Category Archives: America’s future

Let’s Go METS – the Millionaires Extra Tax Supply

Much to-do has been made lately of the problems with our tax system.  Depending upon whom you ask, the problems are usually framed in one of the following ways:

1) Taxes are too high already and should not be raised;

2) Taxes on the rich are too low and they must pay their “fair share”;

3) There are too many tax loopholes that need to be closed;

4) Our entire tax code needs to be reformed.

Before I chime in with my own suggestions, let me present a few facts:  (The following numbers reflect most recent data available from the I.R.S. as given to their Congressional Overlords.)

1) The top 1% of American taxpayers pay 30% of all federal personal  income taxes;

2) The top 10% of American taxpayers pay 70% of all federal personal  income taxes;

3) The Bottom 50% of American taxpayers pay no federal income tax at all;

4) Capital gains tax rates in the US are among the highest in the industrial and post-industrial worlds, and are twice as high as those in Canada which has had lower unemployment, lower per capita debt, universal health care, and higher economic growth than the US over the past four years;

5) If the economy tanks into a double-dip recession, federal tax revenues will decline;

6) Once the US economy rebounds, tax revenues will increase;

7) Long term, SOMETHING needs to be done to bring federal revenues and expenses into line.

These are no major revelations for sure, just things to keep in mind as the discussion about taxes goes on over the next year.

My Suggestions: 

Stage I – Attitude Adjustment

1) Don’t put a band aid on a carotid artery that is currently bleeding $1,500,000,000,000 in debt this year. The patient is too sick and is getting sicker by the day.  A sense of urgency is not out of place here.

2) Ditch the use of the word “fairness”, which has been serially abused on the political scene and used to justify any number of partisan initiatives. As Jimmy Carter said, in perhaps his only accurate public statement, “Life isn’t fair.” The government should be more concerned about the fairness of equal opportunity and less about imposing equal results on the people.

3) Let’s all agree that, just like skateboarding, making lots of money and/or being rich is not a crime, nor is it necessarily a sign of personal greed or misplaced moral priorities. And wanting to be wealthy doesn’t mean you have a lesser developed sense of “consciousness”.

4) Personal and corporate philanthropy should be encouraged rather than discouraged by the federal tax code. Abolishing the tax deduction for charitable giving is retrograde.

5) While there may, indeed, be no free lunch, neither is there a painless solution to the financial mess that is the federal government.  Mr. Politician: Don’t play the American people for fools by advocating “feel good” measures that have little to do with the depth of our real financial problems. (Note to President Obama: If you tax the mega-rich – you know, the REAL millionaires and billionaires – at 100% of their income this year, confiscate all their corporate jets for sale at government auction, what do we do with the other 97% of our national debt that would remain, or the $9 trillion in new debt that you project will be added to it over the next ten years?).

6) Taking a class warfare approach will further divide the nation and make solving our financial problems more difficult, not less.  We got into this mess together, we need to get out of it together. A shared-burden solution must be found.

7) ANY politician who demogogues this problem is part of the problem.

Stage II – Tax Code Reform

1. Tax consumption rather than income. A VAT (Value Added Tax or national sales tax) would have the additional benefit of encouraging savings and investment, both of which we need to do. Perhaps we would need a much-lower flat-rate tax as a platform for VAT, I leave that to budget bean counters to decide.

2. Keep capital gains taxes as low as possible to encourage corporate investment and expansion. Job Creation in a capitalist society is the primary responsibility of the private sector.

3. Everyone should pay some nominal tax. You can’t have a cohesive society when half the population pays no tax at all and relies on government more and more. I don’t care if the bottom tax is $50 per year.  All citizens should be tax payers and recognize that they have a stake in efficient government.

4. Re: Loopholes – As a general rule, close them.  Phase out the deductions for mortgage interest, phase in taxation of health care coverage.  Don’t do these now in a fragile economy, but prepare Americans for them ultimately.  Begin phasing in these changes over a five year period beginning in 2012. Oh yeah, no more loopholes for corporate jets. And the next time that the Democrats in Congress try to pass such a perk, I expect the Republicans to stand firm and vote NO.

5. Re-establish the link between revenues and expenses.  Every American household gets this, why can’t politicians? I won’t go as far as to support a mandated balanced budget amendment, but how about mandating that every increase in tax revenue rates must be accompanied by a cut in the budget of equal or greater value?

Now… about those millionaires and billionaires that the President is so eager to take out behind the tax woodshed…

Consider the following, Mr. President:

1) People making $200,000 per year or couples making $250,000 per year are neither millionaires nor billionaires.  Perhaps you are figuring that they are Republicans, I don’t know. But I just wanted to make sure you had your numbers straight – I know you wouldn’t want to mislead the American people with your magnificent oratory.

2) Instead of trotting out some billionaire stooge who complains that he isn’t being taxed enough, finesse the entire issue, Mr. President.  You’ll look good, the billionaires will look good, everybody wins, OK?  Here’s what you do:

a) Set up a new government agency. Let’s call it the Millionaire’s Extra Tax Supply (METS). You can even name another czar to run the agency without getting congressional approval if it will make you feel better.

b) Invite (yes, I know that’s not as fulfilling as “coerce” but bear with me here) all American millionaires and billionaires who deem themselves undertaxed to contribute to the METS.  You could set up a tiered giving structure, like so many philanthropies and the Jesuits do, i.e. the “President’s Council” for those who voluntarily donate $10 million annually, the “Andrew Carnegie Council” for annual giving of a billion or more, etc. And at the end of each year, the sum total of all their gifts could be used to pay down the national debt!  Imagine what Chris Matthews could do with something like that. Or, you could use the money to pay doctors who agree to treat Medicare patients once Obamacare begins to kick in.  Perhaps you could skim 10% off the top of their total donations as administrative costs and apply this money to your reelection campaign. (Most of these guys were big givers to you in 2008, so I’m doing you a favor by streamlining this, like that intercontinental high speed train you’ve always wanted.) Ultimately the entire process could be open to American taxpayers of all income levels!  Citizens voluntarily giving until it hurts to help clean up the mess in Washington!

I can see it now.  As the program takes hold, millions of my fellow Americans, chanting as one “Let’s go METS!, let’s go METS!”

Finally, in addition to a grab bag of buttons, posters, presidentially autographed 8″ by 10″s, membership cards, all program donors could receive ten free tickets to see my favorite baseball team try to play the game at CitiField.  There will be plenty of good seats available next year, after all.  Just like in Washington, D.C.

Advertisements

One nation, under God, indivisible? No, I don’t think so.

We are as fundamentally divided as a people now in 2011 as we were in the 1850s, just prior to the Civil War.  Back then the division centered around the issues of racially-based slavery and the proper relationship between the state and federal governments.  Today the divide is defined by an economically based  servitude and the nature of the relationship between the individual and the coercive power of government of all levels.

In the 1850s there were people on both sides of the divide who saw the inherent dangers the our situation but they had no real solution,  proving helpless to prevent the drift toward the Civil War.  And as Shelby Foote, the eminent Civil War historian points out, the Civil War was the result of our failure to do what Americans had previously done so well, i.e. compromise.  There were back then two groups of irreconcilable ideologues, abolitionists who considered slavery a moral evil, not a political issue, and ardent states’-rights proponents who saw the power of Washington in any area of their lives as a threat to their sovereignty.  These people identified themselves more closely as members of a particular group (their state) than as American citizens. For them the form of bondage that most offended was the subservience of the South to the Northern bankers, shippers, and industrialists.  Today there are many Americans who have a greater allegiance to an ethnic, cultural, religious or economic interest than to our national interest.

It might be instructive for Americans, and especially our leaders, to go back and revisit the years from 1850 to the outbreak of hostilities in 1861.  I doubt they will bother.

Yet I believe that in some sense, perhaps only lightly felt, Americans realize the perilous nature of our present situation, at least to the extent that they understand we can’t stay on our present course. (In a July 10 Rasmussen poll, 68% of Americans surveyed said the Unites States was heading in the wrong direction, only 25% in the right direction.)

I believe that ordinary Americans are looking for someone, a leader who could transcend our entrenched interest group-centered attitudes and bring us together.  That was, after all, a part of Obama’s appeal in 2008 when he said “there is not a conservative America and a liberal America, there is the United States of America.  There is not a white America, a black America, a latino America or an Asian America, there is the United States of America.”

Whatever happened to that idea?  More and more it seems these words were just empty campaign rhetoric.The man whom so many hoped would take blue states and red states and turn them into a Purple Nation has become just another political Great Divider. And our divide is wider and seems more insurmountable than ever.

So here we are now, no longer One Nation, Indivisible.  And lacking the leaders with the courage to risk offending their various political bases.  In one sense, we are reaping just what we have been sowing for more than a generation.  We no longer imbue our children with a sense of commonly held ideals, we no longer tell them our National Story. The road to political power is now paved with the efforts to get our fellow citizens to see themselves as belonging to specific interest groups (white, black, latino, male, female, gay, lesbian, transgendered, liberal/progressive, conservative, senior citizens, union members, public service employees, gun owners, etc. etc.) and if enough members of these various groups can be convinced of their own victim-hood and entitlement, so much the better.  If enough of these interest groups can then be cobbled together into temporary electoral coalitions, you win.

Shared sacrifice?  Common purpose?  Those ideas are for chumps, quaint perhaps, but not really meaningful in our world today.

The Civil War was the greatest political calamity our nation has ever faced,  It is a pity we haven’t remembered its lessons.  The Great Depression of the 1930s was the worst economic calamity we have endured.  The economic collapse of 2008-09 was proof that we turned our backs on the harsh lessons the Depression taught us about economic safeguards and restraints, and about fiscal responsibility.

Both the Civil War and Great Depression severely tested the bonds of our nation and its people.  Putting the pieces back together in each instance was a long, painful, and sacrificial process.

Getting out of our current political, social, and economic mess will also be slow and painful, and it will certainly entail sacrifices.  Are we any longer up to the task?

My guess is no, not as we are presently disposed.  What will be required is a different type of political leadership, perhaps a different shared definition of both Fulfillment and Success, and the renewal of a sense of shared identity and purpose (if in fact these things any longer exist in America). Here’s hoping it is not already too late.