weekly blog--one for the ages
This past week Bloomberg had an interesting opinion piece on the state of relations between young Americans, middle-agers and boomers. As presidential candidate Pete Buttigieg explained recently, “the reason we’re having this argument over socialism and capitalism is that capitalism has let a lot of people down.”
It’s no accident that many younger Americans take a dim view of capitalism. They were surrounded by great wealth, but they had limited access to good-paying jobs and faced ever higher housing prices. Many middle-aged Americans probably aren’t so sure about capitalism either: They may have had a brief taste of prosperity in the 1990s, yet not nearly enough to set themselves up for retirement or prepare them for the choppy labor market and wage stagnation of the last 20 years.
What to do? According to the opinion writer...the U.S. government should cut taxes on workers and replace them with taxes that target the lifestyles of the more fortunate. A straightforward way of doing this would be to cut or even eliminate payroll taxes and slowly replace them with a value-added tax, or VAT. A VAT is a tax on the consumption of goods and services, and thus falls more heavily on those who spend a lot. The tax does raise the cost of living for those on Social Security, and that would have to be addressed. But it is also more progressive than a state and local sales tax.
Another way to tamp down generational resentment...eliminate the mortgage interest deduction to deflate the artificial rise in home prices. The bottom line: Affluent boomers living off their gains from investments in the market and real estate might want to ask themselves which is more painful--giving up some of their wealth or ignoring the plight of the millennial generation and fomenting revolutionary change?