Tuesday, July 19, 2011

We Don't Need More Taxes, We Need More Taxpayers One Tea Party Plan for the Deficit

No one can deny that growth of the federal debt is exploding under Obama's Presidency, and indeed started to climb after Democrats took control of Congress in 2006. The question before us, with the debt limit about to be reached, is what spending could be cut as part of a deal to increase the debt limit. Michele Bachmann, who is well like by many tea partyers, has said that she would vote against increasing the debt ceiling no matter what deal was cut.

I have to respectfully state that her position is folly, because there is not enough current spending cuts available to balance the budget instantaneously without vast cuts to social security, medicare, unemployment and defense spending. One might desire such cuts, but immediate and massive cuts in these areas are such political suicide as to be beyond reasonable expectation. This is why most tea partyers are going to be disappointed with whatever deal gets cut. A little about the numbers. Total federal receipts are estimated at $2,170 billion for fiscal year 2011. Medicare, Social Security (including their costs of operations) and income security account for $1,870 billion. Income security includes civil service retirement and disability, railroad retirement, unemployment insurance, food stamps, and other public assistance programs. Defense is the next big ticket items at $770 billion, which does not include another $180 billion or so for the ongoing costs of war. The current budget deficit is about $1,500 billion, with total outlays projected at $3,800 billion. Defense and entitlements more than eat up all current spending. This information comes from my analysis of spreadsheets at the government's budget website. A graph that shows this from 2010 follows, the pattern is not very different in 2011.

This hole is too deep to get out of with short term gimmicks. But long term solutions need teeth to ensure that future politicians can't easily revert to form. Spending must be cut, and that is a long term problem that absolutely must be addressed. But what about revenue? It seems clear to me from these facts, heresy that it may be, that federal revenue needs to increase. How do we increase revenue without damaging economic growth?

The first and most important observation is that any policy change must be permanent and stable to be effective. For example, the temporary reduction of social security withholding rates has been a disaster. It was intended to provide a hiring incentive, but because it was not permanent, businesses discounted the future social security tax into their current plans and haven't hired. Further, it has deprived the federal treasury of much needed revenue.

The secret to increasing revenue was discovered by Ronald Reagan in the 1980s, lower tax rates with fewer deductions, and hence a simpler tax code. This concept applies to both individual income taxes and corporate income taxes. This is where the money really comes from to fund the federal government. I created this chart from the same federal budget site:

Unless you increase the payroll tax for social security and medicare, individual and corporate income taxes are where the money comes from. But increasing the tax rate for zillionaires doesn't really raise more revenue, despite the President's rhetoric. Nor will taxing corporate jets. The public knows this. The problem with both the corporate and individual tax codes is the complexity results in huge disparities. Most large companies pay nowhere near the published 35% tax rate. The tax attorneys at these large companies are considered a "profit center," seeking ways to legally game the system and allow companies to retain more profits through tax avoidance strategies. Individuals are also affected. The tax advantage of owning a home provides an additional incentive that leads people in to home ownership who perhaps shouldn't make such a decision. Wouldn't we all be better off the tax code were simple and didn't distort economic decisions. Simplifying the tax code would increase revenue by stimulating the economy. Further, lower marginal tax rates would encourage more people to enter the work force. Here is one example, a married couple where the husband earns enough to be in 33% bracket, but the wife stayed home as the kids grew up. Re-entering the work force, she can not initially earn a big salary. But her marginal tax rate will include the 33% income tax, California tax of 9.55%, FICA tax of 7.65%, SDI of 1.2% for a grand total of 51.4%. If she went to work full time at a relatively low wage of $15 an hour working full time, she might increase the family take home by only 10%. Why bother?

But what about those Social Security taxes? Can we increase that revenue item without harming the economy? Of course we can. Any number of Obama's policies, from Obamacare to the NLRB suing Boeing to prevent the hiring workers in South Carolina are damaging businesses' ability to hire workers. Additionally, the tax code is in continuous flux, with Bush era tax cuts only temporarily extended. How can business gauge the profitability of investments when future tax rates are unknown? Growing the economy will grow social security revenue.

But wait, there's more. The other way in which we can both grow the economy and increase the number paying social security taxes is through legal immigration of a skilled workforce. I have discussed this before, but doesn't our fiscal crisis deserve fresh thinking. Look at these demographic curves, because I consider India a possible source of large numbers of skilled immigrants:

Note the U.S. baby boomer bulge moving into retirement causing strain on the economy. India, by contrast has a large, young population, facing no such challenge.

So here is what is needed to increase revenue, and what I meant by the title.
  • Simplify the individual tax code, eliminate deductions and lower marginal rates. This will increase the number of taxpayers in the three ways. More people will enter the work force. Rising economic conditions will bring taxpayers who do not pay income taxes now to levels of income where they do. As the unemployed enter the workforce, they will pay FICA taxes.
  • Simplify the corporate tax code by lower marginal rates to and eliminating loopholes. This will increase the number of corporations paying taxes and actually bring in more revenue as corporations change behavior. Profits will increase, even if tax attorneys are laid off, which will also generate revenue.
  • Vastly increase legal immigration of skilled workers and professionals. This will grow the economy, while at the same time add new taxpayers to the rolls, increasing revenue from social security and income taxes. It is important that they be skilled workers, because there is a question as to whether unskilled workers don't consume more in public services than they pay in taxes.

Spending cuts are still needed, because these supply side reforms aren't going to solve all of the problems, and if we don't cut spending, politicians will just find new ways to devour the revenue we might get from these reforms. Here are some quick hitters of both a short and long term nature that I find attractive. Many of these have been discussed by Boehner, the President or others.
  • Repeal Obamacare, the cost estimate of which, just keeps rising. Ok, so that's a non-starter until 2013.
  • Across the board cuts to all federal agency budgets back to 2008 levels.
  • Cut farm subsidies.
  • Cut medicaid.
  • Increase eligibility ages for Medicare and Social Security.
  • Means test social security and medicare.
  • End Libyan operations.
That is one tea party proposal to deal with the deficit. I hope some of this catches on.


  1. Wow, you really showed your true colors on this one.

    Crime is rampant throughout the 'government' and you stick to the primary tv talking heads points that project the divide and conquer vibe. Raise taxes, roll back this department cut this service,blah blah blah. Your suggestions are truly insane.

    What about the mass of criminal activity consuming the US and the entire planet? Military, contract mercenaries with no bid contracts, over charging by 'government' contractors from every government agency from A-Z, fraudulent debt based currency using the future profit earning potential of We the People to create currency where Banks are using our Birth Certificates for collateral to issuance of debt based currency by the IMF, World Bank and Federal Reserve! What planet are you living on? This is total economic warfare being perpetrated on the US by the primary owners of the Bank of International Settlements, Bank of England, and Federal Reserve Bank using armies of bureaucrats, law enforcement, and Military to enslave the American Population into all out despotism!

  2. Continued..

    Do you even know what a Taxpayer is? The taxpayer is the Corporate Person (your identity) formed by the banks (in collusion with the Corporate State) with the registration of your birth. The future profit earning potential of your CORPORATE PERSON is calculated by the IMF who then tells the Federal Reserve how many T-bills to print based YOUR future profit earning potential, which is the estimated income taxes you will pay back to the IRS over your lifetime. This number can change over your lifetime because it is equal to all the assets you register our claim with the IRS hence this why you have no privacy under our current criminal system the more you make the more they can steal, This is the real taxpayer a slave born into bondage.

    The Feds and International bankers who own the FED profit from the interest on the money that is created on our bondage and the whole crime is perpetrated without our knowledge or consent. This is not only criminal fraud but it is all out economic warfare against We the People of the United States because ultimately it is easy to calculate the fact that that the monetary system is guaranteed to fail AND that all property will be transferred to banks in the gradual failing of the system due to unpayable interest created from the issuance of legal fiction tender. Bdaddy doesn't seem to know any of this, hence his suggestions for rearranging the deck chairs on the titanic. This makes me think he is a paid operative of the bankers because he is doing what we have predicted for a very long time. As the strains of the always increasing debt for issuing of currency began to be unpayable the solution would be open up the taxpayer status to foreigners so that the scam could continue to remain somewhat stable over more all while enslaving more people with an ultimate goal of controlling the identity source of every man or woman on the planet thus enslaving everyone into paying them.

    To the rest of you out there. Forget this bumb. He is trying to put a used band aid on a decapitation or worse he may be a paid shill.

    We can rediscover our roots and unleash a whole new world of prosperity and peace based on Common Law principles where two rules govern society Breach of Duty and Breach of Peace. We can tear down our criminal courts and tyrannical militant law enforcement and military forces that have created a giant police state around us, we can reconstruct the judicial systems that made us prosperous while also unleashing the most advanced and efficient monetary system the world has ever known where taxes are tied directly to interest on 2-1 fractional principle where the future profit earning potential belongs to the individual not the banks. We can obey the organic law while having a peaceful and lawful society where juries are empowered to determine the facts of a case where contracts are voluntary, there is no income tax, we have a sound and lawful monetary system based on the laws of nature and our affairs are private and that privacy is protected by Government!

    Unleash your mind into the beauty of the American form of voluntary law where we are all equal and endowed with certain rights and where the just powers of government are derived directly from the consent of the governed for justification in any cause of action in your life. This is the law and it is the path to our freedom and our prosperity. The ONLY thing holding us back is our ignorance of what is really happening to us. We can't ever have real leadership if everyone thinks the real things that are actually happening to us are just 'conspiracy theories'. Are we simply too lazy to find out the truth? How hard do you actually work to know what is actually happening to you??? Wake up or you will be reduced to absolute despotism. You Are Warned!

  3. That guy is actually right about a surprising amount of stuff for a crazy person.

  4. Anonymous,
    Military spending needs cutting. With regards to the Fed, I agree that its existence exacerbates the debt problem because it allows the government to monetize the debt through actions of the FOMC.

    However, I honestly believe that we should move to reform our system in stages. Given the political system and who votes, we won't just end social security over night. If we did so through the courts or by armed rebellion, that would shred civil society. I aim to undermine social security by sapping its support through mechanisms such as means testing.

    Bottom line, is that your approach doesn't have the votes necessary to be implemented and I am not in favor of a strategy that can't be implemented outside of republican institutions.

    I also wonder if your aim is really to persuade others. I don't have a huge readership on this blog, so most of the readers are friends, family and acquaintances of mine. Yet you continue to make your points with personal insults. Does that really advance your cause? What ends do you seek? What might be a more effective method to achieve those ends? I hope you will consider what I am saying, as I have been gracious enough to you regarding your comments.

  5. First of all I am not crazy. I have spent years trying to figure out what is going on starting with study of history in the natural order in which it progressed-

    Cannabis->Drug War->Banking->Terrorism->Identity->Contract Law->Common Law->Organic Law->Natural Law->Constitutional Law->Statutory Law->Case Law.

    This is the natural order of investigation I have taken over the past 17 years for voluntary diligent duty after being terrorized by the system over cannabis issues when I was a juvenile. I am not brainwashed anymore period. I was once brainwashed and now I am not and I am perfectly clear of the difference so I know what it is like when someone is brainwashed because I was once myself.

    I awoken to what's going on in 1997 when I read the entire Iran Contra senate subcommittee hearing transcripts and then tracked back through history everyone involved and study their family heritage and business connections to see how the whole thing fit together. My father was a federal agent who taught me federal investigation procedures and I used the same standards to qualify the information I have accepted as fact all along the way. All of this voluntary duty while I became an expert in automation system development for my artistic and business expression side. I understand logic and reason and I have been on the hunt for truth for a long time and I found it.

    Logic and reason dominates the Natural Man because our brains are made of logical gates that enable or disable biochemical reactions based on the logical input stimuli of modulated patterns of vibratory energy in all forms. This has nothing to do with being crazy and everything about the revolution in awareness that science along with the internet is enabling. Logic and Reason are going to sweep the world with a tsunami of truth unleashed by the power of instant communication coupled with the natural influence an individual's logical and passionate mind on a mission for truth and FREEDOM.

    I have no cause other than to be completely free in a lawful community. Our laws were formed to protect the individual and that is the whole point of our republic.

    The courts are the forum for non-violent dispute resolution and the place for the law to be upheld. I do not wish any collapse or violence but I do wish that Real Courts of Law would actually uphold and defend the rule of law and not force contracts and slavery upon everyone for revenue generation.

  6. Continued...
    You mention ending social security over night which technically would also be an unlawful act. All I am saying is that contract law be obeyed where properly applicable. If the government made an agreement that established the obligation then uphold the obligation and if there is no is obligation because there is no voluntary valid contract then uphold that too. It is very simple. No forced contracts protection of privacy and property, FREEDOM. Breaking a contract is Breach of Duty and when has an accuser with a valid cause of action brings the issue before the court the action must be heard by a court of law and moves to trial by jury if demanded. Only those who voluntarily enter into contract have any obligations those who do not have NO obligations. This is the law and it is not being upheld and for a specific reason. They are consolidating our identification into there databases so that they can delete our identity and wealth anytime we become a threat to those who control the creation of currency. The Corporate State and the banks are committing criminal fraud and extortion that is stifling world progress and destroying our planet with war, stress and corruption. Swift justice needs to be brought the individuals who carry out these crimes but the whole point is that the individuals working in 'government' who are not upholding the contract they willingly signed are criminal in function at this point and will not uphold the rule of law. They will force unlawful contractual obligations on We the People and NOT uphold the promises they made to people who did contract with them through a valid contract. Crime is Crime no matter who is committing the crime, period! Criminals require justice and my only cause is to live in a just world based on the rule of law, REAL LAW!

    The only reason I attack you in the infowar is because you claim to be a leader of something that is affecting other people. The sheople are being herded constantly without knowing it and I want to make sure that you are not guiding the unknowing to more destruction. San Diego is one of the last cities in America that has not been completely consumed by tyrannical barbarians and knowing this I don't want to see a government wonk lead people to the slaughter here whether knowingly or unknowingly. If the principles are not within the bounds of logic and reason of American Organic form of Common Law then I will identify the failure in logic in order connect the logical gates in the minds of the readers so that they not be deceived by faulty logic. I am a master programmer and logical machine, logic is inherent in me as it is in you for the perceptron model of the neuron describes neuron electrical behavior as one of the sum of weighted input stimuli. These form networks that in turn program biochemical and electrical communication that causes physiological motor function of the body. If you shut down the logic then the motor actions will fail to form, PERIOD! That is the point. That is what our country's founders learned during the age of enlightenment and expressed this thoroughly but we have lost this because we have traded enlightenment for materialism, ignorance and fear. I am here to shatter that paradigm with truth.

  7. Continued...
    You also mention not having the votes while mentioning a republic. Democracy requires enough votes to determine which rights will be granted or taken away, a republic has contractual obligations of those who participate to uphold and defend according to the letter of the contract. Voting is not the place to bring justice or to grant or take away rights. Courts are for Justice and Common Law if properly upheld is where our rights are protected and the Natural Law shapes Common Law. This is how our law works. If the courts won't bring Justice then they are in Breach of Duty and not Courts of Law. Either way knowing, understanding and pointing out how our form our law works to the courts using logic and reason is how we protect our rights because remember the human body motor functions must first be told by brain to function and the brain is subjected to the patterned input stimuli that, in a courtroom, You are one of the source stimulants facts which are nothing more than modulated patterns of energy that are processed in the brain of the men and women in a court (or anywhere else there is interaction with someone) which collapses the wave function to certain logical outcome in the motor function. This is why we have law to have a forum for this to express itself. This is the very basics of human existence and physiology.

    So in the end I am not here to persuade anything. The human mind works based on logic and reason and this is how to win without any violence. Use logic and reason to show everyone the Laws of Nature. If they violate the Constitutional Contractual Law all day everyday to highly aware and principled people then they will be out of time due to the millions of people hammering them with logic and reason in the revenue generating forum that is supposed to be carrying real justice. Their revenue generation will fail and they will be exposed. Simple! Their brains will give in and they will succumb to the fact that the Logic of principled people is sound and the fact that if they can continue violate the law they will be out of time completely and the people will see their failure in bringing proper justice and we will regain our freedom and reform our system using the Laws of Nature the easiest and most non-violent way to reform is little Time of the Masses with ALL the time of the criminals. Easy.

  8. Continued...

    As far as attacking you I only seek to make you as irrelevant as you are so that people do not get distracted into nonsense opinions that have no basis in Law. Nothing personal, it is clear that you choose to live by your own opinions in ego instead of humbling yourself before the beauty and clarity that exists in living by the rule of law. Your, 'not enough votes' comment is also very telling of your TV induced understanding of the situation we are bring consumed by. The monetary system as it stands is mathematically guaranteed to fail. Do you hear me? It is designed to fail that is how it works! We are under attack and you want to tow their line of getting out of the obligations they made all while having wars of aggression all over the world to the IMF over every central bank of the world so that these people can enslave everyone to debt while potentially cutting off people who are totally dependent. I can’t stand the entitlements either but I am clear to what it means to trim the fat of tyranny first . This is the layers. Stop the MASS MURDER and MASS SLAVERY. That is not only a no brainer it is all out crime. I want to see criminals brought to justice and I want to see the American Giant to awaken and CRUSH the bankers! I think our last war should be a US Declaration of War on the IMF World Bank and Bank of International Settlements so that we can finally free the world from shackles of banker s who control the whole world and bring strife and war to those who do not participate with them. Awaken America! It is time for the Giant to rise again. You know what I really want is to give cops apple pie in thanks of their service to protecting our communities. That’s what I really want but they want to be brainwashed into carrying out WAR against the American people. APPLE PIE or our Courts and monetary system completely failing which do you want?