via Avedon –An Irishman explains the financial problems of the modern world

I have seen some talk about implementing a Value Added Tax in the US. The VAT taxes at each stage of the production process.  The manufacturer pays a VAT, the wholesaler pays a VAT, the retailer pays  a VAT and the consumer pays a VAT. The final price  of a product includes the VAT.  I have seen the VAT in other countries and sometimes I even remember to send in the forms to get my tourist refund. The major issue with a national VAT in the US is that it will require a constitutional amendment to implement and I don’t see that happening.

On general principle I don’t want the VAT to cover Food, Health, Shelter or Education (once the item  is identified as such- we don’t know the lumber is part of a shelter until it actually goes into a shelter. Food is interesting – is it going to a food prep service (reseller) or to a final consumer?  Everything else, services and goods, can be covered by the VAT, although I suppose an argument can be made that Newspapers should also be exempt, but they will be extinct soon enough.

But if that unlikely event does happen, how does that work with the state taxes? If the national VAT is 20%, would goods in NH sell with a 20% premium and goods in NJ sell at + 27% and Chicago at +31%? I favor  the idea of making a flat national VAT  and splitting 50% of the take with the local jurisdictions. The States, Cities, Counties and RTAs can figure out how to split it up. And what about all those excise taxes and surtaxes? Those hotel users have to pay more than their share.

One of the side benefits of a VAT is the option to get rid of the penny. If posted prices include VAT, the retailers can set their prices to nice round numbers and we won’t need pennies anymore. Hooray!

I have solved the Deficit! (Courtesy of the New York Times. ) And I even started paying down the debt! Piece of cake.

Of course, they only offered options that have already been discussed and weren’t throwing out new options.

I would like to simplify the income system to provide a single deduction for everyone, like the top of the 2nd quintile of income – currently about $35K – and then everyone pays 20% of their income greater than that, incrementing by 1%  for each step of the median household income – currently about $50K -up to a total of 55%.

I would also not allow any corporation to deduct any annual compensation in excess of the President’s annual salary as an expense. The corporation will need to treat such excessive compensation as profit and pay corporate taxes on it.

Basically, we the people dug a very big fiscal hole for ourselves over the past two generations and we need to start paying it back. If we want to add new services like universal health care, we the people need to be prepared to pay for it.

I saw somewhere that the US Personal Income is $14T and annual Employee Compensation is about $8T. Using these as ballpark figures, since everyone seems to have their own numbers, with our annual national health care costs running to $2.5T, we can impose a 30% payroll tax that goes exclusively to health care. None of putting these monies into the general funds. They are intended for health care and they stay in health care. (We ought to do the same with the Social Security monies as well.)  Then we implement a single payer system; everyone is covered by health care and the employers, who are contributing 50% of the payroll tax, can get out of the health care insurance business.  And when the medical costs plummet to more reasonable rates in a few years, the payroll tax can be reduced as well. The tax is meant to cover the annual medical costs, not run as a trust fund accumulating cash for future needs.

Each year, the federal government wastes billions of American taxpayers’ dollars on improper payments to individuals, organizations, and contractors.  These are payments made in the wrong amounts, to the wrong person, or for the wrong reason.  In 2009, improper payments totaled $98 billion, with $54 billion stemming from Medicare and Medicaid.  We cannot afford nor should we tolerate this waste of taxpayer dollars and in our health care system.

From the White House

Let’s see, $3,830 Billion budget –  $98 Billion waste. That’s about  2.6% percent waste. Not the best of numbers, but certainly not worth going into a paralytic fury about.  I suppose it is easier for some people to grasp a much smaller number than the almost $4 trillion dollar federal budget. Why not allocate another $1 Billion to Inspector General offices to reduce the waste. If they can reduce the waste by 2% or more they more than pay for them selves.

The 2011 Medicare/Medicaid budget seems to be about $755 Billion. with $54 Billion in waste that is over 7% fraud. HHS is planning to increase their Fraud unit budget $250 million in 2011 to $561 million. Maybe that will reduce the waste a bit.

That leaves $44 Billion in waste for the remaining $3075 Billion  budget, or 1.4% waste.

I was going through the federal budget looking to see who had Inspectors General in their budget items. I was surprised to see that not all departments have an Inspector General. Especially surprised the Department of the Interior doesn’t have one large enough to have its own budget line item. Somewhere in the text write up the Inspector General is mentioned. I guess that explains why billions of dollars from the Indian Trust funds have gone missing. But Interior not only has the BIA but they also oversee our royalty payments from the industries extracting minerals from public lands.

At least GAO gives the citizens a chance to report the fraud they see.