Eleven score and fifteen years ago “our fathers brought forth on this continent a new nation conceived in Liberty and dedicated to the proposition that all men are created equal” (Lincoln, 1863). Now presently it has been seven score and eight years ago that Abraham Lincoln has given the Gettysburg Address. Similar to 1863 with a war to free men from bondage, there is a war that if not resolved will enslave our children. The United States’ (US) debt looms over the Nation like a cruel taskmaster. The uncertainty of our economy has plagued the US for years. The debt is money owed to the US creditors. Analogous to personal finances getting the debt in control will take a two-fold approach; spend less or make cuts and bring in more money. The US needs to do these things to get their House, Senate, and State in order.
Currently the US Gross Domestic Product (GDP) is approximately $15.08 trillion (News, 2011). The National Debt is approximately $14.3 trillion (Government, 2011). The ratio of Debt-to-GDP is 94.8%. The first element of change needed to reign in the debt is to cut spending. Things like Social Security, Medicare, Medicaid, Veterans Benefits, and the Department of Defense are often at the top of the cuts debate. Social Security and Department of Defense are two of the three largest tax consuming recipients in the US.
Social Security is a Ponzi scheme. The Securities and Exchange Commission (SEC) has identified a Ponzi scheme as “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors” (SEC, 2011.) Social Security was created in 1937 and is separated into two categories; Old Age and Survivors Insurance (OASI) and Disability Insurance (DI). In all but fourteen of the seventy-four years, since its inception, Social Security has taken in more money than it has paid out (Trust Fund, 2011). The $2.4 trillion that was given to the Social Security trust fund was supposed to be there however, it has been spent by the government on other programs. Social Security money comes from paychecks and is immediately paid to Social Security beneficiaries. It will not remain solvent long, thus, the nomenclature of Ponzi scheme. Those who are working are paying now to support others and will not receive money later.
The cuts recommended to the Social Security are few. To fix Social Security every individual person that is receiving benefits, will not receive benefits beyond what they have contributed. For example an Oklahoma woman, Karri, was married for ten years. Her husband died at thirty-two and for the last nine years she has received $1,600 a month in OASI Social Security benefits. Her husband had fourteen years of labor at the 6.25% tax rate. He would have to average at least $197,485.76 per year to account for $1,600 a month for nine years. The solution, starting now all Social Security benefits recipients will only receive OASI and/or DI Social Security benefits based upon the amount of money contributed. The Social Security reform will not allow you to get more than what you put into the program ceteris paribus.
The Department of Defense (DoD) comprises of a number of ancillary departments. Specifically it houses the three military departments. The military provides a service to the people of the US. The cost of the DoD and the wars this year is approximately $702 billion as of July 27th, 2011. There are programs within each department of the government that has budget oversights. The DoD is scrutinized more, Senator John McCain stated, “the F-35 both in terms of buying the aircraft and their sustainment costs, which are currently estimated to be a jaw-dropping $1 trillion over the F-35’s lifecycle. (McCain, 2011).” Gratuitous oversight and budget overrun cost the government millions and billions per year. These overrun programs need to be weeded out of the DoD. The budget planning needs to be scrutinized to ensure sacred use of tax payer monies.
When a family creates a budget, decides upon cuts, and increases income by getting second jobs? Then a family can move forward with paying off creditors and eliminating debt. The government does not have a job to create revenue. Taxes are the vessel by which the government receives its “income”. Currently the government uses a progressive taxation system. A progressive tax “charges a higher percentage of income as income rises (Tucker, page 332). The current stand-off in Washington centers on income tax increases, budget cuts, and debt increases. Why tax those who are paying more? The average millionaire in America is “a fifty-seven-year-old male, married with three children (Stanley Ph.D., Danko Ph.D., page 9) Increasing the taxes on the “wealthy” does not improve our economic standing. It only put a burden on those who have sacrificed all of their life to achieve that wealth. Rev. William J.H. Boetcker in a1916 pamphlet titled “The Ten Cannot’s” stated (Boetcker, 1916):
“You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help little men by tearing down big men.
You cannot lift the wage earner by pulling down the wage payer.
You cannot help the poor by destroying the rich.
You cannot establish sound security on borrowed money.
You cannot further the brotherhood of man by inciting class hatred.
You cannot keep out of trouble by spending more than you earn.
You cannot build character and courage by destroying men’s initiative and
independence.
And you cannot help men permanently by doing for them what they can and should
do for themselves.”
Taxation linked to income is the wrong way to move forward. We live in a consumer society. “Scarcity is the condition in which human wants are forever greater than the available supply of time, goods and resources (Tucker, page 3).” Due to scarcity tax reform is the way forward to fund our government.
$0-1000 8%
$1001-10000 16%
$10001-25000 24%
$25001-50000 32%
$50001 - ∞ 40%
This is a progressive-fair tax based upon consumption. When a consumer purchases an item, if that item falls between $0-1000, then that purchase receives an 8% tax. Higher priced items will cost more in tax. If a person wants to purchase a $1.5 million dollar Ferrari then that will be taxed based upon financing rules of a vehicle. It would be difficult to pay 40% tax. The $1,500,000 divide by six years then divide by twelve payments in a year comes to a monthly payment of $20,833.34. The tax on this Ferrari will be 24%. This Ferrari will cost the consumer a total of $360,000 in taxes. That is $5000 a month in taxes. Another example is the purchase of a home. If a person wants to purchase a $200,000 home then that will be taxed based upon financing rules of a home. It would be difficult to pay 32% tax. The $200,000 divided by thirty years then divided by twelve payments a year comes to a monthly payment of $555.56. The tax on this home is 8%. This will increase this payment by $44.44 a month. And pay a total of $15,998.84 over the thirty years.
All apartment rent, homes, cars, pencils, or consumer products would be at the price of the progressive-fair tax. No more illegals not paying, no more corporation loop holes to buy one hundred new computers and use that as a tax write-off. All income earned is income kept. If you remain in the 8% tax then you have saved yourself money. Items required by need such as a home or transportation would be varied based upon the rules of the financing industry.
This will increase the government’s income. Relieving debt and setting free the future children and grand children of the US. This plan is not comprehensive or detailed. It needs a fine critiquing. It is a path of reform. It is a path of freedom. No more free handouts. It is difficult to turn down free money. The US continues to print money. Yet the dollar value is plummeting. It does not have as much purchasing power as it did four years ago. Minimizing our debt is imperative to the success of our future. When ten percent of our “income” or a tax is eaten by interest paid to debts it is time for reform. There are twelve pages of departments and organizations by the federal government. Our fathers did not fight to bring forth death by taxes or death by debt. We live in the freest country in the world. If we cannot free ourselves of ungodly debt we will be slaves to a four letter word, D E B T.
Works Cited
- Boetcker, William J.H. "The Ten Cannots" 1916. Print.
- "Government - Debt to the Penny (Daily History Search Application)." TreasuryDirect. Treasury Direct, 1 Aug. 2011. Web. 01 Aug. 2011. <http://www.treasurydirect.gov/NP/NPGateway>.
- Lincoln, Abraham. "Avalon Project - Gettysburg Address." Avalon Project - Documents in Law, History and Diplomacy. 20 Nov. 1863
- McCain, John. "THE NATIONAL DEFENSE AUTHORIZATION ACT." Mccain.senate.gov. 24 June 2011. Web. 01 Aug. 2011. <http://mccain.senate.gov/public/index.cfm?FuseAction=PressOffice.PressReleases&ContentRecord_id=c3416b09-ca0d-d21b-fe69-788ea0a81a6d >.
- "News Release: Gross Domestic Product." U.S. Bureau of Economic Analysis (BEA). BEA.gov, 29July 2011. Web. 01 Aug. 2011. <http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm>.
- "OASI Trust Fund, a Social Security Fund." The United States Social Security Administration.ssa.gov. Web. 01 Aug. 2011. <http://www.ssa.gov/oact/STATS/table4a1.html>.
- ""Ponzi" Schemes." U.S. Securities and Exchange Commission (Home Page). 01 Aug. 2011. Web.01 Aug. 2011. <http://www.sec.gov/answers/ponzi.htm>.
- Stanley, Thomas J., and William D. Danko. The Millionaire next Door: the Surprising Secrets of America's Wealthy. New York: Pocket, 2000. Print.
- "Trust Fund." The United States Social Security Administration. Ssa.gov, 01 Aug. 2011. Web. 01 Aug. 2011. <http://www.ssa.gov/oact/progdata/fundFAQ.html#n6>.
- Tucker, Irvin B. Macroeconomics for Today. Mason, OH: South-Western/Cengage Learning, 2011. Print.
