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Thanks to my friend and editor (Scott Neil) for his contribution to this article.
This is the first of a series of articles dedicated to ideas I believe will restore the United States to a vibrant free economy. Restoring economic health is vital to maintaining the Constitution, Country, Free Society and all the best things they stand for.
This article puts forth an alternative to the existing federal tax code. Eliminating the requirement for a majority of americans to file federal tax returns is a good first step in energizing the U.S. economy.
Shared Sacrifice
September 15, 2011
"All power tends to corrupt and absolute power corrupts absolutely. "
(John Dalberg-Acton - April, 1887)
It's funny how history repeats itself. Thomas Paine wrote on 12-23-1776 that "These are the times that try men's souls." He also recognized that "All delegated power is trust, and all assumed power is usurpation." The american socialist movement is as power hungry as any group in the United States.
Socialist use the tax code and government regulations to dilute Constitutional freedoms and divide the nation. Constitutional education is absolutely needed to bring to light the failures of socialism and its strain on a free society.
Tom Paine would be shocked to see the nation tormented with the erosion of Constitutional freedoms and repressive tax laws.
The Preamble to the United State's Constitution begins with "We the people of the United States ....." and does not begin with: We the government of the people of the United States. The United States is a republic made up of 50 states with a common Constitution that binds all American citizens to a common concept: all human kind are created equal with certain unalienable rights of "..life, liberty and the pursuit of happiness." How can U.S. citizens be happy with an oppressive tax code?
The federal tax code creates a conflict amongst U.S. citizens that constantly allows politicians to create wealth divisions that are divisive and non-productive. The current United State's tax law must be scrapped. The new tax law must be fair with absolute participation by all Americans.
John Kennedy should have challenged the Nation with the following statement: Ask not what your country can do for you, but what can I do to help myself that will help my country. "Don't give the country fish, teach the country how to fish."
The Democrat Socialist Party (DSP) is constantly reported as wanting all Americans to participate in "Shared Sacrifice" and pay additional federal taxes. At no time did the President or any House/Senate member step forward with legislation that would have reduced their salaries and staffs by 20%.
Tax reform must include Social Security and MediCare programs
Any tax reform solution must deal with Social Security and MediCare issues that concern all Americans. Social Security must be reorganized with the idea of support for existing payees and a program that younger Americans are confident will be in force when they retire.
1. MediCare solutions must include an increase in the number of doctors,
nurses and para-medicals in the U.S.
2. Support Private Medical Savings Accounts and insurance reforms that
include insurance company competition across State boarders.
3. Protecting pharmaceutical patents, Doctors and Hospitals from a
predatory legal system is critical in any medical insurance reform.
4. Getting rid of ObamaCare is a necessary first step in any solution to a
U.S. medical reform plan.
"Shared Sacrifice"
1st step is to replace existing tax code with the following:
1. Social insurance and general retirement receipts will not be included in the federal budget. A separate off budget system will identify the tax payer's account and actual cash in the account.
a) All income will be subject to 6.25% retirement deposit.
b) Self employed income (after expense deductions) subject to 6.25% that must be deposited into retirement account.
c) Employer FICA payments (7.65%), including self employed tax payers, will be paid into a general off budget account to be
used to pay current social security recipients.
d) Two percent (2%) consumption tax (sale's tax) that is
deposited into a general social security account.*
*Receipts will be used to pay existing social security
obligations.
Estimated Annual 1st Year Social Security Tax Paid Directly Into General Social Security Account.
(Direct Payments Into Retirement Account Not Considered)
$1.3 Trillion
2. 2% sales tax to be deposited into a separate off budget account for catastrophic national health care insurance.
a) Catastrophic health care insurance (CHCI) will be available to
all US citizens.
b) CHCI program will be discussed in Health Care Article.
Estimated Annual 1st Year 2 %
Catastrophic Health Care Deposit
$280 Billion
3. Federal income tax law must be a combination of a "Flat Tax" and "Consumption Tax" solution.
4. Eliminate the need for any deductions with the exception of private sector business expenses.
5. No federal income tax on the the first $250,000 of individual earned income. No federal income tax on first $350,000 for married couples or domestic relationships that reside at same address.
a) Employment Income
b) Interest and Dividend Income
c) Self Employment Income After Expense Deductions
6. A 16.0% flat tax rate for earned income from $250,001 or $350,001 to $1,000,000.
a) Employment Income
b) Interest and Dividend Income
c) Self Employment Income After Expense Deductions
7. A 28.0% tax rate for all earned income above $1,000,001.
Estimated Annual 1st Year Income Tax
includes points 3 -7
$1.1 Trillion
8. 10% consumption tax on all purchases for goods and services, including internet sales. This is a grumbling tax.
a) Lower income groups will resist this tax. Unless all participate
in their welfare, there will be issues that will continue to divide
the population.
b) This consumption tax brings equity to the U.S. population.
c) This is a tax that will bring a sense of pride to the nation.
Estimated Annual 1st Year Income From
Consumption Tax
$1.8 Trillion
9. 2% corporate tax on gross income before business expense.
Estimated Annual 1st Year Corporate 2% Tax
$280 Billion
10. 15% corporate tax on profits after expenses.
a) Expense all business employment cost, including bonuses the
year paid.
b) Expense all business purchases the year acquired.
c) Eliminate the need for depreciation schedules.
d) Allow corporations to deduct all medical, 401k and FICA
expenses.
e) All dividend payments based on corporate net income.
Estimated Annual 1st Year 15%
Corporate Tax Income
$600 Billion
11. 15% tax on repatriated foreign profits by corporations and individuals.
a) All foreign profits will be considered net income and taxed.
b) Individual's foreign dividend, interest, capital gains, etc. will be
taxed at 15%
c) All foreign corporation profits earned in U.S. will be taxed at
15%.
Estimated Annual 1st Year 15%
Repatriated Profits
$250 Billion*
* Assumes 1st year repatriated profits and foreign U.S. profits will be
approximately $1.7 Trillion.
12. 10% Estate tax (Death Tax) on all inheritance above $10 Million.
a) Absolutely no estate tax from $0 to $10 million.
b) 10% estate tax $10,000,001 and up.
Estimated Annual 1st Year 10%
Estate Tax Income
$100 Billion
13. No change in current excise tax law (Gasoline, etc.)
Estimated Annual 1st Year
Excise Tax Income
$100 Billion
14. Here is a kicker tax: 100% tax on U.S. Corporation payrolls outside the border of the U.S.
a) All U.S. corporate foreign payrolls will be considered corporate income and will be taxed as a penalty for moving jobs outside
U.S. boarders to save money.
b) U.S. Corporate Officers and Board Members will have an
additional 5.00% penalty tax on all income when moving jobs outside the U.S.
Estimated Annual 1st Year
U.S. Corporate Penalty Tax
To Be Determined
15. Here is a shocker tax: 15% tax on Union Dues prior to any cost to run
the union (Salaries, Campaign Contributions, etc.).
Estimated Annual 1st Year
Union Tax
To Be Determined
The first year estimated U.S. flat and consumption tax along with the other outlined tax receipts total $4.230 Trillion.
New tax system requires
Government Spending Reductions
The goal is to reduce federal government spending to $2 Trillion annually.
This tax system requires the federal government to reduce its payroll by 50%.
All federal employees, including the President, Members of Congress and Senators must reduce their salaries by 20%. Military and Home Land Security departments must be reviewed for excessive spending.
This new tax plan should realize a surplus of approximately $2.23 Trillion the first year and grow each succeeding year. The federal government must reduce its cost to govern, so that the national debt can be reduced to zero by 2020.
A healthy economy is the answer to the national debt problem.
The worst tax on the American people is inflation that is built into the economic engine. The cost of goods and services must be reduced or any tax plan will fail due to prices spiraling out of control. I will address my ideas to control inflation in my next article.
Correcting the slide in home prices and delinquency issues is a function of stabilizing and growing employment. If you can't afford the mortgage payment, how can you stay in the your home or afford to buy a new or existing home. My tax plan will cause the home lending industry to
re-think borrower qualification underwriting models.
In future articles, I will expand my ideas concerning revisions to Social Security and Medicare programs, as they are structured today. At the same time, expanding a simple method of protecting seniors that rely on receipt of monthly social security payments and affordable health care availability.
House and Senate term limits must be addressed to eliminate the "Good Old Boys" factions that governs the United States. English Language Amendment, term limits effecting other federal offices, balance budget, foreign policy, foreign aid, communication, food production, desalination capabilities, hydrogen engine, eminent domain issue and many other issues will be addressed in future articles.
Postscript:
American blood has been shed over the last 235 years for good and bad reasons, but always to support freedoms as defined in the constitution. I support and will work for several constitutional amendments, utilizing Article V of the Constitution, to strengthen and guarantee american freedoms from now to eternity. Harry L. Jensen
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