Time to Simplify the US Tax Code

I was on a Twitter exchange today regarding the Affordable Care and Patient Protection Act otherwise known as Obamacare. As all of us are beginning to see, as more people get involved and learn what it actually does compare to the hype of the alleged harm it would do to country and “Freedom” killing your mothers, sisters and puppies, people are now becoming supportive of the law. Despite 53 votes in the House to repeal it, 63% of the nation doesn’t want it repealed and on this last day of enrollment, they hit the 7 million mark and polling for the first time shows 49% favorable compared to 48% unfavorable. A long hard and angry battle but the tide has turned and there is no doubt this law will stay unless it’s improved.

This is where I get to the point of the title of this rant. In tweeting this with a reasonable person from the right, we both agreed that ACA wasn’t as bad as projected, that it does have some good in it, and we both believed the improvement would be single payer, otherwise known as Medicare for All. This resulted in a discussion of the tax code.

He sent me a chart and asked me to comment on it. Here it is:

 Federal Revenue


He pointed out that most on the left would see the decrease in the revenue from corporations while those on the right see the increase in FICA revenue from individuals. What brought this chart up was my response to him regarding what I thought would happen to the economy if we went single payer but left insurance companies around. This is actually what most of Europe currently has that result in better outcomes with less expense regarding healthcare.

Now I’m no economist, I only play one on Twitter but I told him that I thought it was a good idea providing we lift the cap on FICA taxes (currently at a yearly income of $117,000.00 with a maximum withholding of $7,454.00) in order to fund the increase in coverage by making Medicare available to the entire United States Population from birth. Some want no caps; I think raising it to a million is sufficient. I also mentioned that with the insurance companies still wanting business, and providing they were still held to the customer protections required under ACA, insurance premiums would drop making private insurance even more affordable for good services. I mentioned that I saw this as good for the overall economy and the only negative side, if you want to call it that, would be the reduced profit margins of the private insurance companies.

He tended to agree but implied that the issue with our tax system is that it is too complex with multiple sources of revenue with multiple rules and loopholes and is inefficient. I agree, early on in our history the entire United States Budget was paid for by Tariffs. Alexander Hamilton imposed tariffs on foreign goods that had two positive effects on our new nation, revenue and development of our own domestic industry. Over the years tariffs went down as trade agreements came into play. Then corporations were taxed, income was originally taxed by the federal system during the Civil War to pay for it, then came back 50 years later as revenues to support this nation fell short from tariffs and corporations. Our government and her responsibilities grew and so did the expense.

Now we both had to go off-line but he left me with the impression that not only did he want a simplified tax code, it should be a flat excise/sales tax code. I did let him know that whatever the solution, the code should be progressive. Here are some numbers I came up with and posted on Twitter:

In 2013 the United States total budgetary revenue was $2,770, with expenses totaling $3,450,000,000,000.00 resulting in a budget shortfall. We all know that. Though what few still don’t understand, that deficit has been falling faster than at any time since Eisenhower.

Of the $2,770,000,000,000.00 in revenues:

$1,359,000,000,000.00 came from individual income tax payers. (Around 53% of the population)

$959,000,000,000.00 came from FICA revenues. (Paid for by all working Americans up to the cap)

$348,000,000,000.00 from all corporate tax revenues. (This averages 13% of all profits for all corporations combined)

$88,000,000,000.00 from excise taxes.

$33,000,000,000.00 from tariffs.

$13,000,000,000.00 from Estate and gift taxes.

$101,000,000,000.00 from other sources.

Finally, last year 138 million federal tax returns were filed in this country.

As the chart above shows, the total percentile of corporate tax revenue has gone down. Also it notes the total percentile of FICA revenues have gone up. The two almost cancel each other out.

Here are two more charts to consider:


 Total Federal Spending from all government revenue sources including FICA.


Total spending of income tax dollars excluding FICA

As the largest economy in the world with the most powerful armed forces, the strongest economy and of note, 315 million people of whom the average age is rising, we have an ever increasing number of accounts we need to pay into to take care of our military, our infrastructure, our students, our food supply, our ecology, and our aging population regarding healthcare, housing and necessities of life. It’s what government is for.

Our nation is growing, our population is aging, and our necessary expenditures are increasing. How do we pay the bills? It’s easy to say “cut spending to save money”. It’s also easy to say “penny wise, pound foolish”. Much of government spending does stimulate ours and the world’s economy, especially in times of recession. However it is also true that we cannot continue into deficit spending. The easy compromise is to cut waste, eliminate unnecessary programs that don’t promote the society or helps the economy and raise revenues.

That’s where politicians get scared and refuse to compromise. You can cut taxes they’re already too high. Well they’re actually lower now than at any time since the 1960’s and furthermore, we’ve been cutting taxes, even cut important programs like food stamps, unemployment compensation, housing assistance and we’re still in debt and the cuts have stalled our economic recovery. The richest in this nation are getting richer and paying less tax, the corporations in this country are getting richer and are paying less in taxes and not creating the jobs we were promised. Finally, the middle-class is getting smaller due to good jobs going overseas, resulting in less money being circulated in the economy resulting in more job loss due to less demand for goods and services. Did I mention that demand for goods and services are what actually create jobs, not excess cash?

So how do we simplify our tax code, pay our bills and not ruin what’s left of our economy in the process?

This is what I know:

Our current system was developed over 200 years and cannot be changed in quick order otherwise the economic security of the nation would instantly fall apart. Whatever plan is implemented would have to be done in installments over years, perhaps decades.

Simplifying the overall tax code would help regarding revenues being lost or misapplied. However whatever that code is, it must be progressive. Flat income taxes or a tax system based solely on excise/sales taxes is by definition regressive. This goes back to the famous “47%” who don’t pay Federal Income Taxes. They do pay sales taxes, they pay FICA if they are working, but their income is so low, so paycheck to paycheck that to tax them dramatically cuts into their standard of living, which already isn’t that great. (Raising the minimum wage would help too).

The whole idea of a progressive tax code is that those at the top of the economic ladder have more ability to pay into the society that quite frankly allowed them to be so successful. Further, an increased tax burden on these people has little or no impact on their standard of living. They pay more because they can and it doesn’t hurt them financially. Those with little or nothing shouldn’t take up the burden of paying all of our nation’s expenses if they have little ability to even provide themselves housing and food.

It’s easy to say we need more people working at higher wages to rebuild our middle class. Giving the wealthy and corporations more money via tax cuts hasn’t worked. It hasn’t trickled down to magical jobs out of good will. Instead it’s taken money out of the economy which has resulted in less demand. You increase demand for goods and services by placing money into the economy. If you’re going to sit on your money and do nothing with it, let the government take it by taxing and place it in the economy to those who will use it. I can’t emphasize this more; demand creates jobs, not extra cash in the hands of the few.

We need to yet again review our spending but we need to increase revenue to pay for those things we need to survive and grow as a nation. That money must come from those who have it, not those who don’t. During Eisenhower, the top marginal tax rate was 95%. With tax loopholes, it was actually much lower, but nowhere near the 13% effective tax rate the 1% has today. They can pay more. Corporations can also pay more than their 13% effective tax rate and it won’t kill jobs. In fact, as Henry Ford knew, it would place more money in the economy, driving up demand for goods and services and making more sales for the corporations and other businesses in the country. The corporations will survive, likely thrive, maybe a few CEO would have to give up one of their 8 homes. So be it.

Again, I don’t have all the solutions and I’m not an economist. But I do know simplifying the tax code to make it more progressive and supply just the right amount of revenue to pay our bills is what is needed. I also recognize this will take years to implement since it’s so damn complex right now.

To end on a familiar theme of mine, to get this done, let’s send the right people to Congress and our state houses who are open-minded, pragmatic and willing to do unpopular things to get our affairs in order without favoring those people who need no help at all. Register, research and vote.

Class dismissed.

History Always Repeats when You’re Not Looking

“Those who cannot remember the past are condemned to repeat it” ~ Santayana. Events of the past several days and a few Twitter exchanges I’ve been on have me really thinking about this adage. The similarities of what is occurring in the world today compared to the 1930’s are eerie if not alarming. Actually it’s both.

Our country was reeling under a Great Depression brought on by governmental mismanagement of the economy by the Conservative wing of the Republican Party. They allowed corporations to run roughshod over the economy with no oversight. The country and world fell into the Great Depression due to fraudulent banking and investment deals & the bills coming due from this thing called “The Great War.”

Meanwhile in Europe, a country who suffered the worst economically due to losing that war and the bills and reparations dumped upon them responded by voting in a Nationalistic government that allowed corporate greed and militarism take control over the needs of the population. Germany came out of the depression faster than other European countries, but at a cost. They had a government that ruled with an iron hand, didn’t care for all of her people, placed corporate interests over those of living human beings, and had a growing military industrial complex with no place to go. Hitler was doing so well, Nazi Germany hosted the Olympics.

Meanwhile in the United States, we elected a Progressive President who did implement socialistic programs to get us out of the depression and place out of work Americans back to work. It was costly but it was working. At the time, conservatives leaders from the Republican Party and the corporate interests looked fondly to the strong decisive actions of Hitler and his Nazi party for not only raking in the profits and making international corporations rich (including ours) they saw him as an ally against Socialism, against Communism and they saw the Roosevelt Administration as Socialistic and/or Communistic.

In Germany the Nazis made use of something they knew full well worked, control of the media, and control of propaganda to grow nationalism. Truth didn’t matter, only the story line. They also took advantage of a truism of the history of mankind, nothing gains you support faster than a common enemy. They chose homosexuals, gypsies, communists and of course the Jews to build a consensus of support among the population. These groups were already despised. They also told the public how bad unions were, how corrupt the bankers were, and how the German people, the Aryan race was special, “exceptional” to those other countries and people. Germany was unified, stronger, expanding (on borrowed money mind you) but was also arrogant and angry at the world for what happened to them less than a generation before.

So Germany needed to use its military might. Where did they begin? Well there was Austria who welcomed them with open arms. Military moved in without a shot and it became part of the Reich.

Now what many forget about this act and the invasion of Poland was that there was another invasion. The country was Czechoslovakia and the Sudetenland. This area of Czechoslovakia had ethnic Germans living in it. Also made up a huge portion of the entire country. Hitler moved in to protect the ethnic Germans from the Czechs who surrounded them. This set off warning bells throughout Europe and led to the worst act of appeasement in history. Neville Chamberlain in an attempt to appease Hitler met with him and other European leaders in Munich and came up with the Munich Accords that accepted Hitler’s claims of the ethnic Germans and gave the Sudetenland to Germany and gave them “Peace in our Time.” Of course several months later Hitler took the rest of Czechoslovakia, then invaded Poland on the pretense that the Poles started it and World War II began.

After the war began in Europe in 1939 there still was admiration of the Hitler Nazi Fascist regime by conservative politicians and corporate leaders in this country. Feelings were mixed; the only thing that united Americans at the time was the feeling that we would not involve ourselves into another European war. Also during this time, though the conservatives hated Roosevelt, (and some even looked at a military coup orchestrated in part by a businessman by the name of Prescott Bush, grandfather of W) they did not ridicule our president or his foreign policy in the media or radio. There was an old adage of the time, “politics ends at the water’s edge” and no one would go on record attacking our president in the manner and tone today’s conservatives are doing it. Then on December 7th, 1941 the Japanese did attack Pearl Harbor, we declared War on Japan and Germany and Italy declared War on us.

Being attacked and realizing we were in a World War worked to unite this nation. We had our common enemy, the government borrowed vast sums of moneys, raised bonds and taxed the wealthy to build the armaments and create the army and navy that won the War. It also sped up our recovery from the Depression and left us a World power, not only militarily, but economically. It occurred due to nationalism, standing behind our president and a hell of a lot of borrowing taxing and spending by the government.

For a more in-depth analysis of how Conservatives supported European Fascism in the 1930″s read this link. It is absolutely fascinating.


Now fast forward to what we face today:

Conservatives weakened the banking and corporate regulations put in place to correct the errors that led to the Great Depression. As a result of this and the tax cuts to the wealthy and massive borrowing to pay for two wars, we entered into the Great Recession. This led to another Democratic President taking office to try to correct the country’s economy.

Meanwhile in Russia, a KGB strong man had already been in control and took a country that was devastated economically due to government mismanagement of her economy and built back up their military machine. Putin also inspired national unity by telling the Russian people to blame the West for what happened to their “Soviet Empire” and the economic devastation it brought. He also found a group he could still focus Russian blame on, the homosexual community. He is a strong man dictator. He moved into Georgia despite complaints from the United States and Europe. He flexed his muscles and other than muted complaints coupled with conservative adulation, he got away with it. He was so successful, even with his open discrimination of the LGBT community; he was able to host the Winter Olympics.

Then Putin moves into the Crimea last week citing his need to protect ethnic Russians who lived there. This is where we are today.

However, there are some differences from now to what was going on back then.

Despite not liking President Roosevelt, the Republicans did work with him and didn’t block government efforts to get the country back to work to include borrowing money to pay for economic stimulus programs or taxing the wealthiest to pay down our accrued debt.

Despite not liking President Roosevelt, the Republicans didn’t publicly and angrily denounce his efforts of foreign policy while at the same time expressing adulation for a “strong man” who just invaded another country.

Unlike Germany in the 1930’s, Russia has and formidable nuclear strike force second only to our own. The Mutually Assured Destructions doctrine still applies.

Unlike Germany in the 1930’s, the biggest example of propaganda is Rupert Murdoch’s News Corp i.e. FOX News.

The biggest end-run’s into Fascism in the world today comes from American Conservative groups and corporations i.e. Koch Industries and Charles and David Koch.

John Bolton, John McCain, Lindsey Graham, Rudy Giuliani, FOX news commentators, openly call our President weak while he tries to find ways to resolve this dilemma that if handled incorrectly could literally destroy all life on this planet. Did I mention that Putin is a strong man and he has nuclear weapons and a willingness to use them?

The rhetoric the rightwing is using is exactly what President Kennedy faced during the Cuban Missile Crisis in 1963; the only difference was it was in private. Publicly the entire nation stood behind our president who held the Hawks back, took the time to consult the best minds available, explore all the options and used diplomacy to avoid worldwide destruction. These are the things President Obama is doing right now that the right is ridiculing him for.

These are perilous times. This wouldn’t be a proxy war with the Soviet Union like we engaged in with them during the Cold War. This is Russia; this is NATO and the United States. If we act unilaterally and forcibly as the FOX talking heads and idiotic politicians playing to bigoted teabaggers want, we destroy the world.

Obama did not invade the Crimea; Putin did, as he did Georgia with no complaints against George Bush as the rightwing complains about President Obama today.

We have one president at a time, he is the embodiment of our national foreign policy, we are only assumed as being weak when we distance ourselves from his deliberation and resolve for the interests of our nation, her people and the peoples of the world.

Racism is not as important as the wellbeing of the United States. He is our president until his term is up. Everyone needs to stand behind him and help him navigate this country through this crisis without bloodshed and nuclear annihilation. We also need to stand behind him and the rest of the nation to get Americans working again, to expand our economy again, the care for all of our people again, despite race, creed, religion, sex or sexual orientation.

America is more important than Racism and Bigotry. You don’t get that, don’t call yourself an American.

You hate this country and her president, then like Snowden flee to Russia and spend time with Putin and what he has to offer. As the old saying goes that the conservatives brought up in the 1960’s and 1970’s. America, love it or leave it.

One final word, vote these idiots and bigots out in 2014. Lives do depend upon it.