Here is MY deficit-reduction plan. This plan does not reflect the views of anyone but myself — and maybe half the population. Unlike deficit plans from the “serious people” in DC, this one doesn’t annihilate the poor and gut Social Security and the middle class while passing even more of the benefits of our society up to a few at the top.
1) Restore pre-Reagan top tax rates. We didn’t have massive deficits until we reduced the top tax rates.
2) Income is income. No more reduced capital gains tax rate. The incentive to invest should be to make a bunch of money from a good investment. The reason there is a low capital gains tax rate is that the wealthy get most of their income from capital gains. And the reason they get most of their income from capital gains is there is a low capital gains rate. The resulting income shifting schemes are a drag on the rest of us. (Also applies to dividends.)
3) Income is income. Inheritance income should be taxed as income, except there should be a “democracy cap” on how much someone can inherit. We decided not to have an aristocracy when we founded this country so we shouldn’t have one.
4) Businesses should be taxed or not taxed, but not taxed AND not taxed. They shouldn’t be able to use “double Irish” or “Dutch sandwich” or operate out of PO boxes in Bermuda or the Cayman Islands. (Bonus, this also helps reduce incentives to send our jobs and factories out of the country.)
5) If you don’t pay your taxes We, the People won’t pay to provide you with services. We can start by not allowing you to have a driveway that connects to public streets, or water/sewer hookups or mail. Also we won’t enforce any contracts for you, including the one that says you “own” your house(s). And no government-developed Internet for you.
If companies like Google want to “double Irish” and “Dutch Sandwich” us or operate out of PO boxes in tax havens, we shouldn’t let them use government services like courts, or the government-developed Internet. See how well they operate without access to roads (that includes for employees to get to go to work.) How about withdrawing the limited liability protection that investors in corporations receive? And of course no protection for “intellectual property” or trademarks. Oh, yeah, no access to anyone who went to a school that used tax dollars. And no government services means no sea-lane protection for your products shipping from Chinese factories, by the way.
6) Speaking of sea-lane protection, why do we have a military budget comparable to when we faced nuclear annihilation by the Soviet empire? Bases in Germany and Japan? And why can I go to this website, pick a DC-area zip code, say 22314, and learn that “Dollar Amount of Defense Contracts Awarded to Contractors in this Zip Code from 2000 to 2009: $7,086,397,848.” Seriously, scroll down the page and look at some of the contracts and amounts awarded. I suspect there’s some serious deficit reduction to be found in the military budget. A comprehensive and very public audit of where all that money has been going since, say, 1981 might take a chunk out of the debt problem all by itself.
7) I could start listing all the corporate subsidies, tax breaks, monopoly grants, schemes, contracts, etc. that we pay for, but I think you get the idea. How about calling bribery by its name: bribery, and doing something about it?
8) To the extent that implementing this plan does not clear up the deficit and start paying off the debt, how about a yearly national property tax on all individual holdings above, say, $5 million, with the tax rate progressively increasing as total wealth increases, and keep doing this each year until the debt is paid off. Perhaps start at 1% on $5 million, 2.5% at $10 million, 5% at $50 million, etc. (Hedge fund managers and investment bankers start at 50% and go up, just for the heck of it. We can call this the “get the money from where the money went tax.”)
So there is MY deficit-reduction plan. Or, instead, we could do what the “serious people” deficit-reduction plans do: cut services for We, the People, cut Social Security, cut health care, cut education, cut infrastructure, cut the things that make life better for people, and give all the money to a few at the top. Take your pick.