be happy to announce the cause of “common prosperity.” Ray Dalio, an American billionaire and long-time supporter of the Chinese government, praised the common prosperity campaign and said that the US “needs more common prosperity” along with many other countries.