A number of articles have appeared recently on the subject of nations increasing the size of bond offerings to cover rising fiscal shortfalls and reports that some private sector companies are experiencing a slump in profits and investment (Report, February 1).
This is happening at the same time as the cash hoards of private equity, hedge funds and other financial services entities have risen to disturbing heights. Yet wage growth for ordinary workers has stalled and inequality is rising. The obvious solution is to increase taxes. During the first world war the US government expanded tax revenues by creating an “excess profits” tax levied on corporations and individuals. This was aimed at stagnant fortunes and it forced investments in useful projects.
Tax receipts, according to William J Shultz and MR Caine’s 1937 Financial Development of the United States, flooded the Treasury with more revenue than it expected. We need such a proactive change, to address the “dry powder” of investors, and inequality at the same time.
Niccolo Caldararo
Department of Anthropology, San Francisco State University, CA, US
