Saturday, November 10, 2012

A Financial Proposal



We have a big financial crisis facing America right now.  The cliff, as the media calls it, is getting closer. I’ve got a solution.  It may not be good, but at least I want to get people talking and moving. So here it is.

This is my ten-year economic policy. It is endorsed by no one and approved by neither party. But it could work.  So I offer it as a means to compromise the stalemate bogging down progress in Washington.

I would love your feedback and your ideas.  The more, bright, intelligent ideas we can gather, the better the solution will be. I hope to forward these on to members of Congress and to the White House.

Please remember this: this problem is not a Republican problem. It is not a democratic problem. It is an American problem. So let’s roll up our sleeves and go to work.

Revenue income:

Go to a three-tier, flat-tax program.

Besides raising more revenue, this would eliminate the tax code from being the political gift shop it has become. No more. We’re all in this together and we’ll all pull our load.

Here’s how it would work.

Citizens earning below $10,000 a year would be exempt. (They would still have to file for proof of exemption, but would owe nothing.) $10k to 35K would pay 10%,  $35+K to 85K would pay 17% and everyone above $85+K would pay 27%.  There would be NO deductions EXCEPT for an easy formula for home mortgage interest. It would work like this. Any home whose value is $1,000,000 or less is eligible. Annual mortgage interest minus the top tax rate of your gross income (say if you make $101,000 a year that would be 27%) would be the amount you would get to write-off for income tax purposes. BUT YOU STILL STAY IN THE TAX BRACKET OF YOUR GROSS INCOME.

So here is an IRS form for the new plan:

Annual income (total of salary, investments and savings interest.)  $86,500.00
Tax:  (Based on 27%)                                                                                         23,355.00         

Home mortgage  interest on a $250,000 home.    $ 8,400                     
Less Tax % of gross bracket                                            -27%

Deduction=                                                                                                             6,132.00
Total Tax owed:                                                                                            $ 17,223.00

Currently with all the deductions available a family of four
Would pay about                                                                                              $16,500.00

That is a $723 increase.

Plus, your entire federal income tax can be done on a single sheet of paper in about three minutes.

Corporations and single proprietary companies would get a similar gross-down flat tax system as well. Companies sending jobs over seas will be taxed a surcharge of 15% on their gross revenues until a similar number of employees are hired domestically. Hey, you are using our roads, airports, our infrastructure…so pay up. Made in American…Stayed in America. Can’t compete with that…get into another business.


Debt Reduction Surcharge

Every American making over $200,000 (net…that’s after taxes) will contribute $1500 to a Federal Debt reduction fund per year that can only be spent lowering the national debt. As soon as the debt gets to within 5% of payoff, this surcharge will automatically be repealed and retired. Congress may not renew it nor can they spend its money for anything other than debt pay off. (If Congress breaks the terms of this ten-year program, the DRS will automatically be revoked. This keeps greedy, sneaky political people from double dipping.)


EXPENSES:

Spending Cuts. (This is going to hurt so hang on.)

For ten years, the Federal budget has to be trimmed by 4% a year.

Straight-up, no cheating and no fudging on the budgets. (A war is a war and it cost tax dollars…want to go to war, find a way to pay for it.) Plus, there can be NO deficit spending. None. Might want to think about bankrolling an emergency fund for hurricanes, tornadoes and earthquakes. The difference between revenue and expenses would go to a debt buy down. 

In fact, the President’s budget, with the help of Congress, should be 20% less than the revenue income each year. The difference should be split accordingly. 10% into rainy day fund. 90% into debt reduction.

Think about it. In the year 2023, our federal budget would be 40% less than it is today. (That is a rough rounding job…so it is not quite that much, but close. Very close.)

This austerity program is going to cut into farmer’s subsidies, oil company depreciation allowances, Pentagon spending, affordable healthcare act, PBS (sorry Big Bird), highway funds, education programs, Medicare Prescription plans, and many more things we like, but cannot afford any longer. The arts are going suffer. So, too are entire industries who have had their hands in the government’s cookie jar for decades. (Example: your milk is going to cost more because we are not going to subsidize dairy farmers for butterfat. And breakfast programs are going to have to find other funding; after school programs too. We are going to have to make tough choices…people over planes…health over helicopters…it is up to America to send to congress the very people who will watch out for them and not special interest groups…think about it next time you go to the polls. They guy you vote for is now going to really be in your pocketbook.)

We are going to cut gradually. But by trimming this way, we will avoid a possible melt down of the system.

And it has to come from every department of the government. We have to streamline the government, too. First thing: Get rid of Homeland security. A needless, overgrown bureaucratic monster. Trim Defense spending. Consolidate departments that have cross-over functions. Limit waste. Tighten down the hatches and the leaks. Make every department accountable for every nickel.

We have to do more for less. Sorry, we ran up the credit card bill, time to wind it down. Grab that belt and tighten it.

Get ready America…it is coming.

No new initiatives, unless you can pay for them with current revenues.

This is a tough one. It sounds a bit Tea Party-ish, but if we had this in place under President W, the two wars would have had to host their own national telethon to raise money to go off half-way around the globe to shoot at people.

If Congress wants to go to the Moon again, find a way to pay for it in the budget we have now.


Banking law changes

Much of the financial melt down which led to the most recent increase of our debt, came from overzealous banks. Banks going to edge of reasonable actions to make more and more money. No longer. Banks and brokerage companies may no longer participate in buying and selling of investments for themselves. Nor can they trade in high-risk, paper. Period. They must remain only a conduit of financial services.

Too many financial institutions themselves are controlling the marketplace. When banks control the value of money, they control too much space in the market. We are going to limit their role. It is for their good and ours. (do you want to bail them out yet again?)

Federal Assistance to industry and business

If you need a bailout by the U.S. government, then you get a loan. Not a handout. Borrow from all of us, we expect to be paid back…with interest.

Drilling on public lands

My buddies on the left will not like this, but we can raise a lot of revenues, if we turn over certain Federal Lands for energy exploration.  I am not talking about drilling in Yellowstone or Yosemite…but we have miles and miles of Federal forests and grasslands and wild lands that might well hold untold reserves of much needed energy.  (We should study the state of Oklahoma’s citizen’s ownership of energy. Everyone in the state owns a piece of the state reserves and profits from oil and gas exploration there in much, much lower prices at the pumps. Let’s steal from the ideas that are working. We can do this. If Federal lands contain energy, let’s rill it, mine it do whatever it takes, but let’s collect the revenues off of it to pay down out debt.)

Term Limits

Believe it or not, this will actually end up saving us money. Members of the House will be allowed to hold office for a limit of three two-year terms; Senate, two-five year terms and the President one six-year term. No politician elected to a Federal office or appointed to a Federal Cabinet-level position, may lobby Congress for five years from the last day of elected or appointed service. (Get out of Washington and go find a job.)

Just to make sure Congress and the White House are playing fair…

STOP gap proposal:

If after five-years, if this plan is not meeting goal, a national sales tax (please do not call it a value added tax, that insults my intelligence) on all goods and services (ouch!) would be levied to raise funds solely to pay off the debt. Again, when the debt is retired this tax will automatically be repealed and Congress cannot extend it nor can they use its monies for any other purpose.

These are just a few ideas to kick around to get the brain waves flowing.

It is not pretty, but neither is 16-trillion dollars our children and grandchildren are faced with paying if we don’t do something. We are not going to pay it all back at once.  It took two Presidents and close to twelve years for us to get into this shape, it will take a few years to get out of it. But we will.




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