AGENDUM FOR CHANGE
(continued)
Preferential Treatment For Community Banks
The U.S. banking system was once made up of unitary or community banks that collected local savings deposits, made loans to local businesses, and financed mortgages to expand local home ownership. Successive changes in banking regulations have allowed the former community banks to be colonized by gigantic money-center banks that channel local deposits into the global money system. If the banking system is to serve local economies, the system of community banks must be restored by requiring money-center banks to divest their branches and by tightening community investment laws to require that a substantial majority of the investment portfolio of any bank covered by federal deposit insurance be invested within its service area and that all its investments meet federally mandated standards. The large, global money-center banks that wish to speculate with their depositors' money in risky investments around the world should be required to obtain deposit insurance from private insurers, with the premiums determined by the risks involved. Federal insurance should be reserved for community banks that serve community needs and play by community rules.
RIGOROUS ENFORCEMENT OF ANTITRUST LAWS
Vigorous legal action should be taken to break up concentrations of corporate power. There should be a legal presumption that any acquisition or merger reduces competition and is contrary to market principles and the public interest. The burden of proving otherwise to skeptical regulators should fall squarely on those presenting such proposals.
WORKER AND COMMUNITY BUYOUT OPTIONS
In most instances,the human interest is best served by patient, rooted capital. To this end, worker and community buyouts of corporate assets should be supported by public policy. For example, before a major corporation is allowed to close a plant or undertake a sale or merger, the affected workers and community should have a legal right of first option to buy the assets on preferential terms. The terms should reflect the workers' years of personal investment of labor in the company and the local community's collective investment in public facilities that have made its local operations possible. In most businesses, there are many investors in addition to the formal shareholders, and this investment should be recognized in the law. Bankruptcy rules should be structured similarly to give employees and communities the option of taking possession, on preferential terms, of the corporation's remaining assets after bankruptcy proceedings. Similarly, when a company is required to divest parts of its operation under antitrust laws, employees or the community or both should have first option to buy the divested units. Rules governing company pension funds might allow their use by employees to purchase voting control of their firm's assets. Government oversight should structure worker and community buyouts so that workers and communities have real control --- in contrast to many Employee Stock Ownership Plans (ESOP) that vest control in management.
TAX SHIFTING
One of the most basic, but often violated, principles of tax policy is that taxes should be assessed against activities that contribute to social and environmental dysfunction. Therefore, tax laws should be revised to reduce taxes on activities that benefit society, such as employment (including employer contributions to social security, health care, and workers' compensation) . The lost revenue would be made up by taxing activities that contribute to social and environmental dysfunction, such as resource extraction, packaging, pollution, imports, corporate lobbying, and advertising. Such taxes would cascade up through the system to encourage more social and environmentally responsible behavior and discourage the use of harmful products. For example, a carbon emission tax at the source on coal, oil, gas, and nuclear energy would increase end-user prices and encourage conservation and conversion to solar energy sources such as solar heating , wind, hydro, photovoltaic, and biomass. Resulting increases in transportation costs would provide a nondiscriminatory natural tariff to encourage the localization of markets. The added cost of automobile commuting would encourage investment in public transit and and locating closer to one's work. A tax on pollution emissions would encourage pollution control. A tax on the extraction of virgin materials would encourage conversion to less polluting, less materials-intensive product designs and modes of production and a greater reliance on recycled materials. Assessing manufacturers an amount sufficient to cover estimated costs to dispose of their product packaging would discourage unnecessary packaging . Import tariffs would encourage economic self-reliance.
ANNUAL PROFIT PAYOUT
Instead of taxing corporate profits, corporations should be required to pay out their profits each year to their shareholders . Profits would thus be taxed as shareholder income at the shareholders' normal marginal rate --- much like mutual fund earnings are now taxed. The double taxation of corporate profits ---once to the corporation and once to the shareholder --- would be eliminated, along with the deferral of shareholder taxes and the many distortions that the corporate income tax introduces into corporate decision making. If this were carried out universally, corporations would have no incentive to shift profits around the world to the jurisdiction with the lowest tax rate. Interest payments on debt financing would come directly out of profits rather than out of taxes, thus discouraging the use of debt and encouraging greater reliance on equity financing. Many leveraged buyouts that depend on the tax deductibility of interest to make them profitable would be discouraged. Corporations would be taxed on specific activities that it is in society's interest to limit, such as the use of carbon fuels, resource extraction, and speculative financial transactions. Such taxes would be difficult to avoid. Corporate expansion would also become more difficult--- a step toward keeping markets more competitive --- because a company would not be able to grow simply because management decided to reinvest its profits rather than paying them out to shareholders. If a corporation wanted funds to expand, it would need to raise new money in the financial markets and make its case accordingly. Shareholders could, of course, be given the option of rolling over their dividends into additional stock, much like the current U.S procedure on the taxation of earnings from mutual funds.
The U.S. banking system was once made up of unitary or community banks that collected local savings deposits, made loans to local businesses, and financed mortgages to expand local home ownership. Successive changes in banking regulations have allowed the former community banks to be colonized by gigantic money-center banks that channel local deposits into the global money system. If the banking system is to serve local economies, the system of community banks must be restored by requiring money-center banks to divest their branches and by tightening community investment laws to require that a substantial majority of the investment portfolio of any bank covered by federal deposit insurance be invested within its service area and that all its investments meet federally mandated standards. The large, global money-center banks that wish to speculate with their depositors' money in risky investments around the world should be required to obtain deposit insurance from private insurers, with the premiums determined by the risks involved. Federal insurance should be reserved for community banks that serve community needs and play by community rules.
RIGOROUS ENFORCEMENT OF ANTITRUST LAWS
Vigorous legal action should be taken to break up concentrations of corporate power. There should be a legal presumption that any acquisition or merger reduces competition and is contrary to market principles and the public interest. The burden of proving otherwise to skeptical regulators should fall squarely on those presenting such proposals.
WORKER AND COMMUNITY BUYOUT OPTIONS
In most instances,the human interest is best served by patient, rooted capital. To this end, worker and community buyouts of corporate assets should be supported by public policy. For example, before a major corporation is allowed to close a plant or undertake a sale or merger, the affected workers and community should have a legal right of first option to buy the assets on preferential terms. The terms should reflect the workers' years of personal investment of labor in the company and the local community's collective investment in public facilities that have made its local operations possible. In most businesses, there are many investors in addition to the formal shareholders, and this investment should be recognized in the law. Bankruptcy rules should be structured similarly to give employees and communities the option of taking possession, on preferential terms, of the corporation's remaining assets after bankruptcy proceedings. Similarly, when a company is required to divest parts of its operation under antitrust laws, employees or the community or both should have first option to buy the divested units. Rules governing company pension funds might allow their use by employees to purchase voting control of their firm's assets. Government oversight should structure worker and community buyouts so that workers and communities have real control --- in contrast to many Employee Stock Ownership Plans (ESOP) that vest control in management.
TAX SHIFTING
One of the most basic, but often violated, principles of tax policy is that taxes should be assessed against activities that contribute to social and environmental dysfunction. Therefore, tax laws should be revised to reduce taxes on activities that benefit society, such as employment (including employer contributions to social security, health care, and workers' compensation) . The lost revenue would be made up by taxing activities that contribute to social and environmental dysfunction, such as resource extraction, packaging, pollution, imports, corporate lobbying, and advertising. Such taxes would cascade up through the system to encourage more social and environmentally responsible behavior and discourage the use of harmful products. For example, a carbon emission tax at the source on coal, oil, gas, and nuclear energy would increase end-user prices and encourage conservation and conversion to solar energy sources such as solar heating , wind, hydro, photovoltaic, and biomass. Resulting increases in transportation costs would provide a nondiscriminatory natural tariff to encourage the localization of markets. The added cost of automobile commuting would encourage investment in public transit and and locating closer to one's work. A tax on pollution emissions would encourage pollution control. A tax on the extraction of virgin materials would encourage conversion to less polluting, less materials-intensive product designs and modes of production and a greater reliance on recycled materials. Assessing manufacturers an amount sufficient to cover estimated costs to dispose of their product packaging would discourage unnecessary packaging . Import tariffs would encourage economic self-reliance.
ANNUAL PROFIT PAYOUT
Instead of taxing corporate profits, corporations should be required to pay out their profits each year to their shareholders . Profits would thus be taxed as shareholder income at the shareholders' normal marginal rate --- much like mutual fund earnings are now taxed. The double taxation of corporate profits ---once to the corporation and once to the shareholder --- would be eliminated, along with the deferral of shareholder taxes and the many distortions that the corporate income tax introduces into corporate decision making. If this were carried out universally, corporations would have no incentive to shift profits around the world to the jurisdiction with the lowest tax rate. Interest payments on debt financing would come directly out of profits rather than out of taxes, thus discouraging the use of debt and encouraging greater reliance on equity financing. Many leveraged buyouts that depend on the tax deductibility of interest to make them profitable would be discouraged. Corporations would be taxed on specific activities that it is in society's interest to limit, such as the use of carbon fuels, resource extraction, and speculative financial transactions. Such taxes would be difficult to avoid. Corporate expansion would also become more difficult--- a step toward keeping markets more competitive --- because a company would not be able to grow simply because management decided to reinvest its profits rather than paying them out to shareholders. If a corporation wanted funds to expand, it would need to raise new money in the financial markets and make its case accordingly. Shareholders could, of course, be given the option of rolling over their dividends into additional stock, much like the current U.S procedure on the taxation of earnings from mutual funds.
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