8 January 2009

President-Elect Obama c/o Transition Team

Dear President-Elect Obama:

I am writing to suggest a way that helps the lower economic classes more than the means of the current "bailout". It should not be going to financial corporations. It is better to assist the lower economic classes who have suffered from the inequities of the income tax system, which has increasingly redistributed wealth from the lower economic class to upper class and corporations from the 1930's till present. By defining taxable income differently for individuals (individuals may not deduct the costs of surviving and selling their labor in the market) than for corporations (corporations may deduct their costs of surviving and providing their goods and services in the market), the income tax system has gradually slipped the tax burden of corporations into the tax burden of individuals. In 1930 the tax rate based on gross income was about 1% for corporations and 2% for individuals. In 1986 the rates were 2% for corporations and 22% for individuals. To me it is glaringly obvious from these figures that corporations are not paying their fair share of taxes.

Above it is shown how the wealth created by individuals is trickled up to corporations. In my opinion the bailout money should have been used to restitute this money to those it came from in general, by a formula. Divide the country into 10 income percentiles ... take the money and divide it into shares: 10 shares to the 0-9 percentile; 9 shares to the 10-19 percentile; and so on to 1 share for the 90-100 percentile. Or one that may be more effective, at reversing the trickle up to corporations of wealth created by the lower economic classes, start with 512 shares for the 0-9 percentile and decrease by half each percentile's share to 1 share for the 90-100 percentile.

To help the lower income classes the bailout money, in my opinion, should have been used to pay down mortgages for home buyers and in the case of non home buyers to pay down highest interest credit debt. This would leave them with more discretionary cash on a monthly basis which would probably be spent more diversely than a lump sum payment.

Sincerely,

Jack R. Jones