taxes

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Slashing Programs is NOT the Answer: Republicans Take Note!


I read in today’s (March 9, 2023) Boston Globe how many Republicans are looking at slashing our foreign aid programs, making medicare receipients pay more and other cuts which only affect those on fixed incomes or of limited means. For my entire adult life I have paid into Medicare, and I continue to do so at age 74. This is NOT an entitlement; this is an investment I made for help exactly at this time in my life when I am no longer a part of the workforce.

We are the richest nation in the world, and it is not even close. Supporting Ukraine in its battle and supporting disadvantaged countries is something we owe the world.

President Biden has suggested increasing the tax rate for anyone who makes over $100,000 a year and yet Republicans are complaining! They can afford it! Republicans need to remember that the darling of their party, Ronald Reagan put a 20% minimum tax on such people and his threshold for such a tax was much lower.

Taxes are not the boogeyman Republicans make them out to be. Nowhere in the industrial world are its citizens taxed less. I suggest that raising the individual tax deduction to $25,000 will insure that lower income families are not affected by rising taxes. Even more, I recommend that this deduction be raised each year according to the rate of inflation.

A tax a rate that ensures those families making over $1,000,000 individually be mandated to pay the 20% minimum tax as Pres. Reagan suggested. This would be a start to reducing the national deficit. It should be, and is, that those people who make over $100 million a year pay nothing! This shows the absolute need for Congress to fix the tax code and close loopholes that favor only the very wealthy to super wealthy. That should be their focus and not cutting those things they are suggesting.

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Despotic Donald: The Ultimate Narcissist


Let me start by telling you that I have over 30 years of service in the federal government, am now retired.  I spent the first almost 11 years of that service as a member of the U.S. Army on active duty: 1968 – 1979.  Then from 1987 – 2007 I was a systems analyst/computer specialist for the U.S. Department of transportation.  I mention this to validate what I know from experience within the government.

I have listened very carefully to Donald Trump and two things occur to me, both scary.  He is an absolute narcissist.  A narcissist cannot image that anything he says or does is wrong.  He believes that he is always misunderstood when people try to correct him.  But worst of all, a powerful narcissist, as Trump is, feels he can do just about anything with impunity; he believes he is above the law, that he has certain privileges that set him apart from most everyone else.  And as a despot, he wields his power without an sense of responsibility when things go wrong.  In his case, he does not feel stiffing people their wages when his companies went belly up is wrong.  And just last night (September 26), he thought the fact that he did not have to pay any income tax on over $600 million income meant he was smart.  Those were his words actually.  Had he paid only the 14% tax rate most of the middle class pays, he would have paid $84 million.  Don’t you think some school systems, some public health agencies, some poor municipality could have used that money?  It makes me wonder just how much income over the years he has paid nothing on.  And in that same sense, how many others do the same?  But that’s another subject.

Trump stated last night that he had been endorse but the Federal Agency ICE.  That is a very interesting statement since no agency, by law, can endorse or engage in any political activity.  And to do so would require action from that agency’s inspector general with possible criminal charges.  Every year I worked for the federal government I was required to attend ethics training and that is one subject, particularly during election years, that was emphasized.  It is a prohibited action.  I think more likely he got some official to say he is support Trump in his run.  But that official cannot say those words publicly as a member of ICE for to do so would “give the appearance of a conflict of interest,” very damning situation in the government.

Trump was born June 14, 1946 which means he was required in 1964 to register for the draft.  Curiously when he registered he was a student at the New York Military Academy, a military prep school.  I too went to a military prep school and I can tell you with certainty that a very large portion of my classmates went into the military.  We had 10 out of a class of 69 who went to one of the service academies, several others went to Virginia Military Institute and The Citadel.  We had a feeling of duty to our country.

Trump, like so many, got a college deferment while he attended Fordham University and after 2 years transferred to Penn.  That means he graduated in 1968, the height of the Vietnam war.  He did not continue on to grad school and probably would not have gotten a deferment had he, the exceptions were medical school and theological studies.  We know he is neither Dr. Donald nor Rev. Donald, so how did he avoid military service.  He was not married until 1977 so that was not it either.  He was quite the patriot!  What he was doing during the early 70s was using his family money to buy real estate, housing mainly.  It was also the first time, of many, that he was charged with “anti-black bias” in a suit brought by the Dept. of Justice.  In turn he filed suit against the federal gov’t for $100 million because he said the gov’t was trying to force him to rent to welfare recipients.  Contrary to what Trump said last night, the affair ended 2 years later when he settled with the DOJ.  The narcissist looks back upon such incidents and claims no wrong doing, no fault, no responsibility, and states he was innocent of anything said against him even when the facts show the opposite.  He cannot see such facts because they do not suit the narcissistic mind.

One of the strong-holds of the Republican Party has traditionally been the military.  Trump claims to have been endorsed by over 2o0 admirals and generals.  Why have we not seen this list?  You would certain want such a list front and center to prove your validity as Commander-in-Chief.  I suspect he had 2 or 3.  I noticed time after time during the debate Trump’s penchant for speaking in hyperbole.  And since he refuses to show proof, then hyperbole of the worst kind it is then.  Our military is literally tired from all the wars it has been forced to fight.  They are war weary.  But if you listen to Trump, it takes no imagination at all to see he is hell-bent on starting a war somewhere.  He thinks that is the was to kill of ISIS, and other undesirable elements.  Trump will probably still get a large portion of the military vote but it is unlikely he will get the 90% most Republican candidates have enjoyed over the years.  It is very difficult to have confidence in a commander-in-chief who has absolutely no military or government service experience.  And as an aside, if elected, he would be the first president to have neither.

There is one thing all president over the past 50 plus years have understood implicitly.  They knew you dealt with friends and enemies both via diplomacy.  The military necessarily is the last resort, when all forms of diplomacy have failed, AND, you are under attack.  Trump definitely does not understand this.

The man is dangerous and I am at a loss for what people see in him as a realistic leader, as someone who will keep our country safe and do what is best for the country, not what suits him.

 

 

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How To Eliminate Personal Income Taxes


There is an irony to the income tax debate going on today.  The Republican Party attacks income taxes as being too high, and how they restrain investment.  The irony is, it was their own party that developed today’s personal income tax under President Howard Taft.  In 1913 the 16th Amendment was passed creating a permanent income tax.  That amendment says, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”  And that is it.  There is absolutely no language saying what form any tax must take, just that Congress has the power to levy them.

The fix is actually very simple and ultimately fair, a national sales tax.  Consider, every person pays taxes as he goes with certain exemptions, which I will get to.  If that sales tax were 5%, it would meant all transactions would be subject to that tax, and a person could not claim exemption for any reason.  Now, so it would not unfairly impact the poor, certain items would be exempt from taxation, food, medicine, medical services, clothing up to a certain price per article, and other such items.

To make it even more fair, transactions between businesses would take three levels, 5% for small business under 100 employees, 10% for businesses 100 to 500, and 15% for businesses about 500.  Businesses, unlike individuals, would have no exemptions, particularly, but not limited to, transactions outside the United States.  There is one really interesting aspect to this and that is that political donations would immediately become taxable.  Since such donations are little more than paying for a service they would not gain an exemption from the still existing 503(c), not for profit, agency.  Such agency would be limited to museums, charitable foundations, etc.

The first group who would complain about this setup will be tax accountants and lawyers.  Since an automated point of transaction system can be set up to immediately feed funds into the U.S. Treasury, the need for lawyers and accountants to oversee individual and corporate taxation would plummet.  A simple set of electronic transactions laws could be set up to insure tax collection.  Corporations, however, could gain a lot of ground on the tax rate they now pay, upwards of 43%.  If, for example, it was determined that the corporate transaction rate should but put at 30%, they would still gain.  But corporations would still be eligible for certain right offs for things like capital equipment depreciation and claim a tax refund at the end of each fiscal year.  Individuals would be eligible to do the same, however, their tax rate being so low that the threshold to get such a refund would generally be too high.

There could also be written in a transaction threshold before a tax is levied.  For example, there might be a $5000 threshold for the purchase of any first vehicle in a family.  If a guy buys a $10,000 car, he pays a $250 tax for the next $5000.  This helps keep an undo burden on the poor.  Now if a guy buys a $105,000 car, he is going to pay $5000.

By instituting a national income tax and eliminating the personal income tax, April 15 would become a memory as no individual would ever be required to make out a 1040 or any of its brothers, no more W-2, no more W-4, no more 1099, etc.  That all by itself will greatly reduce the IRS bureaucracy.

The fairness of such a plan should be evident but the willingness of Congress to even consider such an idea may be too much.

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Major Corporations Who Paid No Taxes In 2012


With April 15 looming large for all us private citizens, here is a little food for thought.

Verizon Communications
Profits: $19.8 billion    Effective tax rate: -3.8%

General Electric
Profits: $19.6 billion    Effective tax rate: -18.9%

Boeing
Profits: $14.8 billion    Effective tax rate: -5.5%

Pacific Gas & Electric
Profits: $6 billion    Effective tax rate: -8.4%

The negative number indicates government subsidies.

I have two questions: 1)  How can I get in on the no tax deal?  2) How can I get subsidized by the Federal Government.

 

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American Entitlement


In my advancing years I am looking for new and better ways to be “of service” and how I can be a productive member of society in the long-term.  It will not be long before I am “entitled” to Medicare, but I am at odds over being deserving.  While it is true that I have paid into this program my entire adult life, I have a pretty good insurance policy that will see me through the rest of my life, provided I continue to pay into it, which I will.  This entitlement called “Medicare” seems a bit redundant to me although I confess to not knowing a lot about it.  It is my hope I will never find the need to figure it out for any personal use.

I never got an allowance, and to be perfectly honest, the concept of such a thing when I was a kid was totally foreign to me.  True, I begged money from my parents from time-to-time, but once I figured out how I could earn it for myself, in general I stopped asking.  And so, from about age 12 onward I always had ways to putting money in my own pocket without my parents help.  This concept seems relatively lost on today’s generation.  Why is that?  Why do they feel entitled to an allowance and a whole lot more?  I suspect a lot of the blame lies in my generation’s permissiveness.

Once again this year I have to send the government money to pay for my federal and state taxes.  Consider that I am living off social security and a modest retirement plan.  I do not begrudge the government a cent of this money.  It seems to me the benefits I have reaped far outdistanced anything I have paid in taxes.  Having lived in, and visited, several dozen foreign countries, I can attest to the fact that we have things better than anyone else in the world.  But I do not understand why paying your fair share is such a hard concept for the Republican party to get its arms around.  They seem to be the party of tax loop-holes and unequal levying of taxes on individual.  This goes back to millionaires, and billionaires, who literally figure out how to pay nothing, or very little, it taxes, while low and middle-income families are required to pay anywhere between 15 and 28% of their gross income.  The entitlement of the rich is astounding.

The Reagan administration was the champion of laissez faire when it came to corporate and financial America.  It was, in their minds, somehow un-American to make them answerable for their actions.  When Wall Street imploded in 2007, so adept was Wall Street at double-talking, they invented the phrase “too big to fail” which was, and is, a euphemism, bail me out and do not hold me responsible even though I have acted anywhere from irresponsible to absolutely criminal.

I have this strange believe that with the entitlements one gets just from being born in America, goes a responsibility to serve, at least for a little while, at the federal, state, or local level.  I chose the military to do that.  People these days love to criticism the military and lump it together as the “military-industrial complex.”  To be certain, industrial America is, and unfortunately, always has taken advantage of defense dollars and spending them as if they need not worry about responsibility for responsible spending.  I am not now, nor have I ever been, a part of that.  I chose to serve on active duty in the army for 11 years, another 4 in the national guard, and have just recently returned to a unit of the Massachusetts State Militia known as the Massachusetts State Defense Force.  For my participation in this organization I am paid absolutely nothing except when ordered to duty by the governor.  I do this because I feel responsible and this is how I respond.

The only things I feel entitled to are those things I have worked for and earned.   If I have to pay higher fares to keep the MBTA running, fine.  Do not misunderstand, I want its debt to be brought under control, but in the meantime, I will pay my way.  If I have to pay a little more in federal taxes to improve the condition of the roads I drive on, so be it.  What I expect in return from congress is a more responsible approach to the letting of contracts.

I want an end to all corporate welfare, without exception.  Corporate America should be entitled only to equal protection under the law, but no financial compensation for being in business.

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Let’s Kill a Few Democrat Sacred Cows


If you were to check my status at the city hall where I live you will find that I am a registered Democrat.  I bring that up simply to point out that this is not some conservative’s rant against liberals.

The Minimum Wage — This is like the holy grail of Democrat policies.  The minimum wage was first enacted in 1938 under the Roosevelt administration.  At that time it was intended to help raise people out of the abject poverty so many were in.  According to an Oregon State University study, that 1938 minimum wage raised the purchasing power of the employee to well above the poverty level.  Since 2006, however, that same study shows the minimum wage and the poverty level are almost identical.  This begs the utility of the minimum wage at all.

The federal government for decades now has had in place a wage scale for its employees that is adjusted for the area in which they live.  That is, a GS-5 level employee in Mobile Alabama gets a lower base pay than does his counterpart in New York City.  It is well-established that the cost of living can vary greatly from one locale to another.  That suggests that, at the very least, the minimum wage needs to be adjusted according to the locale.  Some states, Washington, Oregon, Connecticut and others, have already adjusted that rate upwards but the question is, is that really necessary?

I suggest that the minimum wage is entirely unnecessary any more for a variety of factors.  First, and foremost, the economics of 2012 have so drastically changed from those that existed in 1938 that the logic of any minimum wage is not defensible.  For example, the minimum wage here is Massachusetts is $8 an hour as opposed to the federally mandated $7.25.  Still, I can assure you, that a person working the front at any local McDonald’s is getting well above that $8 an hour which bring into focus who is getting the bare minimum?  Another clarifying point, exempt from minimum wage laws nation-wide are farm employees and certain other tip-based employees.  That is the federal government recognizing that certain exceptions need to be made.  But it also leaves you with the question, if market demands for labor keep minimum wages above mandated levels, why do we need a minimum wage?  I suggest we do not.

Federally Supported Welfare  —  I am not against welfare at all.  But I do believe in needs to be reigned in and the best way to do that is to switch that responsibility to each of the individual states.  The theory behind such programs is everyone feeds into the top as it serves the greater good.  That is, the good people of Grasse River Nebraska reap the benefits of helping Detroit poor.  It is absolute redistribution of wealth.  But it unfairly takes from wealthier better run states and given to poorer less well-run states.  The source of all welfare funds is the individual tax payer.  The closer you put the distribution of those dollars to their source, the control of those dollars improves.

Federal Funding of Public Schools  — To be clear, I think the funding of public schools needs to increase.  However, I do not want my Massachusetts-based income tax going north to support New Hampshire schools.  I think the Federal government needs to continue to mandate educational minimums and standards, but it needs to get out of the business of funding those schools.  Again, this is another place where redistribution of wealth is just not fair.

The bottom line is, by removing these, and other Democrat and Republican sacred cows, we will necessarily remove from the federal budget many items which are viewed as “pork.”  A thing like Sarah Palin’s “bridge to nowhere” would not have received a dime of federal funding and probably would not have been built by the good people of Alaska.  It is a simple recognition of personal responsibility within any given state.  When a state is fully responsible for funding its projects, its citizens are much likely to sit up and take notice of how much it costs and why they might even need it.

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Killing the Federal Government’s Sacred Cows


This post may seem rather odd coming from a lifelong registered Democrat and yet it does.  But I do believe that there are entire agencies within the federal government that need to be greatly reduced if not entirely disbanded.  Our government is trying to be all things to all people, and that is just an impossibility.  Most agencies were founded with the idea that since they apply to all people in the United States the federal government is the natural head.  That is both idealistic and overly optimistic.

One of the sacred cows of the Democrat Party is Health and Human Services.  This is an agency that should probably exist, in a much reduced form, under another cabinet head with most of its services being relegated to the individual states.  I think this also applies to housing and urban developement.  This does not mean I am in favor of eliminating welfare, but it does mean I believe welfare should be entirely funded by the individual state.

I have no idea why the Department of Energy exists as a cabinet post at all.  It would seem that its various organizations are better fitted beneath other existing agencies such as transportation and commerce.

Another cabinet post that thoroughly aggravates me Homeland Security.  This was a knee-jerk reaction by the Bush administration to the events of September 11, 2001.  While I agree in principle that greater security measures were needed, I entirely disagree, obviously with how this was carried out.  Title 10 and Title 32 of the U.S. Code dictates how our military troops can be used on U.S. soil.  Events following the incident at Kent State in the 1960s forced the issue of how the army can be used during civil discord.  It was affirmed that they cannot arrest any U.S. citizen for any reason, that is the domain of local, state, and federal police forces.  It should be noted, however, that there is absolutely no function which is the domain of Homeland Security that did not exist under some other authority prior to the events of 9/11.  It did mean that such activities needed to be better defined and expanded, but not to the extent that has happened.  Our troops, to included the Coast Guard, can be and should be used to assist in security our airports and seaports.  In fact, an open military presence at such facilities would likely underscore the commitment of the U.S. Government to the protection of its people.

Democrats are calling for a huge reduction in the Department of Defense’s budget citing the reduction of forces in Iraq and Afghanistan.  The Republicans seem to be complicit by the simple fact that they have not raised much of a fuss over proposed budget reductions.  This is one, along with State, of the cabinet posts that neither needs reduction in personnel nor funding.

The Department of Veteran Affairs should be made a part of Defense.  And with that, a compact needs to be struck such that anyone who has honorably served in our armed forces can expect lifetime care by the DoD.  This would not only make the military a more attractive place to young men and women, but would also enable all disabled veterans to get a consistently high level of care they deserve.  Understand, the VA would not go away but would become an active arm of DoD and find its funding there.

The federal government does need to redefine how its distributes funding among its various agencies to support the needs of the states.   Republicans are fond of saying how American business is better suited to do certain things the government now does.  And where the Department of Energy is concerned, save the regulatory portion, I could not agree more.  I believe that all portions of research and development done by the DOE, as well as any number of other agencies, is better left to the private sector.

Every person in every state must realize that to reduce the size and cost of the federal government means individual states taking on those tasks.  Health, welfare, housing, and many other programs now run by the fed will be taken over and funded by individual states.  As an individual you have to come to terms with what that means and what it is going to look like.  Personally, I am all for it.

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Taxing America — Killing the Sacred Cow


This year’s presidential campaign has had the candidates, and their respective party, sparring over taxes.  The thing is, each side is being disingenuous in dealing with the public.  Each side knows that the majority of Americans have no idea of how our tax system works.  They count on that so they can pressure Americans into thinking that their particular brand of taxing, or not taxing as you will, is absolutely the correct way to do business.

There is a New Hampshire PAC this year that is running an attack ad against a woman who is running for office.  They detail how she, when she held office, was responsible for raises taxes, fees, on New Hampshire’s citizens.  I am certain she did what they said she did but this group would like the public to believe that she was horribly wrong in doing so.  New Hampshire prides itself in having no personal income tax.  But New Hampshire, like all the other 49 states, needs a revenue stream to fund governmental activities that its citizens demand of it.

In this year’s presidential race, the Democrats are trying to make hay out of raising the tax rate on the wealthiest Americans.  Republican Ryan has countered that such a tax increase will fund America for about a day.  That is probably close to the truth but is it the point?  Obama asked why is it fair that Romney’s 14% overall tax burden just as fair as his secretary’s 20% percent tax rate, and that is the point, fairness.

As much as I like the idea a fairness, an idea, by the way, formulated by Ronald Reagan, it cannot be a prime motivation for any tax increase, or tax decrease for that matter.  Romney has claimed he will reduce taxes on middle-income America by 20%.  The question that has to be asked of that is, at what price?  That is, if you decrease you revenue, which a 20% decrease is obviously doing, what are you going to eliminate to fund it?  Romney is strangely quiet on that point.  The Democrats would be better served by promoting a complete tax code overhaul, rather than offering a single fix.  The tax code is so complex, so difficult, that probably few, if any, members of Congress can claim much of any expertise in it.  To wit, there are high-priced attorney’s whose only function is to be expert in the tax code.  No politician, regardless of how committed, can give such time to the tax code.

Government, at all levels, needs a source of revenue.  It cannot operate in such an absence.  There are two ways, and two ways only, to get such revenue, taxes and fees.  All Americans must understand that as a basic principle of government.  Republicans are fond of offering up the idea of running the government like a business.  But that in an impossibility.  But if the must, they need at least describe such a business as being a “not for profit” business which in essence is the only kind of business model any government is allowed to employ.  Those sort of businesses require benefactors, contributors, and maybe even gate receipts to survive.

In a recent debate between Sen. Scott Brown (R-MA) and his challenger, Elizabeth Warren, the controversy over subsides being allow oil corporations was brought up by Warren, who, of course, wants them eliminated pointing out the hundreds of billions in profits the oil companies make.  In response, Brown pointed out, also correctly, that the loss of the subsidy would be passed on to the American public.  What neither of the chose to address is what that increase at the gas pumps would look like.  Why?  They do not know.  For a short while, to be sure, there would be a public outrage but that would die down quickly enough and another industry would be showing the public the actual cost of a gallon of gas, not the subsidised price.  Americans would be forced, God forbid, to recognize the real cost of motoring.

Neither party, Democrat nor Republican, has had the courage to tell Americans that government is an expensive thing.  They seem incapable to telling Americans that if they want to continue the level of governmental services they receive now, then they are going to have to pay for them.  That means there is no chance for a tax reduction but more likely, at least for a short while, a tax increase for everyone.

The only reasonable way to control taxes is to control expenditures.  Americans need to look long and hard at each and every government service out there.  They have to decide which to cut back on, which to eliminate.  They need to become more knowledgeable about how the government goes about its daily business, contracts, government employees, the relative necessity of the service provided.  It Americans truly want to get the cost of government under control, there can be no sacred cows.

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Is Cutting Taxes Really a Good Idea?


Stockton California is filing for bankruptcy, the seventh U.S. city to do so this year.  The principle of bankruptcy is a very simple one: your debt load far exceeds your ability to pay it off in a timely manner at the very least but usually means your income goes to zero before you are able to pay the minimum of your debt service.  Such is the plight of Stockton and many other U.S. cities are on the brink.  By law, government has a single source of income, taxes.  The law also requires that they annually construct a budget, bring it before the town meeting or city council, and then vote on it.  If they have done their work properly, town and city leaders have done the homework properly in balancing their income against their outlays, and leave a little in reserve for emergencies.  States and the Federal Government must do the same thing but public discussion of those budgets is generally limited to elected officials and their appointees.  Still, government’s income at all levels is derived from the single source, taxes.   Stockton probably got into trouble, in part, from poor management of its debt load but had there been a tax reduction initiative earlier, this certainly would have happened all the same, just earlier.  Is this what we want for the United States in general?

Every level of government so has the ability to carry a certain level of debt.  Usually this debt arises from the issuance of bonds.  Bonds are usually issued to cover the cost of major construction programs, such as schools at the local level, and large transit projects at the state level.  These bonds can be found in the Moody’s Investment Guide and are rated according to the entity’s credit worthiness.

The Federal Government is a whole different story, however.  It too sells bonds on the U.S. market.  But it also sells its debt and that is usually to other governments of the world.  Right now, China is one of the largest holders of U.S. debt.  This worries a lot of people.  China could, for example, say, “We want all our money, now.”  It is a “demand” kind of debt.  But this is unlikely to happen simply because the adverse hit on the U.S. economy from such a move would have world implications what would, of course, affect China negatively.

The amount of debt the U.S. is carrying now is well over one-trillion dollars.  People worry about this, as they should.   The ways to reduce debt are to reduce spending or increase income.  In the case of governments you can reduce spending by reducing the government’s size.

Mitt Romney is running a campaign, as so many Republicans have before him, George W. Bush included, of tax reduction.  Their logic says that it will put more money in the pockets of the average American and therefor stimulate a sluggish economy.  They say this with great certainty, strongly enough that their message is “you should absolutely believe them.”  There is one problem with their hypothesis.  They are projecting into the unknown and this is what Americans with actually do with that extra dollar or two.  Personally, I’d pay down some of my own debt but I certainly would not be out on a spending spree, and  think that is the same thing many Americans would do.  This act is neutral with regards to the national economy, it neither grows nor shrinks the economy.

Now if you listen to Ron Paul, he will tell you that the way to deal with lowering taxes is reducing the size of the government.  And on that point he is exactly correct.  Government is expensive at all levels.  But government is also necessary at all levels.  If you take away the aspect of national defense from government and international relations, pretty much every other government entity exists, in some form, at every level.  All levels have police forces, fire fighters, lawyers, road maintenance people, tax collectors, land assessors, and so on.

Let us say, for example, that the city of “Big” one day declares that it can no longer pay for all the services is supplies.  The Mayor of Big, after long and arduous discussions decides his city has to cut back immediately on at least one of his city’s services.  He sees that maintaining the city’s streets is one of his biggest expenses so he declares that hence forth the people who own property along a street will be required to pay for its maintenance at the level required by state law.  The people of that street must pool their money and see to the street’s maintenance which includes its repair, snow removal, and resurfacing as called for.  He then dismantles the city’s highway department and not only is his budget in balance, but now he has extra cash on hand to pay down the city’s long festering debt.  He tells the voters that their property tax is immediately reduced by 5% because of this.

With this initial success under his belt, and people all over Big declaring him their savior, he announces that he can low property taxes by another 5% just by eliminating the fire department.  When asked how, he says it requires a simple principle that was actually used in the U.S. in the early 19th Century.  People would support a local privately owned fire department.  They pay their annual dues and their house or business would have a placard placed upon it saying the owner was a member in good standing of the local fire department and fires at that address will be attended to.  Even better, he announced, you are not required to buy into the program!  You can save even more money.  But, if your house does catch fire, then you are personally responsibility for putting out the fire, and are responsible if the fire spreads to other houses and businesses.

The people are so excited after a year, and paying hundreds of dollar less in taxes, that a man from West Big, suggests to the city council that all parks and recreation areas be maintained by the neighborhoods in which they exist!  The people of West Big, where most of the population exists, love this idea because most of those parks are located in East Big where the rich people live.  Their thinking is, why should they have to pay for something they don’t use very much, if ever.  The people of East Big like the idea because not only can they afford to pay for the parks but it gives them the right to say who can and who cannot enter into “their park.”  They have long groused that a “certain element” seems to come to their neighbor which they find unsavory.

Until this point the people in South Big haven’t had much to say about anything as they are all farmers who own large tracts of land and have been relatively unaffected by all the new smaller government ideas, and they of course have benefited greatly from the greatly reduced property tax.  But South Big is where the town’s lake exists and this is the summer escape for all the residents of Big.  But the few residents of South Big decided, in accordance with the latest law, to put up a fence around the lake and declare it closed.  They promise to maintain it, as required, but since they do not have the resources to run a public beach, nor to the desire to run the beach even if they did, they simply close it down.  Suddenly the city of Big is at odds with one-another.  The time-honored right to enjoy the summer on the shores of their lake has been taken away by four farmers who simply are not interested in keeping the tradition going.  People all over Big are asking each other how it happened that so much power fell into the hands of so few people.  The farmers replied to them that they were simply using the new laws, and besides, most of their families had lived in Big as long as anyone else, if not longer.  Weren’t they entitled as much as anyone to exercise their rights under the existing laws?

The basic tenant of government is to provide services to its constituents that cannot be reasonably, or equitably, provided by private organizations.  There was a time in its early history that the United States was a morass of private highways and bridges.  To leave Boston, for example, you had to pay a toll to cross one of the few bridges over the Charles River.  Towns and private citizens set up toll booths along public and private ways to collect monies for their upkeep and for the right to use them.  Philadelphia is renowned for its private fire companies in the 19th century who actually had wars between companies over who would cover which houses.

The point is a simple one: if you want a continued level of service you now enjoy in your city or state, or at the national level, then you have to pay taxes because they simply are not free.  If you think government is inefficient then you must offer solutions in how to make it more efficient.  It is not enough to point at some government entity and declare that they are very inefficient.  You must provide both the proof of the inefficiency and the method of improving its efficiency.  In the mean time you must accept the level of funding just to maintain what you have.

My suggestion is that there needs to be a major revision in the tax code.  Although I never liked Ronald Reagan as a President, he did come up with the idea of a “minimum tax” that he thought everyone, particularly the rich, should pay.  Somehow that has fallen into disfavor by today’s Republicans.  Personally I think a national sales tax, together with the elimination of all personal income tax, would solve many tax problems and reduce the size of one portion of the government greatly.

The bottom line is, every American has to ask himself what level of service he expects from the government and at the same time, he must realize that it will cost him something.  He must also recognize and accept that everyone is going to have their own idea of how much government we need to have.  But in the end, regardless, we will have to pay taxes to pay for that government.  Highways, fire departments, police departments, national defense, airports, and so forth are things we all have to pay for.  They are not cheap.  If you want your highways to be as good as they are now, or better, then you must pay for that.  This is not the time to cut taxes.  It might be the time to reorganize government at all levels, but it is not the time, yet, to reduce taxes.

 

by

Why Taxes Must Go Up


I am the last one who needs to have his taxes raised.  I am retired and on a fixed income.  Although my income keeps me comfortable there is not much room for extra or emergencies.  I can get extra income by working but I am limited in doing that because it affects my retirement pay after I earn a certain amount.

Paul Ryan, Republican Wisconsin representative, says that he would reduce the size of the national deficit by reducing the size of the government.  But he would also reduce taxes.  If he does both then the deficit likely stays the same and our other national problems just get worse.  Ryan is on the short-list of possibilities for Mitt Romney’s running mate this fall.

I am four square in favor of reducing the size of our government but I have yet to hear a single politico say what that would look like, what goes and what stays.  My guess is Ryan and his cohort will go after the social programs first.  And that means they will go after welfare, those who wield the least power lose.  Is there even a PAC for welfare?

I think congress would be better served by first fixing the law that govern the economics of the various government agencies.  Fully funded oversight from the GAO is also a must.  I worked within the federal government for over 30 years, and I can tell you that one of the biggest problems is how the government contracts out its work.  For decades agencies have been begging for fully funded initiatives but congress almost always declines and requires annual begging from the agencies to keep its contracts funded.  This is extremely wasteful.  Having to justify project funding, let’s say there was a project to buy all new computers for the FAA’s air traffic control facilities, would be stretched out over 2, 3, or more budgets.   Even though the need to replace the computers does not change, congress’ priorities do, and on a whim congress can decide to not fund that particular initiative at all or at a very low-level.  That can cause contractors to raise their prices or remove themselves from the contract all together.  Now what was a bad problem just became worse.  The message here is, fully funded initiatives costs the government less in the long run.

But making government work better simply is not going to be enough.  We as Americans expect a lot from our government at all levels.  But as Americans we have become horribly spoiled.  We are always looking for a bargain.  We want a lot but we do not want to pay a lot for it.  In meeting those needs of the public, however, America has incurred a debt that goes far beyond money.  We have lost contact with the idea of “you get what you pay for.”  Somewhere along the way Americans have lost sight of that very simple but very real concept.  For many decades we have been paying for an efficiency apartment and now we are wondering why we do not live in a penthouse.  When we were single the efficiency apartment was fine but now that we are a family of five we have to accept that we need more space and that space costs more, much more.  There is also a debt to be paid beyond rent for living in that space and we have paid nothing towards that.

Our roads and bridges are crumbling before our eyes.  Our public transportation is woefully inadequate.  Our airspace control is in desperate need of modernizing.  Our police and fire forces are underfunded and hence undermanned.  Our military is too small.  Agencies like NOAA, NASA, NIH, VA, and many others are underfunded in their research capabilities.

Right now the average American pays less than 15% to the federal government in taxes.  We can afford more.  We have one of the lowest tax rates of any nation in the world.  We could almost double our tax rate and still be low relative to the rest of the world.  I am not saying we should double our personal taxes.  But in the interest of fixing our infrastructure and other governmental problems, I would personally be willing to have my taxes go up by 25%.  I would prefer to keep that money for myself, of course, but I cannot be so selfish that I am not willing to pay for what I use.

Americans, next time your car hits a pot hole that you think should have been fixed a long time ago, or, you come upon a closed bridge that you think should have been repaired or replaced long ago, or next time you wonder why you next door neighbor is going to the middle east for the national guard for a third or fourth time, remember it is because you are not willing to pay enough to make things different.  You get what you pay for and we are faced with that right now.