We cannot continue to borrow and spend. To me it is clear that if we want to continue social security we are going to have to pay for it.
It is my opinion that the working person who makes less than $90,000.00 a year is paying too much while the rest of us are paying too little.
A reform of our taxes and Social Security benefits
Revised Sep. 2011
The government will forfeit on all debt to the treasury thereby reducing the national debt to seven trillion dollars. This will force us to deal with our economic problems now. The only new issue federal bonds will be callable short term, callable transition national debt bonds or specifically backed bonds (for example highways with tolls to pay the bonds).
Social security and Medicare revenue.
In 10 years there will not be enough workers. End the social security and Medicare revenue that taxes workers including the corporate share. Instead tax all individual gross income 8% (call it the gross income tax). After the present social security revenue reduction finishes its term this will reduce taxes by 12% (when compared with the original rate) to those whose only income is earned income below $95,000 a year and increase taxes on everyone else.
All gross income includes wages, salaries, tips, benefits, all interest, all dividends, alimony, non-incorporated business profit, royalties and Rental Property income, realized capital gains, Ira distributions pensions and annuities which are not a return of premium, unemployment compensation, social security benefits, prizes, awards, gambling winnings, and inheritance.
The Federal Pension benefit replacing the Social Security benefit.
The benefit should be a graduated scale such that every eligible worker (67 year olds who have worked 160 Quarters) is supplemented by the Federal Pension so that he/she has an income of $26,000 a year ($40,000 a year for couples who have logged 260 quarters of work though they will have the option to file separately if each has worked 160 quarters ). The benefit should phase out so that an eligible worker who has an independent income of $52,000 a year receives no Federal Pension benefit. To accomplish this task people receiving the Federal pension (of $26,000) will be subject to a 50% tax on the first $52,000 of income independent of the pension.
This will begin for everyone now. Seniors presently struggling to survive will gain reducing the need for extra government support. The result will be that no retired workers will need Medicaid or other assistance. Some wealthy seniors will lose.
Although the disabled will be subject to the same ceiling their benefits will be handled separately. They will be required to take food stamps, use public housing, use VA Healthcare and other government benefits rather than cash assistance. The value of these things will be used to reduce their cash benefit.
Personal income taxes and corporate income taxes.
In addition to the gross income tax (the social security replacement) there will be a base income tax. The base income tax rate will be the same for individuals and corporations. The base rate table is given below.
Over but not over your tax is of amount over
$0 $10,000 10% 0
$10,000 $35,000 $1000 plus 15% $10,000
$35,000 $65,000 $4750 plus 20% $35,000
$65,000 $100,000 $10,750 plus 25% $65,000
$100,000 $250,000 $19,500 plus 30% $100,000
$250,000 $750,000 $64,500 plus 35% $250,000
$750,000 $239,500 plus 40% $750,000
The actual income tax rate will be adjusted by a multiplier. The income tax rate will be the product of the base rate and the multiplier. The multiplier will be a number selected by the Federal Reserve estimated to pay the previous year’s deficit or return the previous year’s surplus from/to the taxpayers. The previous year’s expenses will include an installment payment to pay off the (now reduced) national debt in 20 years.
For example, in a bad year the multiplier might be 1.2. This means that a man whose taxable income is $10,000 will pay $1200 ($1000 x 1.2) while a man whose taxable income is $750,000 will pay $287,400 ($239,500 x 1.2).
Corporate tax changes
The corporation will be able to deduct salaries and wages as they have in the past. In addition they may deduct salaries and wages (with an adjustment) a second time. However, this deduction may not be used as a carryover or any other form of averaging.
The adjustment is a subtraction of any increase of any non dedicated liquid assets. This means that as long as the liquid assets do not go to a new high point they will not decrease the wage deduction. This is a protection against corporate hoarding. (A dedicated liquid asset is money that will be spent in a planned capital improvement or new venture within the next five years.)
This means a small entrepreneur who pays himself a salary will reduce the taxable profit of the company by that amount. By taking half his corporate profits as salary rather than dividends it will reduce his corporate tax to zero.
This also means that there will be a 40% tax advantage by large entrepreneurs who employ more people. They can make tax free profits up to the size of their payroll.
Corporations will not be allowed to deduct room, board, travel or benefits paid to employees. This will encourage large companies to favor salaries without benefits. This will make these items subject to the 8% gross income tax (which corporations do not pay). Corporations or unions will still be able to package benefits paid for by their employees.
All corporate government tax evading subsidies will be rescinded.
Changes to the base income tax.Resend the alternative minimum tax.
Resend the individual 15% tax rate on capital gains and dividends. Tax at the full rate.
The filing status “joint” will apply to civil unions and not marriages. The government will no longer recognize marriages but will grandfather previously recognized marriages as civil unions for the sake of income tax. Marriage will be a matter for the church not the state. The civil protections of couples will apply to civil unions.