Campaign Issues Dems Can Do Better On - Medicare For All

Medicare for all would be a vast improvement on our existing health care system.  I've been blogging about the insanity of Medical Care in our country for years. Here are two of the 14 or fifteen blogs on the topic:

https://motrvoter.blogspot.com/2010/02/economics-101-and-health-care.html\

https://motrvoter.blogspot.com/2011/09/americas-socialized-medicine-system.html

The big problem with Medicare for all is how do we get from where we are to where we need to go without creating serious political and economic problems.  The insurance part of the equation is a 24 billion dollar industry, the care part of the equation is a 90 billion dollar a year industry.  That is a 114 billion dollar chunk of our economy.

As Medicare for all has been presented by some of the candidates in this campaign suggests an overnight conversion, at least that is the impression the folks building their platforms around the issue leave.  Never a word of caution about what a difficult transition it will be.  

Millions of voters in this country owe their jobs and livelyhood to the for profit medical care industry, in addition millions of folks are perfectly happy with their existing health care arrangements.  Add that to the folks who buy into slogans about socialized medicine and you have a formidible stumbling block to success.  When you fire up your base by promising Medicare for all right now you are also firing up the folks that will be hurt by it.  Donald Trump probably owes his election to the mess that grew out of Obamacare (although kudo's to Obama for breaking the logjam to get us at least moving forward).  

Overpromising a radical change now could be a gift to Donald Trump and would certainly be a gift to any Republican running in 2024.  If you actually want to get it done in an efficient manner it has to be acknowledged as a long term goal of easing us from for-profit to Medicare for all.  The idea of allowing existing for profits to continue, but opening up Medicare to all to compete with existing for profits makes a lot more sense to me.  Better to underpromise and overdeliver.  

Campaign Issues Dems Can Do Better On - Capital Gains Taxes

Virtually every Democratic candidate advocates some increase in the Capital Gains Tax.  

Is just tinkering with the rules rich folk made that primarily  benefit themselves really the best we can do?  Is it so important for them to pad their wealth quicker we tolerate working folks paying often twice as much tax on their income?

I want to hear a candidate say "income is income, we are abolishing the special rate for Capital gain.  You can adjust your gain for inflation, but what is real gain is taxed just like any other income."

Background:  

A capital gain occurs anytime you buy an asset, then turn around and sell it at some later point and make a profit. 

When our income tax was enacted in 1913 it made no distinction between Capital Gains and other forms of income.  That changed in 1921 when Republicans had control of both houses of Congress and we had a Republlican President.  They competely revised the 1913 income tax law, dropping the top tax rate from 73% to 25%.  But they also created a special catagory for taxing capital gain, setting the rate a 15%.

The justitification for creating a special rate for Capital Gain was a fundemental difference between wages and capital gains.  Wages are paid for work right now.  But capital gains are gains accumulated over time. For example if I bought a farm 40 years ago for $300 and sell it today for $3000, that extra $2700 might be in part, or all, simply inflation.  When corrected for inflation there really is no income, I'm just getting back what I paid for it so I shouldn't be taxed.

The logical solution in 1923 would have been to create inflation tables so when you sell something you do a little math to figure out what percentage of the gain is inflation and then the rest would be treated like your other income.

But Congress didn't go that route.  Instead they created a seperate tax, with rates much lower than what folks pay on wages.  Often there has been two rates, one lower rate that applys when you hold the asset more than a year, and a higher rate when you flip it in under six months.

This was, in 1923. essentially one a companion gift to the wealthy to go along with dropping the top tax rate from 75% to 25%.  Now if there income just flowed to them through their accumulated wealth they only had to pay 15%.  

It was a real boon to Wall Street, it made speculative investment vastly more profitable.  I don't think it was an accident the 1929 stockmartket crash came along 6 years later.

In the intervening 90 or so years since the 1920's the Capital Gans tax rate has fluctuated, going down when Republican's are running the show, and going up when Democrats run the show.  But the disparity between taxes on wage income and taxes on Capital Gains has remained.  The Capital Gains tax rate has never been higher that 28%, and that was when the tax rate on wage income was over 70%.  

The low Capital Gains tax rate has played a big part in the boom and bust nature of the housing market and wall street over the last 30 years.

I've heard my whole life the low capital gains rate incentivizes investment.  

Seems to be baloney to me.  I sometimes trade stocks for myself.  When I make a profit and sell my stocks it's not incentivizing anybody to start some new enterprise.  It doesn't create new wealth, it simply reallocates a little bit of existing wealth.  In most circumstances its hard to distinguish from winning a bet when you are gambling.

In the last couple decades I've known a lot of smart people who stopped making things or offering services for things because they sit at home and trade stocks.  They might make more money if they were working, but because their income is capital gains they pay less taxes.  In my experience low capital gains rates often incentive productive people to divert their energy into speculation.

I believe we would have a stronger, fairer, more productive economy if we stopped incentivizing speculation with low capital gains taxes.  I would welcome any data folks have that contradicts my view.