Rants-a-plenty (a pre-rant)
The topic of conversation for May was really not that difficult of a decision to make. In the last month, little came across as really being news.
Lets see:
-Obama weighs in on nuclear issue, little to show for it.
-Nuclear security summit a good idea, but the first one was a flop. Maybe in the future, there will be some accomplishments.
-Volcano blew. That should curb “so called” Global warming for a bit.
-Gitmo still open 1/3 into presidents term. Gitmo north idea more expensive and really solves nothing.
-Still no word on the Gitmo terrorist trials, four months after the, poorly thought through, announcement that they would be held in New York City.
-Health care law uncovered to be everything we feared, and little good.(considering the cost)
-Financial reform just getting started, too early to comment…but I will. Especially if the dems, poorly thought through, first proposal comes to pass.
No… these are not “news” issues, they’re either “olds” issues or premature for comment. Sure…they are, or will be, leftist failures that deserve a rant, but a few sentences in, even I get bored with them.
I could, and probably should, comment on the gulf coast oil spill. I could probably research oil companies. Their exploration, and exploitation, of our ocean floor to provide the needed resources we all need to live day by day, but my hearts just not in it. After all, I am pro energy exploration and pro energy companies. I know this is not a popular sentiment right now, but even a BMW breaks down once and a while, even a Rolex stops, and oil spills are bound to happen from time to time. So long as they are rare, and responded to correctly, I have no beef. (Might have rant on response later)
No, given that last month was the dreaded tax reporting month (and I pay big), I’m still a little pissed as to how poorly these dollars are managed, have been managed, and look to be mismanaged for the forseeable future.
So hang on… here we go.
Economic kaos in Greece, are we next. Swimming in debt, an American tragedy.
By 2025, interest on our debt, Medicaid, Medicare and Social Security will spend every last dollar of the Federal governments annual revenue. Our yearly deficit this year has reached 10% of GDP (entering the danger zone). While this number is expected to drop in the next few years, projections show, if we continue as we are, our total national debt will equal our entire GDP in just ten years time. Furthermore, at the end of that decade, our yearly deficit will return to that 10% number, or higher, and remain there on a permanent basis. Like Greece, our government policy is way too far based on spending money we do not have, on programs fiscal conservatives believe we do not need, or given the cost, do not want at their current, irresponsible, scale.
Interest on our debt is projected to consume 1/3 of our annual budget by 2040, pulling even with Social Security and Medicare as our single largest budget expenditure. A little quick math tells you there will be no money for any other government programs, including Medicaid and National Defense!!
Now, this shouldn’t be news to you either, but many don’t understand why this financial collapse is projected to occur. Other than the yearly budget deficits we have endured from every administration since inception, liberal ideas concerning government provided health care and retirement income were introduced, implemented and expanded well beyond economic viability. While this makes little economic sense, as a social populist campaign, it made perfect sense for strategic political gain, feeding the socialist ideological infection that has driven us toward this impending financial doom. Teach a voter to fish, he lives free and is self-sufficient. Repeatedly give a voter a fish, and he becomes dependant on you, loosing all ability to live independent from that assistance. In short …making the voter a slave to its government. The use of government benefits to garner votes, fighting against logical cutbacks required to make economic sense of them, and assuring citizens that the future will provide the cures required for the future, have been part of the socialist democratic playbook over the last century. The slow, steady erosion of personal independence, individual liberty, and the self-reliant character that has made Americans… “American” in the past, are causing this country to follow, instead of lead. The problem with following is; your never the first one there, second is the best you’ll ever be, and allowing yourself to be led to failure is so much worse than failing on your own.
This is not a problem that democrats can try to tax their way out of. It’s simply not possible. The 80-to-90% tax on the top two income levels, that would be required to boost revenue to levels of balance with spending, would kill economic growth and eventually lead back to tax revenue shortfalls. I’m not advocating spending cuts only either, but too much taxing will surely prevent all efforts to keep GDP growth ahead of deficit and debt growth. We need to cut back government services on a monumental scale, starting with cuts of any and all assistance programs to people making more than twice the poverty level. We need to make Social Security purely a retirement safety net for those above 70 that fall below that level in income and/or savings. And we need real health care reforms added to the recently passed health legislation. Reforms that are actually pro growth, in that they deal with lowering the costs of health to the people, both as a consumer and as a taxpayer.
Nothing we do in government, that does not efficiently and effectively manage each and every dollar of revenue, should be tolerated. There needs to be responsible project managers working with efficiency experts at every turn. There is at least $250 billion and maybe as much as $500 billion or more in spending each year that can be saved through; privatization of the federal government-owned enterprises, ending all wasteful, duplicative or contradictory programs, corporate welfare and subsidy elimination, or just simply returning certain functions of government back to the states that are better suited to address them. But …I don’t want to just stop there. I want every single law, regulation and program gone through with a fine tooth comb. And, if its cost-benefit does not score well, its eliminated! There are studies and reports put out periodically by the congressional budget office (CBO), the general accounting office (GAO) and several reputable think tanks that contain specific reforms that can be implemented to reduce wasteful spending. But few, if any, ever are.
Can it really be fair that the top 50% of wage earners, pay 97% of all income taxes. How is it that the “well off” minority of Americans have to pay for tax and spend policies they oppose. Policies of liberal politicians, voted in by the “less well off” majority. The same majority that reaps the benefits of those policies, but shares none of the pain that funds them. That’s representation, without taxation. It’s also a well hidden purchase of votes during the election cycles. Now, you can argue till your blue in the face that the rich should pay more, cause they make more, and that’s where I have you by the short hairs. If you progressive income tax proponents believe, “share of wealth” should dictate “share of taxes”, bring it on. I’ll even remove poverty level Americans from the mix. The top 20% of wage earners currently pay 86% of the nations taxes. The top 5%, while making 1/3 of the nation’s income, end up paying nearly 2/3 of the nation’s income taxes. The bottom 50% of earners make approximately 12% of the nation’s income, and only pay around 3% of the nation’s taxes. The facts are obvious, the large amount of “less than rich” people are really the ones not paying their way and sticking it to our governments bottom line. We need the middle class and slightly less fortunate, above the poverty level, to at least pay something. I have no problem with them taking advantage of subsidy programs and tax credits, but getting more from government than you put in should be reserved for those below the poverty level exclusively. As it stands now, some 67 million Americans, nearly 1/2 of the nations wage earners, pay no income tax.
Now, let me be clear, I am not advocating an income tax increase on the bottom 50%. Quite the opposite. Below is a 2006 chart of the American workforce in percentile groups. Followed by each groups percentage of all adjusted gross income(AGI), the adjusted gross income threshold of that group and their percentage of all the income taxes paid.
Now you would think in a heartless, capitalist society, that Obama claims we’ve lived in for so long, poor people would pay a larger percentage in income taxes than their percentage of all income earned. To listen to liberal socialist politicians, you would think the rich have an advantage over all others. In this touchy, feely, semi-socialist society, you would think the amount of income earned would be proportionate to the amount of taxes paid. All people, rich..poor…everyone. The poor make 12.6% of all income. To be “fair”, they should pay 12.6% of all income taxes. The richest make 21.8% of all income. To be “fair”, they should pay 21.8% of all income taxes. They don’t, the poorest only pay 3%, and the richest they pay 39.9%!!
So, let’s be a little more progressive and move the “unpaid” portion of the poorest 50% of peoples taxes and send it up to the richest. It’s kind of socialist, but lets call it compassionate conservatism. That would move the richest 1% from a 21.8% income tax burden, up to 31.4%. Well that’s not enough. Lets make the richest 1% pay all the “unpaid” taxes of the poorest 75% of our workforce. This would bring them up to 39.5%!! Still less than they are currently paying! Even after the Bush tax cuts of 2003!
O.K., forget about the richest 1%. I think I’ve showed how they are already providing tax relief for three-quarters of the country. Lets look at the next to the richest group. They pay 4.9% more of the income tax burden than their percentage of income. Why? Because the 75-90% group falls 5.1% short of their fair share. So if you tack on the tax welfare for the 4th richest group, and add it to the 2nd richest, you get 20.5%. Their a little short, but pretty close to fair, in a socialist mind. The 3rd richest group almost hold their own and should be left alone. But, they too, fall a little short of fair. It’s hard to believe liberal-minded intellectuals can see this and still claim foul. The numbers above indicate, in the name of fairness, a need for a 0.4% tax cut for the richest and a 0.2% tax increase for the next two richest groups, just to achieve socialist nirvana.
I have news to all you people scared to death that we are changing into a socialist society. We are, and have been a socialist society for quite some time, and far too long!!
Here in the real world, the lower 50% of income earners are getting a near free ride that a 10% sales or V.A.T. tax would cure. And since they make nearly 1/3 of the country’s income, our debt and deficit issues, as well as tax fairness, would finally be addressed.
Real Change
Change, for change sake, is pointless if it does not help make us a more perfect union. Unfortunately, Little positive change has actually occurred and nothing has even been proposed lately that would be for the betterment of our society. The idea of changing the degree of government involvement in our lives seems to have plenty of broad-based, bipartisan support. People want less government intrusion, less government manipulation, and less government cost at a time when all three seem to be growing exponentially. I believe government should do less, for less, and finally get their financial books in order. A new mission statement is needed for our government. One that is simple, easy to define, and plain-spoken for all to understand. This, primarily is to include; the defense of our homeland, security of our streets and neighborhoods, and provisions for those below poverty level status. Little more is expected. And frankly, just doing those few things correctly, would be a shock to those of us wise to government ineptitude.
I’ve been working on an entirely new tax structure for some time, and I think it’s about time it be released to the public. It has been carefully thought out and my calculator has had the numbers rubbed off its buttons to estimate the effective result. It begins with the elimination of corporate taxes as we know them, an implementation of a consumption tax, followed by completely rethought health and income assistance programs, paid for through a payroll tax on your gross income, and finally, a substantially reduced income tax scheme.
Fact is, we need a more pro growth tax structure based more on consumption. One that takes the load off income taxes and no longer taxes modest savings and investment. Thats right, a sales tax or value added tax of 10%. It forces all to pay something, but is countered by an increase in welfare benefits for those below the poverty level. Its been a pretty hot topic lately and I’ve studied the issue in the past to find a trillion dollars of additional revenue can be pumped into the government treasury each year. Now, government does not need nearly this much additional revenue, after responsible cuts have been implemented, so an elimination of taxes on your first 25K in capitol gains, an income tax cut, and a complete elimination of business taxes will be part of the deal. It’s a reworking of our system of taxation that treats income more fairly, is pro business, and pro growth.
Corporate tax / V.A.T. tax
Our country currently has the second largest tax rate on corporations in the world. Lowering their tax rate will prevent a good deal of businesses from outsourcing your job or moving their entire operation overseas. If corporations stay, future unemployment, due to a poor business climate, will be practically eliminated. There is no point in just implementing further income tax cuts if it’s done at the cost of more American jobs moving away. See, businesses don’t really pay taxes. All business taxes, since the first day they were imposed, were just price hikes on the goods and services their consumers paid. They are nothing more than federal taxes hidden in the spread sheets of thousands of businesses coast to coast. The business tax has been, and will continue to be, treated as nothing more than a business expense figured into every American product and service sold. It’s this additional cost that has contributed to our products being priced out of the world market. Business taxes shouldn’t just be cut, they should be abolished and replaced with a more up front and honest tax. Killing the corporate tax and replacing it with an upfront consumption tax would do more for this countries economic growth, and its ability to compete, than anything else ever done by government. It would lower prices of American products exported, allowing them a better chance of selling overseas. And, It would increase costs on foreign products sold in America, allowing further opportunities of competition to American products sold here at home.
I propose they be replaced with a “10%” value added tax (or sales tax) on all new products and services. (food and medicine will be exempt) Think how quick, easy and effective a stimulus bill would be during an economic downturn. There’s no argument, there’s only one way the government can respond, reduce interest rates and the VAT tax rate. The only debate would be over “how low”, and “how long.” It could be easily adjusted, much the same way the federal reserve adjusts interest rates. It could be formulated, and tied, to changes in the interest rate and the GDP growth rate. The speed at which adjustments can be made would make the government response to the economy much easier, efficient, and effective.
I truly believe the savings to the business community will not only strengthen it and allow for job creation, it will, through the decreased cost of operations in this increasingly competitive world marketplace, allow for American made products to have an edge over their imported rivals. American businesses will be expected to reduce their cost of products and services to the consumer, equal to the difference in taxes they pay. Even after the 10% sales tax, your cost should be lowered 15-20%, giving you a lower cost of living. This leaves you more money to spend, save, or invest. Any which way you choose to use it, it’s a plus for your economic situation, our economic growth potential, and our governments coffers. This will lower costs of living and increase employment, leaving room for wage growth so you can more easily afford to meet your families needs and/or save for its future. The greater benefit is, the government will receive revenue from business operations regardless of whether or not they are profitable. And, yes, some sort of Government assistance card will have to be issued to welfare participants and non-profit organizations to exempt them from having to pay.
The only thing I would ask of the business community, is to collect these taxes. Well that’s not exactly true, there would be other changes they will need to brace for. All tax incentives, loopholes, and corporate welfare is gone and gone forever. This should be all that is required to reduce the level of special interest lobbyists from D.C. The health insurance tax credit to businesses will be eliminated along with the entire employer-provided health insurance idea. The employee will now be empowered to shop around and make the choice for themselves as to what type of coverage actually fits their individual needs. (Like buying auto insurance)
They will also have to pay a tax, equivalent to 15% of the wages they pay out. (5% to a health care assistance fund. 5% to an income security fund and 5% into a employee retirement fund. All limited to the first $500,000 of income per employee)
(BUSINESS TAX =15% OF WAGES (payroll taxes) + 10% VALUE ADDED or SALES TAX)
American health care assistance fund (5% payroll tax)
That’s right, health care assistance. A program that allows your cost of health care to be reduced through tax credits. Employers, and employees, would pay a “5% of payroll” health tax into the American health care assistance fund. This new government health fund would be used to help citizens purchase private insurance policies. The American health care assistance fund will be responsible for Medicaid and Medicare participants as well as the rest of us, all based on need, with the goal of keeping your cost of health insurance at, or below 10%, of income.
Individuals earning below 20k, families below 40k (this includes most seniors), are in my 0% tax bracket and are eligible for basic health care free and clear. Those earning 20K-40K, families earning 40K-80K are eligible for a 50-99% tax credit toward the cost of a, government approved, but private, health insurance policy of their choice. (Limited to total policy cost of $5000 for the individual plan and $15,000 for a family plan) Those earning 40K-60K, families earning 80K-120K, are eligible for a 25-50% tax credit. And those earning 60K-80K, families earning 120K-160K, are eligible for a 0-25% tax credit.
The fact that Americans have to pay 5% of income in, with a guaranteed tax credit, to get some of that money back, should be enough to press them into get insured. It may not be of any benefit to individuals making 60k or more, or to families making 120k or more, but most of them can afford both the insurance and the tax. Plus, with my income tax cut below, they’ll still be better off than where they are today. We all will.
American income assistance fund & Employee investment mandate (10% payroll tax)
Businesses, matched by their employee, will still need to pay 10% of payroll to Social Security. But, it too would be radically changed to provide assistance to all people of poverty status, regardless of age. Only 5% of the 10 would actually go to the American income assistance fund. (replacing welfare and unemployment) This fund is designed to keep all citizens above the poverty level. (time limited for those who are “able to work”)
The remaining 5%, would go into the employees personal retirement fund, to cover a “minimum investment mandate” instead of the failed Social Security set up were currently stuck with. This fund would; have no government involvement (other than oversight of compliance), would be owned by you, would be untaxed, but would only be available for withdrawal during your retirement years. (or disability) Your minimum investment mandate can be done with whatever investment company you choose, but the majority of your investment(s) must be broad, balanced and fall within a particular risk level set by law. The 15% capitol gains would be eliminated on your first 25k of each year, so more of your nest egg is actually yours.
Your payout occurs at any time you choose, past the age of 70. You get 12 monthly checks equal to 10% of your funds yearly balance, with a maximum annual payout of $100,000.(assuming you had accumulated 1 mill.) Keep in mind that each years payout is 10% less than the last. A 1 million dollar fund would still have $348,680 remaining after 10 years, but the 10% payout would only be $34,868 in the 11th year. And $1480.20 would go to the capitol gains tax. If you should happen to die before this fund is depleted, and you most likely will, with 10% increments, after capitol gains taxes are deducted, your family will inherit the balance. Now, one million dollars, paid out in 10% increments, will drop to a below poverty level income (20K) after 15 years. (assuming no growth during that period) If you should happen to out-live your fund, and its payout drops below the poverty level, the American income assistance fund will supplement your payout up to the poverty level for as long as you should live. Also, you can free yourself from the 5% investment mandate with the purchase of an annuity that pays out a minimum of poverty level income projections, from retirement till your life expectancy age.
Note- People earning less than 150% of poverty income, are exempt from the American income assistance fund/Employee investment mandate (10% payroll tax), but only those below the poverty level, and enrolled in Medicaid, are exempt from the American health care assistance fund (5% payroll tax).
Personal income tax
Now, as we all know, revenues grow faster than the economy. And, there is no better way of stimulating the economy than not taking money out of it. Personally, if we must have income taxes, cutting them substantially and implementing the VAT appears to be the best start to correcting our deficit and debt problem. I’m a pretty large fan of the three-tier income tax brackets being at 10, 20 & 30%, but the reductions comes from it being a stepped system where you pay your way through each bracket. After payroll taxes are deducted, your first 20k (or poverty line income) is taxed @ 0%… Your next 20K (or twice poverty level) is taxed @ 10%… and the following 20K (or 3x poverty) is taxed @ 20%…. All earnings above 60K (4x poverty level) is taxed @ 30%. With this stepped system, someone with 40K (after payroll taxes) pays only 5% income tax to the I.R.S., someone holding 60K (after payroll taxes) pays 10%. You would need $120,000 remaining after payroll taxes before your actually taxed 20% of income, and a 3o% tax of total income does not come in until you exceed 2,000,000. More important than that, all Americans would finally be treated equally by our income tax structure. Finally, equal rights under the tax code!!! This tax system is set as an individual earner only. No more filing jointly, because there is no benefit to do so. Each income earner is responsible for his or her own tax bill. No dependants or exemptions are allowed in the above “stepped” tax brackets. If your determined to claim dependants or itemize your tax exemptions, you will have to pay an additional 5% on top of each bracket. Hey, I’ve made the first 20k non-taxable, what more do you want. Paying the added 5% would not pay off for most Americans. It is meant to discourage complicated tax forms, decrease filing costs and eliminate the need for I.R.S. audits.
Now, keep in mind, this stepped tax is only on the money remaining after paying the 5% health assistance and the 10% income assistance payroll taxes. (It’s really just a net 10% payroll tax because 1/2 of the 10% income assistance withholding is deposited in your personal retirement account and really shouldn’t be considered a tax.)
This tax structure is permanent and is never to be messed with unless removed entirely and replaced with an increase in sales tax. (fair tax)
The income tax is only adjusted when poverty line income has changed by 10% or more. And that will only change the size of the steps, the rates are firmly set.
Investment Income (interest, capitol gains and dividends)
Taxes on savings interest, capitol gains and dividends from investments would be 15% on all gains above 25K.
The inheritance (or death tax)
The inheritance (or death tax) will be eliminated completely
Beyond my plan
Many will tell you that, where a VAT tax is implemented, it always starts off low (around 10%) and gets jacked up repeatedly to 15…20…25%. This, I must admit, is true. I, Eventually, would like to see the same, with one difference. I want to see the VAT succeed and slowly replace the income tax all together. (fair tax) In fact, I want it to be the sole source of federal government revenue. The days of government needing to know how much you make will be over. Government intrusion into business balance sheets will be over. The cost of tax returns and business compliance fees will be gone. Money better spent elsewhere…anywhere. No sin taxes on products the government wants to discourage. (none of their damn business) No separate Social Security or FICA withholding for employees, ect, etc… so on so forth. Most important is, it removes government from our lives. It’s simple and efficient. No corporate welfare or tax lobby loop holes …. a less corrupt government, since most is tax lobby related. Tax deductions and tax credits will be replaced by prebates equal to the sales tax on “up to poverty level” income. No receipts to save or exemptions to claim, we all get the same prebate at the start of each month. In short, a more perfect union.
Refounding America
The problems facing this country today can be solved by returning to the principles which guided our Founding Fathers when they drafted the Declaration of Independence and our Constitution. This country is in need of a change that restores the limitations on the power of our federal government back within the limits that were set when the constitution was first enacted.
Article 1, Section 8 of the constitution states the authority of Congress to:
-Tax, borrow, and spend; Regulate commerce, establish bankruptcy laws. Coin and regulate money, punish counterfeiting.
-Establish rules and testing for citizenship.
-Establish a postal system.
-Pass copyright and patent laws.
-Establish federal courts.
-Declare war; finance and regulate the armed forces; Call up state militias.
-Administer the seat of government; Administer federal lands.
-Pass laws required for the implementation of the above
No less, and certainly no more! Seems like plenty of work for such an incompetent group of people.
The 10th Amendment to the Constitution states, “The powers not delegated to the United States…, are reserved to the States…, or to the people”.
All of government’s power comes from The People. Today, the only power the people have left is their right to protect themselves, their family and their property. Even this power requires us to ask the government to assist through The courts, Military, Police, Fire Department, etc.
The U. S. Supreme Court, in 1905 ruled, “The Constitution is a written instrument and as such its meaning does not alter, that which it meant when it was adopted, it means now!”
The over-regulation and over-taxation restraining our businesses and harming our economy will continue if we don’t, at some point, elect new thinkers who can turn back the clock and undue the governments damaging overreach.
“Unless the people, through unified action, arise and take charge of their government, they will find that their government has taken charge of them. Independence and liberty will be gone, and the general public will find itself in a condition of servitude to an aggregation of organized and selfish interest.” – Calvin Coolidge
The task at hand is not an easy or small undertaking. It is necessary to reduce the size of the Federal Government by abolishing or returning to the states all federal departments, agencies and programs found lacking constitutionally granted authority (See Article 1, Section
It will also be necessary to abolish the 16th amendment. It is, without a doubt, the worst of the amendments and counterproductive in today’s competitive capitalist system. Replacing the income tax, capital gains tax, business and the inheritance tax with a sales or consumption tax will correct this inefficiency.
Article 1, Section 9, of the US Constitution states…. “No capitation, or other direct tax shall be laid,….”
The income tax was imposed during reconstruction after the Civil War. However, the US Supreme Court overturned it with these words, “The income tax is indeed a direct tax and therefore unconstitutional.” -Pollock v. Farmers Loan & Trust Co., (1895)
The income tax was unconstitutional then and, goes against the better thinking of our founding fathers. Well, they were right….. However, in 1913 the socialist Congress forced the income tax on the people with the 16th Amendment. The income tax is not designed just to raise taxes, that could have been done with a national sales tax. Instead, its goal was to find reason to collect your personal information and punish the successful while rewarding the failures of our society.
A national sales tax is indeed Constitutional. Other positive effects include;
-Our privacy would be protected. Government does not need to know how much you make.
- Everyone who spends money participates including the super-wealthy with no income, foreign visitors, illegal aliens, drug dealers, and others now in the criminal underground economy. It is a pay as you go system.
- No April 15th. The IRS and all bureaucratic collection cost would be sharply reduced and/or eliminated.
- Lower tax compliance costs will allow our businesses to better compete internationally. Prices of good and services would come down more than enough to cover the sales tax.
- Unbelievable economic strength creating new jobs and government revenue.
- The money now moved into off-shore tax shelters would return to this country further stimulating the economy.
- Manufacturing would make a comeback without the over-taxation and over-regulation that drove them to low wage countries.
- Special interest lobbyists that currently press congress for tax breaks would be jobless.
It’s also going to require the real political push required to reform Social Security and slowly replacing it with Individual Retirement Accounts (IRA’s) which would allow workers to retire with the same income they made while working. A threat from a few will not do. A threat from many will affect plenty.
“The force of public opinion cannot be resisted when permitted freely to be expressed. The agitation it produces must be submitted to.” -Thomas Jefferson
“Resistance To Tyranny Is Obedience To GOD” -Thomas Jefferson
Our current system will eventually go bankrupt. The only unanswered question is how much of your tax money will be wasted getting us out of this failed system. The longer you wait to force your elected officials to get serious, the more it will cost to make the correction.
-The Conservative
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