The American dream desperately needs a reboot

The five-fold or more escalation in costs for housing and higher education are unsustainable for the average American.

In a recent column, I suggested we need radical reforms in these sectors, as well as in the domain of our regressive taxation. Top-bracket income tax rates fell by 50 percent or more in the Reagan revolution. We must address as a nation these blatant inequities.

The Republican Party’s way is to freeze the wealthy in place. We discourage young, diverse and disadvantaged citizens from full participation in the American dream. Entrenched interests and stigmatizing cries of “socialism” make reforms seem remote. Post-midterms, it feels more like the “Twelfth of Never” from “Guys and Dolls.”

Swim against the tide as I may, here is what we eventually must do. Let’s start with creating the funding to support constructive change. At a 20 percent maximum, long-term capital gains taxes are almost half ordinary income tax. This makes no sense. In the guise of spurring investment, all this achieves is shielding great wealth and punishing wage-earners. Why should a person whose income is comprised largely from the sweat of their brow surrender so much more of their paycheck compared to a passive investor? All income should be treated equally. Period.

Tax brackets should be restored to the scale that prevailed in World War II. For every $100,000 in income, taxes should grow from a floor of 20 percent in 5 percent increments, to a maximum of 70 percent. That is the level pre-Reagan, and considerably below the 1940s. Only millionaires would be taxed at the highest rate. Will that discourage people from making money? It didn’t in the postwar boom years.

America must remain competitive in a world economy where others, such as China, are far more rigorous in their pursuit of an educated workforce. We need to course-correct the unconscionable cost of higher education. Concurrently, we need to compensate teachers far more than we customarily do to attract the best and the brightest to this essential occupation. Using funds gained from a more equitable tax policy, we should create a pool to reward good teaching. Then we must make higher education free for families earning less than $160,000 a year, as my alma mater now does, based on cost-of-living.

Home ownership is a thornier issue, but it is necessary to address this substantively, not only to create a path to equity for the young and families but because we need an alternative to skyrocketing rents in urban areas. The average apartment rental cost increased more than 22 percent last year. A two-bedroom apartment now goes for nearly $2,000 a month. A small family is spending close to $50,000 yearly in rent, with no equity being built. There is little margin for error before falling out of our permeable social safety net. A major illness, let alone saving for college, can implode fragile finances in a heartbeat.

This is no way to live. We need a national home-ownership incentive plan through which property owners and local governments receive persuasive incentives to remake underutilized properties for sale based on income. We are not talking luxury residences, but rental-to-condo conversions, attached homes, lofts in abandoned factories, empty offices in buildings rendered overbuilt by remote work, starter homes. In this scenario, the stigmatized category of subsidized housing becomes instead a reasonable mechanism, like 401(k) plans, to enable citizens to live decently and grow equity. Once again, fair and progressive taxation should more than enable such a transformation.

Yes, algorithms will need to be developed and administered. Thoughtful review will be necessary so that builders and landlords are fairly compensated without it becoming a boondoggle. The goal is not bureaucracy but clarity. If coupled with simpler and more equitable taxation, it should be possible to determine eligibility for housing at reasonable rates. To keep from creating a mountain of paperwork and legions of auditors, local housing boards attuned to the economics of their areas should be established subject to federal guidelines.

Call this whatever term of opprobrium you’d like to throw. The system today is irrevocably broken, and the next generations have no faith in a long-term future. Without that belief, the heart goes out of young America. Their world is shadowed by the threat of nuclear annihilation thanks to Vladimir Putin. If all our youth have to look forward to is extreme climate and job impermanence, then initiative will stall and we will fall behind.

Every dream needs a reboot. The American one is no exception. We have seen unfettered capitalism morph into de facto corporate ownership of government. Billions were poured into buying the midterms. This dream may have to be put on hold while the rich get richer. Then call for a democracy with minimum standards of living. It’s the American way.