Workers Are, Increasingly, Owners, Too

Stocks are replacing homes as the primary nest egg of Americans, a Page One article in The Spokesman-Review reported last week.

Stock equity has soared beyond 5 trillion, said the article from The Washington Post. Home equity is stalled around $4.5 trillion.

Baby boomers are looking more to the stock market than the housing market to accumulate savings for retirement, economists and market analysts said.

The experts made much of this being an historic shift in household assets.

But they failed even to touch upon what a profound change in public perceptions this economic shift indicates.

Millions of workers newly joining the ranks of business owners as investors must be spiritually and philosophically torn between economic extremes.

On the one hand, as workers they suffer the miseries of round after round of job cuts, eroding benefits, and stagnant pay. But as business owners with a stake in the bottom line, they receive short-term economic rewards from cuts in the payroll, benefits, and wages.

Does this Jekyll-and-Hyde duality help to explain the growing acceptance of corporate CEOs who make more in a single day than most employees do in a year? Perhaps the same polarity can also account for the short-sighted view held by so many workers who seem to equate stock market performance with economic health.

In cold reality, rising market prices, investor earnings, and standard definitions of economic growth no longer track with worker wages and household disposable income.

In the past decade and a half, while stock values, investor earnings, big business profitability, and most other economic indices posted strong gains - real disposable income of average wage-earners lost ground.

Yet, so much of the concern voiced today is about whether conditions are favorable to the markets and large corporations - not small business or the average wage-earner.

A “flat tax” could further accelerate the transfer of equities from the home market to the stock market, it seems.

Gingrich & Co. claim they want to make paying taxes easier. To that end, the “flat tax” proposed by the speaker’s revolutionary guard would simplify tax forms by eliminating deductions, including the home-mortgage interest exemption.

Obviously, this would decimate the housing market, undoing decades of gains in home ownership.

Realtors regard the proposal as a declaration of war.

Other readers have asked my opinion of the flat tax pitch. For the most part, its ramifications are beyond me.

But the Spokane certified public accounting (CPA) firm of A. Avery & Co. flat out calls the flat tax a tax hike.

Writing in his firm’s current newsletter, tax specialist Anson Avery reflects that the GOP scheme “looks and smells a lot like the Tax Simplification Act of 1986.”

That act “made it simple for the IRS to get more of our money,” says the tax accountant. “The (effect of the 1986) scheme was to simplify taxes by taking away deductions and credits. It was sold by lying.

“The scheme did lower taxes a while,” Avery acknowledges. But taxes later went up again, far beyond where they were.

The end result, Avery says, is that taxpayers lost valuable deductions and credits. “The flat tax,” he charges, “is just another sneaky way to do the same thing.”

Far from easing the average person’s burden, the CAP says, the GOP version of tax reform would:

“One - raise taxes a ton.

“Two - hurt the housing industry and municipal bonds.

“Three - give the IRS greater power.”

Newsweek’s Mike McNamee takes an even dimmer view of what he calls the GOP’s “next economic crusade.”

The magazine columnist reports that “a growing number of Republicans themselves are conceding that a pure flat tax will hike levies by up to 25 percent on the middle class, while giving a huge break to the rich.”Those earning $50,000 to $75,000 would see a boost of 10 percent.

“Taxes would fall almost 40 percent for those earning more than $200,000,” McNamee reports.

As with many GOP reforms, the rich win again.

, DataTimes MEMO: Associate Editor Frank Bartel’s column appears on Monday, Wednesday and Sunday.

The following fields overflowed: CREDIT = Frank Bartel The Spokesman-Review