The Goals of the Capital Homestead Act

As summarized below, the Capital Homestead Act is designed to:

1) Generate millions of new private sector jobs by lifting ownership-concentrating Federal Reserve credit barriers, with the aim of accelerating private sector growth linked to expanded ownership opportunities, at a zero rate of inflation.

 

2) Radically overhaul and simplify the Federal tax system to eliminate budget deficits through a single rate tax above poverty levels on all individual incomes from wages, profits and investment incomes, while:

a) eliminating payroll taxes on working Americans and their employers;

 

b) integrating corporate and personal income taxes; and

 

c) exempting incomes of the poor.

Policy Objectives of Capital Homesteading

To save Social Security and provide for its eventual phasing out as the mainstay of retirement income for most Americans, and to shift the Federal Government’s role from today’s income redistribution policies to the more limited and healthy role of encouraging economic justice through free enterprise growth, a Capital Homestead program would:

• Promote Private Sector Growth Linked to Broadened Ownership. Recreate in the 21st Century the conditions that resulted from the first Homestead Act of 1862, including full employment, declining prices, and widespread, individual and effective ownership of income generating assets. Set a realistic long-term target, based on the nation’s industrial growth potential, to achieve a minimum Capital Homestead stake for every American family. As an initial measure, this could be geared conservatively toward an equity accumulation of, for example, $100,000 over the next 20 years.
  
  
• Save the Social Security System. Keep existing promises and reduce the growing burden on the Social Security System, by enabling every American to accumulate (through inheritances, gifts, CHAs, ESOPs, IRAs, community investment corporations and other expanded ownership vehicles sheltered from taxes under the “Capital Homestead Exemption”) sufficient wealth-producing assets to provide each person with an adequate and secure taxable income from property, independent of Social Security benefits and incomes from other sources.
  
  
• Stimulate Maximum Growth, with a Balanced Budget and Zero Inflation Rate. Remove barriers to maximum rates of sustainable and environmentally sound private sector growth to achieve a balanced Federal budget and a zero inflation rate under the Capital Homestead program.
  
  
• Stop Federal Reserve Monetization of Government Debt. Terminate use of the Federal Reserve’s money-creating powers to support foreign currencies or to buy and sell primary or secondary Treasury securities. This would force the government to borrow directly from savers in the open markets.
  
  
• Stabilize the Value of the Currency. Create a stable currency backed by productive private sector assets rather than non-productive public sector debt.
  
  
• Reduce Dependency on Past Savings for Financing Growth. Create money to expand bank credit to enable every American to become an owner of a viable accumulation of new income-producing assets, thus reducing America’s dependency on past savings, corporate retained earnings, or foreign investors advantaged by America’s growing trade imbalances, while increasing consumption incomes. Require the Federal Reserve System to supply sufficient money and credit through local banks to meet the liquidity and broadened ownership needs of an expanding economy. Such “Fed monetized” loans would be subject to appropriate feasibility standards administered by the banks and limited only by the goal of maintaining a stable value for the dollar.
  
  
• Establish a Tax System That is More Accountable to Taxpayers. Radically simplify the existing Federal tax system in ways that automatically balance the budget and make Congress more directly accountable and responsive to all taxpayers. Eliminate tax provisions that unjustly discriminate against or discourage property accumulations and investment incomes, especially for poor and non-rich families.
  
  
• Discourage Monopolies and Monopolistic Ownership. Link all economic reforms to methods that discourage privileged access to or monopolistic accumulations of private property ownership of the means of production. Enforce anti-trust laws by providing access to capital credit to broadly owned new competitors to enhance and sustain market-oriented growth.
  
  
• Introduce a Market-Driven Wage and Price System. Gradually eliminate rigid, artificially-protected wage and price levels and other restrictions on free trade, which afford special privileges to some industries, businesses and workers at the expense of American and foreign customers of US products. Replace subsidies with credit incentives to farmers who wish to associate voluntarily in cooperatives and in enterprises jointly owned by farmers and workers, including integrated agribusinesses. The income generated by the resulting enterprises would supplement farm incomes and reduce the need for subsidies.
  
  
• Restore Property Rights in Corporate Equity. Restore the original rights of “private property” to all owners of corporate equity, particularly with respect to the right to profits and in the sharing of control over corporate policies, while still safeguarding the traditional functions of professional managers.
  
  
• Offer a More Just Social Contract for Workers. A top priority during the next decade would be developing a more just “social contract” for persons employed in the private sector. This would be geared toward establishing maximum ownership incentives. Instead of inflationary “wage system” increases, employees can begin to earn future increases in income through production bonuses, equity accumulations, and profit earnings. These increases would be linked to their personal efforts and to the productivity and success of their work team and the enterprise for which they work.
  
  
• Encourage More Harmonious Worker-Management Relations. Promote the right of non-management workers to form democratic trade unions and other voluntary associations. Instead of promoting the traditional “conflict model” of industrial relations, however, the labor union would be encouraged to transform itself into society’s primary institution for promoting a free market version of economic justice, while continuing to negotiate and advance workers’ economic interests, including their ownership rights, vis-à-vis management. Under Capital Homesteading, unions could expand their role in a free market system by organizing and educating other shareholder groups and helping to protect and expand their ownership rights.
  
  
• Downsize the Public Sector. Reduce taxpayer costs, by providing America’s military, policemen and firemen, teachers, and other public-sector workers with a growing and more direct equity stake in the free enterprise system, both as a supplement to their costly pension plans and so that they will better understand and defend the institution of private property. Whenever feasible, transform government-owned enterprises and services into competitive private sector companies, by offering their workers (and customers and other stakeholders in capital-intensive operations like TVA) opportunities to participate in ownership, governance and profits.
  
  
• Promote a Life-Enhancing Environment. Encourage special ownership incentives for those engaged in research and development, especially in the search for new and sustainable sources of energy, ecological restoration and labor-saving technologies. Provide sufficient low-cost credit and royalty-free licensing for enterprises capable of commercializing life-enhancing technologies developed for the military and space programs. Subsidize the development of new methods of conserving and recycling non-replenishable and limited natural resources that are vital to civilization’s long-term survival, at least until suitable substitutes can be discovered and developed. Promote the teaching at all levels of education of universal principles of personal morality and social morality, that are based on the inherent dignity and sovereignty of every human person under the higher sovereignty of the Creator.
  
  
• Initiate New Challenges for Multinationals. Provide special encouragement to US-based multinational corporations and global financial institutions to become instruments of peace and a more just world economic order, by broadening access to their ownership base to all citizens of the world community. Encourage businesses to open up future ownership opportunities as they begin harnessing the resources of the sea and other planets.
  
  
• Establish Workable Demonstrations of Capital Homesteading at the Community, State, Regional and Global Levels. Launch several Capital Homesteading demonstrations. These would be most effective in areas of high unemployment, such as the Super Empowerment Zone proposed in 1996 for the District of Columbia, and for the New Millennium Project now being developed in East St. Louis, Illinois. Similar projects could be developed on Native American reservations. The goal would be to evaluate ownership-broadening Federal Reserve reforms, innovative broadened ownership mechanisms and advanced concepts of worker participation in decision-making and self-management. Encourage State and local governments and other countries to promote widespread capital ownership as a basic pillar for building a sound market economy.
  
  
• Promote a New Global Monetary System. Encourage the convening of a second “Bretton Woods Conference” to consider the implications of the Kelsonian binary economic model on global currency standards and foreign exchange rates. The new policy should seek to reform global financial markets to address the challenge of global poverty and sustainable development, as well as leveling the playing field among nations for global free and open trade.

The "Community Investment Corporation" or "CIC" allows residents of a community to share in the control and profits associated with land planning and development.

 

The "Consumer or Customer Stock Ownership plan" or "CSOP" lets customers of utilities share in the governance and profitability of "natural monopolies," like telecommunications, water and power companies, mass-transit and cable television.

 

The "Capital Homestead Account" or "CHA" is the primary tax-sheltered vehicle for the democratization of capital credit through local banks. It would enable every man, woman and child to accumulate wealth and receive dividend incomes from newly issued shares in new and growing companies, without being taxed on the accumulations (including property and shares gained through inheritance, savings, and arrangements like ESOPs, CSOPs and CICs). In addition to serving as a source of capital credit for corporate workers, CHAs would also provide an ownership-building account for individuals who do not work for profit-making enterprises, such as school teachers, civil servants, military personnel, police, and health workers, and for individuals who have no remunerative employment, such as the disabled, the unemployed homemakers and children.

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See also "Beyond ESOP: Steps Toward Tax Justice," Chapter 8 in Curing World Poverty: The New Role of Property, John H. Miller, ed., Social Justice Review: St. Louis, 1994.

To obtain these and other writings on tax and monetary reforms to promote expanded capital ownership, see the publications list.