unblock's 10-point plan for economic reform:

[unblock]

(1) funding for future commitments such as social security shall be accounted for as general set-asides, not to be commingled with general expenditures. this doesn't mean the government has to hold cash while maintaining debt, it just means that it has to be reported properly. this means we will have a clear view into how underfunded these programs are.

(2) abolish the social security and medicare payroll taxes. these amounts will continue to be tracked, but they will be funded out of general revenues instead of payroll taxes. this means an immediate cut in labor costs. without changing anyone's nominal compensation, employers save 7.65% and employees earn 7.65% extra (up to the social security limit).

(3) increase the minimum wage to a living wage. i don't know the exact percentage here, but note that item (2) means that an increase of 15.30% is effectively pain-free.

(4) tie income tax brackets, exemption levels, etc., to state/locale cost of living. i am aware that such measurements are corruptible in the long term, but this plan can be fixed at a later date in that event.

(5) tilt the progressivity of the income tax brackets to further assist those near or below the poverty level.

(6) increase income taxes, consistent with (5), as needed to fund item (2).

(7) further increase income taxes, consistent with (5), as needed to cut eliminate the annual deficit within, say, 6 years.

(8) initially tax interest, dividends, and capital gains income the same as ordinary income for all but the top bracket or two.

(9) for the top bracket or two, tie the tax rate on intereset, dividends, and capital gains to gdp. the higher the gdp, the higher the tax rate and vice versa. this means the government makes more money when the economy is booming and less when the economy is tanking. this automatically pushes the government toward running a surplus when the economy is great and running a deficit when the economy sucks, which is what it should be doing.

(10) similarly, tie the bottom bracket or two to gdp. the lower the gdp, the higher the bracket and vice versa. i.e., lower gdp means more of you income is exempt from taxes. again, this automatically pushes the government toward running a surplus when the economy is great and running a deficit when the economy sucks.


among the many advantages of this plan is that it puts more money in the hands of the poor and struggling. make no mistake, this bulk of this money will eventually wind up in the hands of the rich, because that's what the rich do. the thing is, they have to EARN it by providing actual goods and services to the people of this country to get the loot.

this makes it easier to balance the budget and run surpluses when times are good and deficits when things are rough. when there is a surplus (good times), the debt can be paid down. when there is a deficit (bad times), both the rich and the poor get a break, which helps both investment and consumption, which helps quickly get out of the bad times. in fact, the PREDICTABILITY of such payouts may help prevent or mitigate the bad times in the first place.

eventually, other issues such as property taxes and school funding need to be addressed, but i can't solve ALL the problems at once....

[blm]

1. ...will keep bumped while you figure out how to solve the rest.....

;))))))))))

[unblock]

2. voting me in for president is the price for that :)))))

[Zynx]

3. Problem with abolishing the payroll and medicare taxes is that they

account for so much revenue that we would have to raise the regular income tax big time to cover for it. Last time I checked FICA brought in over $800 billion.

[unblock]

4. true, but much of it is just optics

it's more of a tax consolidation than anything else. you're getting a 15% tax cut on the one hand but a hike on the other hand to cover for it. so, yes, the income tax rates LOOK higher, but this part of the plan is revenue-neutral.

moreover, part of the burden is shifted to the higher income brackets who can better afford it. this of course is one part of the plan that the rich would howl over, but face it, this plan is not your typical sop to the rich.

[Zynx]

12. My point was that it would be a dramatic reform.

Payroll taxes bring in almost as much as income taxes and are much less costly to administer. Administering the personal income tax is very expensive by comparison. Also, income taxes are much more volatile than payroll taxes in terms of collecting revenue.

[Selatius]

5. Your solution is dangerously incomplete

It is too easy to reverse. You need to do something like this to make the reforms far more permanent in nature:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=104&topic_id=5599113&mesg_id=5599113

[unblock]

6. well i certainly like that platform as well....

[triguy46]

7. So let me get this straight,

if I choose to live in San Francisco, I'd be in a lower tax bracket? Exactly how does this make sense? Through my higher taxes I'm underwriting someone's fantastic view. Using the tax code to underwrite lifestyle choice as in where you live, seems more than a little unfair.

But, that said, I'm on board with the rest of the plan. Really like #2 as a means to adequately fund a single payer, universal health plan.

[unblock]

8. sort of.

if you live in san francisco, perhaps the first $30,000 of income is tax-free, whereas if you lived in peoria, perhaps only the first $15,000 of income is tax-free. it depends on what the poverty level is in your locale.

the point is that you don't want to tax san franciscans as if they were wealthy just because they earn enough to live like kings far away from any major city, when in fact they're struggling where they are.

i'm most definitely NOT saying the tax code should be used to completely equalize this, just that it should mitigate some of the injustices of having uniform numbers across all locales.

[triguy46]

9. OK, that seems tweakable...

how about raising it to $30, but phasing it back in as income increases. I don't mind needs testing, and I don't mind giving the poor a break. But have a hard time underwriting dual income no kids couples making $250K/year just because they live in SF.

But perhaps there needs to be some more refined measure. I would suggest that "cost of living" is heavily weighed toward housing. I wonder if all other components are as different? If housing is 4 times the cost of the midwest, it doesn't mean food is 4 times the cost, or gas, or utilities.

I'm on board with the concept, just tinkering with the details.

[unblock]

10. it's true that "cost of living" is corruptible

some devious politico could reengineer it to heavily weight this or that until it most benefits the states they need in the next election, etc.

but i think it's a step in the right direction.


i'm not sure i'm on board with your idea of phasing out the cost of living adjustments at the higher brackets. the thing is, $250k in san francisco is NOTHING like $250K in peoria, so taxing them the same isn't very fair. the problem is that it's almost like there's a different currency in different parts of the country. one dollar just doesn't buy nearly as much in manhattan as it does in podunk. the whole idea of progressivity is to tax more heavily the people who are RICH, not the people who simply have higher paying jobs because they live in higher cost of living areas. "rich" in one locale is different from "rich" in another.

[triguy46]

14. As a lifelong citizen of Podunk

You would never be able to sell this here. There are 50 states with 2 senators each, and bunch also have podunks. So unless we are going to eliminate congressional action, you would have to move this. I understand, after watching a show on HGTV last night, that $650K in SF gets nothing. In OK, that would get you over 5000 square feet, and 5 acres. That doesn't mean we want to underwrite the SF couple. We have our share of poor here, and $6,000/yr is social security benefits buys little more than it would in many places, it is still poverty income. I'm concnerned with the low end, but have little compassion for people living in $650K condos in SF. Things can be much worse.

[dkofos]

11. What about corporate taxes??

[unblock]

13. actually enforce them.

'nuff said.

[Selatius]

15. It's a bit difficult to enforce when they underwrite politicos' campaigns

They have some of the biggest bankrolls in the lobbying world. Unfortunately, in today's electoral system, it has become conventional wisdom to curry favor with these powerful groups in order to more easily build a war chest for campaigning. It's easier to solicit donations from several wealthy individuals worth tens of millions if not hundreds who also own or have influence over the radio, the television, and the newspaper than it is to solicit donations from their employees who own little if anything in comparison. A couple hundred executives for money? Or several million workers for money? Which one is the path of least resistance?