6. The fatalism with capitalism and why we need elementary reforms

In the last chapter we learned that in every thinkable economy and society is existing an unavoidable dependance of distribution of the property, power, work and money. Concentration of property can' t be the reason for equilibrium at work. And concentration of power can' t be the reason for equilibrium of money. This does not mean that everybody should have the same income or that everybody should have the same power or the same property of course. Because it' s not a realistic vision that everybody is able to accomplish the same economic performance. The aim of a successful reform should be the approximation of the differential of money distribution and economic performance, that means the minimization of the difference between individual income and individual economic performance. In this case it' s reasonable to guarantee everybody the same minimum income as social benefit but not the same maximum income of course. But the main problem of capitalism is still after the downfall of european socialism the separation of economic performance and economic property. Every thinkable reform can' t be successful which is not solving this main problem of capitalism.
We know, that in a private market economy the government can' t manage the distribution of gross income in private companies. But it is an important task of the government to decide about the difference of gross income and net income. This is the most underestimated task of the legislator.
It' s a reality that no traditional scientist is convinced about an optimal system for private firms. Neither the politicians nor the economists or the lawyers have a theory about an optimal tax structure for private companies. In the consequence the communistic scientists denied any tax system in their theory and accepted taxpaying in the reality only in order to assist the remote control of manufacturing firms and industrial economic units. In capitalism the economic companies have to calculate their market value every year. The growth of the market value of the whole firm in one year is defined as the company income. This calculated company income is burdened with a linear tax. In some countries the market value of a firm is a tax base too for a property tax.

The marginal income tax rates of some countries
Germany is the only OECD country which uses a tax structure without brackets. It uses not a linear tax but a linear marginal tax rate.

The average income tax rates of some countries
In this diagram you see the income tax rates of the same countries. In the above diagram of the marginal tax rates are shown the derivations of the same formulas.

Such taxes from companies are very dependant from the business cycles. In boom eras the capitalistic companies are burdened with high taxes and in depression eras many companies are without any tax burden. An additional disadvantage is, that this tax depends from the inflation rate. In years with low inflation rates the firms need no ascending property for their existence. In the era of globalization many companies are organized in groups with a parent company and many subsidiary companies. Such companies can sell and purchase goods and firms in their own group in order to make the profit in countries or regions with low tax rates or even in tax heavens.

The income tax structure fo USA
The income tax structure of the most important economies depends from the marital status. In this diagram are shown as an example the marginal federal income tax rates of the United States.
Different income tax rates of the United States
The average federal income tax rates of the United States at 2001. At the above diagrams are the derivations of the same formulas.

This means that the accumulation of capital in the decades of the reigning shareholder value ideology was becoming easier in the most countries. But the states need more and more money for the social expenditures in the growing economies of the 20th century, especially in the era after World War II. Hence the labor compensation was burdened continually with more taxes and social contributions. If an employer want save money, he must reduce the costs for labor compensation. This option is possible if he can subsistute workers through machines for production. They know that the costs for means of production are charged with very less taxes and contributions.

The lowest and highest income tax brackets in the United States
The top brackets of the income tax from the United States differed very much at their history. It seems to be that from this feature depends the prosperity of an economy. But also european economies were in the past successful with very different top marginal tax rates.

In a market economy every seller and every buyer is comparing the market value of a product with his own advantages. But this rule is not a reality in the capitalistic labour market. In capitalistic labour market the worker knows, that they can expect wage only perhaps 50% of the costs of the employer. Hence, if the worker can produce less than 200% of a machine, it is cheaper for the employer to substitute the worker through a machine in order to save money for the wage and the taxes and the social contributions of the wage. Obviously in the capitalistic tax system the workers are a great evil like tobacco and alcohol and the machines for production are a great bless for the people like bread and water.
Is this really unavoidable?
If such a tax system would be fair, this homepage would be not necessary.
Naturally machines are not an evil for economical prosperity. But a fair tax system needs some essentials in order to reach economical and social justice. In the next chapter we discuss

7. The principles of a fair tax system