It occurs to me that people who make large amounts of annual income in the United States do so because of the general infrastructure that the US provides. All the way from easy transport, financial support, security protections, and a stable business environment, along with a lot of other good things. People who can take advantage of all these positives, demonstrated by increasingly large incomes, don’t think they should pay for it. Let the working stiffs, who are barely surviving from paycheck to paycheck, who aren’t benefiting from the glorious infrastructure that America provides, pay the bulk of the cost. This doesn’t seem fair or equitable.
We have set up Trust Funds to help cover growth and costs. There is Social Security, Highway, Post Office, Military Retirement, etc. These funds collect money from use taxes and the like, with the expectation that it will be spent sometime in the future. It is setting aside money collected today to pay for a rainy day.
But Congress, in its infinite wisdom, has made the revenues collected and distributions part of the federal budget. So the money collected on the sunny days is counted as Federal Income and the money spent on rainy days is subject to political debates, every time. The Highway Trust Fund is a good example. We have gasoline taxes that go into the fund and should go to pay for highway repairs ten or twenty years down the road. If the Fund is On Budget, then some or all the monies go into the General Fund controlled by Congress and when it comes time to actually repair the bridges and roads Congress won’t provide the funds because it is not politically expedient to spend the money and increase the deficit.
Take the trust funds off-budget and the money in-out flows don’t count towards the federal budget. If the Fund actually needs an infusion of cash, then Congress can debate if it is deserved instead of debating whether to payout monies that should already be in the fund or not.
Infrastructure support. If we build infrastructure we need to expect and plan to maintain that infrastructure for the ongoing future. Highways, airports, pensions, these are all part of the infrastructure we need to maintain the society we are building. If we don’t want the building to collapse, with us in it, we need to keep it repaired and growing. Congress is not doing that.
Even cities and states should be setting up trust funds to maintain the public infrastructure of roads, sewers, water mains and public buildings. These shouldn’t be subject to debate every time a bridge collapses or water treatment plant fails.
Saving for a rainy day is an axiom that is based on common sense. It isn’t always easy to see a large nest egg being built up and not used when you have so many ‘better’ things to spend it on, but it needs to be done.
Take the Trust Funds off budget.
I really do wish that they (the powers that be) would take social security income and outgo off the budget books. In my earlier post I was talking about a $3.8 trillion budget, but 880 million of that is Social Security which is already covered by the Trust Fund and should be ignored for our calculations.
So let us use a budget figure of $2.9 Trillion
$13.1 Trillion in total personal income.
$6.1 Trillion in deductions.
$7 Trillion available income to cover the budget.
Then a 41% tax on all income over $53,000 will cover the budget.
Alternatively, looking at the 2013 budget broken out, if we take the income tax income – $1.36 Trillion ($1,359 Billion) and add the deficit – $0.9 Trillion – Then we need to cover $2.26 Trillion and the remainder to $2.9 Trillion is covered by the estate, corp, etc. taxes. Oops, they are including $959 Billion of SSA trust income which is $76 Billion greater than the SSA outgo and we want to keep the SSA out of the calculation so lets add the $.076 Trillion to our total and we need to cover $2.34 Trillion to meet the budget.
So a 33% tax on all personal income over $53,000 should be able to meet the 2013 budget.
I am using high level swags here. The $6.1 Trillion in deductions is really a worst case where everyone in the low median half is counted with a $53K income. A more realistic total deduction is probably less than $5 Trillion since the total income of the lower median group is less than $2 Trillion and the total deduction would be the $3.1 Trillion from the higher median group and the actual total income of the lower median group.
My google-fu is weak. I am trying to find out what percentage of the total annual personal income is for the folks in the lower median group, and I can’t find an exact number. It appears to be in the 20-25% range, or lower. I saw one graph that might have been 15%. So if the Total income is $13.1 Trillion the Lower Median total income is somewhere in the $2 Trillion-$3 Trillion range
I have some numbers (rounded) to put in the pot.
$13.1 Trillion is the total personal income in the US.
116 Million Households in the US.
$53,000 Median household income. (half of the households make $53K or more, half make less.)
$3.8 Trillion 2013 Budget
Pay for the Budget –
Give all households a $53K deduction. – $6.1 Trillion
Total Income after the deduction – $7 Trillion
Tax Rate on post deduction income to cover the budget – 54%
So, put a 54% tax on all income over $53,000 and there is no more deficit. There are no other deductions. Simplified tax code.
And we can use the corporate taxes to pay down the debt.
(I hate it when I make stupid math errors in public)
I am curious as to what the powers that be are thinking in regard to net neutrality.
To use an analogy to the transportation system, the current internet is like a railroad network. Freight trains are loaded with containers destined for delivery to end users. When the train pulls into a railyard, the containers are picked up from one train and moved onto another train heading towards the ultimate destination. Eventually the containers get to the proper destination but they don’t necessarily follow the quickest, most direct path. The tracks are owned by various companies and those companies probably own the railyards their tracks lead to. (But they can’t own the content that is carried by the railroad, which is where the analogy breaks down.)
The railyard protocols determine which containers get handled and in which order they are handled. The new net neutrality rules seem to be allowing the railyards to revise their protocols to let some container shippers to pay for priority handling. They may even establish separate railroads just for the priority traffic and let the existing infrastructure muddle along, just like AT&T did with the telecommunications network in the post-war period.
This is a hard one to address. On one hand, the networks cost money to build, the routers that can handle the traffic cost money to install, the features cost money as well. If a service provider requires lots of bandwidth capacity and router ports, the user should be paying an appropriate cost. The service provider also needs to increase the bandwidth capacity interior to the network to handle the increased usage. So they should be charging the source provider enough to cover the bandwidth and equipment costs generated.
Most of the new internet services seem to be streaming video related. and with streaming video speed and order of the incoming info containers is important. If you could let your computer collect the entire stream of video before displaying it then it wouldn’t be an issue. But a lot of those video providers don’t want to let you have the entire video at one time. Why, you may pirate the video; shame on you. So they need to have your videos delivered piecemeal but in an evenly streamed manner. To get this requires using the prioritization flags in the Internet Protocol. And who should get those flags? The ones that pay for them.
What should not be allowed to happen is getting someone’s container dropped completely, based on either originating address or destination address. The ISPs have already been guilty of this (e.g. the early VOIP services) and will probably bend any new FCC rules to continue being guilty of this in the future.
The internet is a network of networks. The backbone networks connect to edge networks or other backbone networks to facilitate the movement of those information containers. An intranet may be considered a single network managed and operated by a single entity. As an example, the Verizon backbone network connects to the European backbone, to the Canadian backbone, to the AT&T backbone, to the Comcast edge network, to the Time Warner edge network, to the Verizon edge network, etc. (I am using edge network to describe the networks that connect to the users, both senders and receivers. Unless you are going right around the corner you will probably traverse a backbone network to connect with someone on the web.)
In my example I used the Verizon backbone network and noted that it is connected to the Verizon edge network. And in reality the two networks may not be distinguishable as far as routers or links are concerned. For Verizon it may all be one intranet. The edge network delivers content to the end users and receives content from content sources. Will Verizon provide better packet handling for its customers than it will for content coming from the internet?
Internet Protocols are developed and managed by the IETF. It seems to me that government internet regulators should be ensuring that ISPs are following the internet protocols fairly, especially on the backbone portions of the internet. And I think the backbone portion should be regulated as common carriers. The edge networks I reserve judgement on.
I wonder that would be the effect on quick-time stock sales if there was a transaction tax on each stock sale equal to $1/number of seconds the security has been held. If you hold a stock for 1 second it is a $1 tax. If you hold a stock for 1/100000 of a second it is a $100,000 tax. If you hold a stock for 10 seconds it is a dime tax.
This would be a per stock tax with the proceeds going to the SEC for enforcement.
Some different ideas are kicking around and I need to get them down to develop in more detail.
Have the individual states issue licenses for firearms. Basically, everyone/anyone can get a license. The states can set some minimal requirements such as training on safe firearm usage from a recognized trainer, such as military, police, scouting, gun club, etc. The licenses can be done in classes, such as shotgun, rifle, handgun, automatic, etc. much as DMV will give motorcycle, standard, chauffeur, and the different weight class truck driving licenses. Licenses may be revoked for felony convictions, judicial orders and similar situations.
In order to buy a firearm, you just have to show a license that supports that class of firearm. The seller can do a quick check to see that the license hasn’t been revoked and away you go. And you have to show the license to buy the ammunition for that class of firearm.
This all goes back to the well-regulated militia phrase of the Second Amendment. Let the states decree that all firearm license holders are members of the militia and let them regulate as they see fit.
20% across the board tax on all income directed to the Social Security and Medicare. If you have a job, the 20% is collected as a payroll tax. If you are collecting non-wage income, like dividends, rents, royalties, etc, the 20% can be deducted by the dispenser. No matter what your income level, you pay the 20%. What you get for that is a retirement plan and healthcare. Social Security and Medicare go off-budget at the Federal level. Congress can maintain oversight of the Trust Funds running these systems, but that is about it.
States, private companies and insurance companies can get out of the basic healthcare business. Every citizen gets access to basic healthcare. Employers can match the payroll tax.
After the initial 20% tax on all income, there will be a Personal Income deduction per household equal to the median household, currently ~$50K. I am also tempted to adjust this to the Median Household Income for the Metropolitan Statistical Area you reside in. Need to look at that in more depth. Single member households may use the 4-member household Poverty Level for their MSA .
The main idea here is to give everyone a large deductible. No itemizing. If you want to give to charities, buy houses, pay mortgages, go to school, go for it. There is no tax advantage or incentive either way.
As far as our debt and deficit is concerned, Congress shall be mandated to collect revenues to cover their budget. In addition, Congress will include paying back 5% of the deficit each year as part of the budget. We can give Congress some wiggle-room such as the 5% doesn’t need to be included under certain economic conditions, such as the ones we are currently under. Also, in the event of a natural disaster that wasn’t originally budgeted, the 5% deficit payback can be diverted to cover those costs. If Congress and the President declare a national emergency, then all restrictions are off.
In order for Congress to meet their revenue mandate, they must set a tax rate on all incomes above the deductible that will collect the desired revenue for that year.
1 Representative per 100,000 citizens.
6 Senators per State. Senatorial elections will continue by the classes as they are now, but the three top vote-getters in each election will each become a Senator.
No one elected to Congress may serve consecutive terms in the same office.
Any compensation paid to individuals in excess of the salary of the President shall be counted as Corporate profit
Make the corporate tax rate something like 20% which must paid, at a minimum, on the profits reported to shareholders. – No deductions, no incentives, no corporate welfare
$1 tax on each transaction that hold a share for less than 60 seconds. Taxes raised this way go to an SEC trust fund to prosecute the people gaming the system.
Bank, or any Corporate, Executives go to jail when their bank, or company, breaks the law or agrees to settlement without admitting guilt.
The Total Personal Income in 2011 was almost $13 Trillion. The federal budget for 2011 was $3.8 Trillion, about 30% of the Total Personal Income. I see a lot of wiggle room to put forward a $0 deficit budget and to even start paying back principal on the debt.
How to save Social Security, Medicare, get rid of the deficit, reduce the debt, and save the state’s budgets in one fell swoop.
First extend Medicare to all citizens and incorporate Medicaid into Medicare, taking it off the backs of the states. Basically, go to single payer health care.
Then take Social Security and Medicare off budget. Congress doesn’t even have a chance at the monies in these trust funds.
Enable a 20% payroll tax that is directed to SS and Medicare. Employer matching as well. For people receiving income without a paycheck, or over and above a paycheck, they would pay a flat 20% tax to the combined trust funds.
The US income is ~$14T. Medical expenses run ~$2T. So that 20% payroll/income tax should cover the all medical expenses and the remainder goes into Social Security. The citizen is receiving a retirement fund safety net and basic health care for life.
This takes States and Employers off the hook for providing health care services to their citizens and employees, removing a big drag on their budgets.
For the remainder, Congress passes a budget for the year and must pay for that budget with revenue. It must authorize collecting enough revenue to pay for that budget, keeping SS and Medicare off the table. And unless there is a declared economic emergency, the budget will include paying 5% of the principal of the outstanding national debt.
The base of the taxpayers are already paying 20% of their income to the trust funds, so I suggest that for citizens making more than the median household income or $75K or some amount that won’t crush the lower-income household, that they pay enough income taxes to cover the budget. Congress can determine if it a flat tax or a sliding scale tax. Either way deficit spending ends and the debt starts to come down.
Or we can leave the national debt part out of the previous equation and say that all corporate taxes collected go to pay down the debt, but then it will never go away.
(I just did a quick check and if we pay off the debt at 5% per year, in 60 years it will be @ 5% of the of the current debt. )
It is time for a rational economic debate.