“We are running over $20 trillion in debt. I want to make sure that we are clear on this—that $20 trillion is owed by us the taxpayers, not our elected officials. They may waste it, but in the end, we are going to have to pay it in one way or another.”
I do not understand the United States Congress at all, and I am speaking about both houses. You have a Republican-run government that is liberal-leaning and the Democrats are still complaining about the conservativeness of these elected officials. I am not sure what their litmus test is for political leanings, but I would think they would simply sit back and watch the party implode. In particular, I am aghast at what is going on with the budget and tax reform process.
Here is the problem that clearly the government simply cannot fathom. You cannot have any meaningful tax reform without having a budget reform. To try to conquer taxes first is simply nonsensical. Here is what the Congressional Budget Office (CBO) is currently projecting for FY 2017 federal tax revenue: individual income tax – $1.6 trillion; payroll taxes – $1.2 trillion; corporate income tax – $310 billion; other – $267 billion, for a total of $3.4 trillion.
The requested budget was $4.15 trillion.
Additionally, we are running over $20 trillion in debt. I want to make sure that we are clear on this—that $20 trillion is owed by us the taxpayers, not our elected officials. They may waste it, but in the end, we are going to have to pay it in one way or another. When will that be? That is a good question. Maybe it will be when you are preparing for retirement and discover you have no social security benefits. Actually, the money that you paid into the system has already been spent due to government mismanagement, so really it is the next generation who will be paying your benefits, assuming that they can afford the cost.
I remember my time in the Army as an officer. Every August, we would start to play the Let’s Blow the Rest of the Budget game. The problem with the government is the fear that if your office does not spend its budget, then you lose that excess the following year.
Meaningful tax reform must first balance the budget. Without that, no reform actually accomplishes anything
In the military that means that come August, all of your higher echelon commands start looking at who has and has not spent their budgets. They then take this money and reallocate it to other units who are ordered to spend it. In what can only be called a monumental case of fraud, waste, and abuse, these lower command headquarters (battalions and companies) are then brow beaten into spending the money on items whether they need them or not. (I bring this story up to simply show how government waste needs to be reined in no matter what agency it is).
Meaningful tax reform must first balance the budget. Without that, no reform actually accomplishes anything. Let’s look at the big picture. The government, instead of zeroing out the discrepancies of money taken in and money spent, borrows that money in order to supposedly save the taxpayer from having to spend more. However, that money then has interest put against it.
Currently, if we divide out that interest among all 326 million people living in the United States that comes to roughly $8k per person in interest payments. How is saving me $1000 a year going to help me when I am left with an $8000 per family member interest payment? At some point we as a nation will have to atone for this indebtedness.
Taken directly from the GOP website (gop.com), the Republicans lay out several of their proposed ideas regarding taxes.
“The current tax code is rightly the object of both anger and mockery. Its length is exceeded only by its complexity. We must start anew. That will be an enormous undertaking and, if it is to succeed, it must command the attention and approval of the American people. It cannot be engineered from the top down, but must have a common sense approach, and be simplified…We oppose tax policies that deliberately divide Americans or promote class warfare. Because of the vital role of religious organizations, charities, and fraternal benevolent societies in fostering generosity and patriotism, they should not be subject to taxation and donations to them should remain deductible. To guard against hypertaxation of the American people in any restructuring of the federal tax system, any value added tax or national sales tax must be tied to the simultaneous repeal of the Sixteenth Amendment, which established the federal income tax.”
Let’s look at how well they have addressed these issues. Neither the House nor Senate plan truly simplifies the tax code. A simple plan is if you make $x then you pay y%. I never did well in algebra, but I am pretty sure that my 7th grade daughter could do our taxes with that sort of simplification. The statement from their website speaks of repeal and replace (familiar banter without the strength of true conviction coming from the congressional Republicans), but the plans being debated do not do either one of those things.
How is saving me $1000 a year going to help me when I am left with an $8000 per family member interest payment?
Next, the website calls for opposing tax policies that divide Americans, yet this is something that Congress is in no way addressing. When approximately 45% of Americans pay no income tax, and almost 20% of Americans qualify for earned income credit (meaning that not only do they pay no income tax, but they in fact receive money back that they didn’t earn), how is it possible that we have a system that does not divide America into classes?
The problem is that every American should have to pay some level of tax. As long as half of Americans pay no income tax, then they will have no vested interest in how our government spends our tax dollars. For example, people might become frustrated at our government spending $387,000 on giving rabbits massages or spending $171,000 to investigate the gambling habits of monkeys.
Just like most problems in our country, I do not believe that the solution is difficult to figure out. The problem is that it takes an amount of moral fortitude that I do not believe politicians have. There are several tax systems that are simpler and fairer.
I personally like a flat income tax. No matter how much you make, everyone pays the same percent. I personally do not believe in vilification of the rich. Minus lottery winners, actors, and athletes, the overwhelming majority of the rich earned their money by creating a product or business. They earned that money through not only sweat and struggle, but also with the risk of impending doom and disaster hanging over their every decision. They earned it, they should keep it.
The problem is that for all of their promises made during the election cycle, Congress has shown virtually no desire to actually accomplish anything meaningful.
However, if you don’t like that system, I am all about a national sales tax as well. In many ways I like this option even better. First, it truly taxes everyone in the country, since everyone buys things. Whether you sell drugs or work under the table, you are still going to get a bite to eat at McDonalds and then buy clothes for your expanding waistline. The wealthy are still going to buy expensive toys and therefore pay quite a bit more in their taxes, so it all works out. Those are just two (way over-simplified) examples, but in both cases one of the best results is the dismantling of the IRS.
The problem is that for all of their promises made during the election cycle, Congress has shown virtually no desire to actually accomplish anything meaningful. In fairness, they only have a slight majority, which means that they must get virtually all of their members to vote for these bills. However, and this may sound callous, I really don’t care.
We did not elect these people to hear their excuses, we elected them to see results. I will agree with South Carolina Republican Lindsey Graham. If the Republicans don’t find a way to accomplish tax reform, “that’s the end of the Republican Party’s governing majority in 2018.”
Unfortunately, I don’t really think that we would notice the change much anyway with the lack of accomplishments they have had so far.
