We Can Balance the Budget. Right Now – No Tricks, No Gimmicks, and No B.S. [Reader Post]

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We’ve got a federal debt problem, and our political leaders are not taking it seriously. Granted, Paul Ryan was ready to step up and give us a budget that will eventually get us back on the path to fiscal solvency, but even his suggestions were promptly scorched by our president, whose own budget proposal was such an excellent idea that it got rejected unanimously by the Democrat controlled Senate. One of the biggest problems with getting any kind of spending reforms in Washington is that to most people the federal debt is some distant issue, or worse, something that can and should be paid by somebody else. I want to change that.

I had previously written a post showing how we could spread the pain of paying off the existing national debt by spreading it across every adult taxpayer in the United States. It was a quick, back of the envelope estimate that I even admitted at the time was flawed and a number of commenters rightly called me on it. I’ve gone back and made a few tweaks, such as adding an additional bracket for earners making over $5M per year, and making the brackets more progressive. Here is what I came up with:

(Side note: Click on any image in this post to view a larger version)

The boldface shows where I made a few tweaks to the numbers. The schedule is now more progressive across every income bracket. Yes, this will be painful for every person, but if you think you have it bad look at what the person in the bracket immediately above you is paying. That person has it even worse, and that continues right up to the top, where the 8,274 Americans who reported over five million dollars in income last year get a bill for 100 times their annual income. I hashed out a few details as to how this could be repaid and possible exceptions, which you can read in my original post. You might notice that the totals also increase somewhat. In the nine months since I wrote the original post our leaders have added another $1.3 trillion to our federal debt. Ho hum.

This time I took it a step further. I found some debt projections over the next few years to see how much additional debt we can expect to assume by year:

The next step was to use my same rules to project how we could pay for our additional debt in each coming year. Here is how 2013 looks:

Again, no American is exempt regardless of income, and both the rates and actual dollars are progressive all the way up the line. And if you haven’t already noticed, yes, we are confiscating twice the annual income of our top earners. I did the same exercise for each year through FY17, and pulled together an aggregate of what each American’s total bill will be. To avoid repetition I’m not displaying them here. Instead I’ve summed them all up in the separate table:

Now take a look at what you owe. The column on the far right shows your combined bill for paying off our total deficit plus the projected deficits for the next four years. I can’t imagine a single person being happy with their bill, and if you don’t like what you’re getting stuck with, again – look at the person in the next bracket up and it gets even uglier. And as bad as this looks, it gets worse.

If you’re married these rates don’t apply to household income; they’re based on the incomes of both you and your spouse. I’m looking at where Sister Babe and I fall under this payment schedule, and it’s not pretty. If we were handed a bill like this over the next few years our spending habits would change dramatically. This would all but end going out to eat, going to the movies or any other shows, and cutting every discretionary expense (not to mention savings) in our household to the bone. As this same effect multiplies across every household in the United States guess what happens to all of the lower wage earners in those service industries and every other business that they support. Now with the contracting economy think about what happens to the tax base at local, state, and federal levels. And it gets worse.

Why do we have this debt to begin with? Simply put, it is because the government is spending far more than it is collecting. That means that all of this money you’re being asked to spend only pays for the deficit spending. In case you missed it this is not some alternative tax or fair tax or flat tax – this is an additional tax, not a replacement for the existing code. So in addition to federal, state, local, property, sales, and any other taxes you’re already paying this monstrous bill is what you owe on top of what you pay now.

How about if we just go after those evil one percenters, or call for a "Buffet Rule" or whatever the left’s class warfare meme of the month will be? The Forbes 400 wealthiest Americans have a combined net worth of $1.5 Trillion. Let’s start off by confiscating every cent that they own. Doing some rough math that gets you a ten percent discount on your bill for the current debt, and will naturally increase your bill on subsequent years since we’ve killed the geese to get their golden eggs. And if we set a precedent for the government to decide to arbitrarily confiscate the wealth of private citizens at a certain income level guess what the people who fall below that line start doing? And guess what the effect on private investment will be at all income levels? "Eat the Rich" might be a great Motorhead song, but as a tax policy it doesn’t measure up.

(Click on the image if you want to hear Lemmy at his best)

"Shetland pony extra pepperoni, just pick up the phone"

Now that we’ve dispelled the notion that eating the rich will solve our problems, what about businesses? Um, why do you think that we’re having such an anemic "recovery"? The Nation ran an interesting article called "Six Rigged Rules Corporations Use to Dodge Taxes"

It breaks down a few complications/loopholes in our tax code that allow corporations to avoid paying taxes. Most leftists reading the article will conclude that we need additional taxes and regulations so that our government can get its hands on this money. Most conservatives reading the article will take away something to the effect of, "Well, if you lower the tax rates and make it cheaper to pay the tax code than to pay lawyers and accountants companies will choose to pay the tax."

Keep in mind one other flaw in the notion of taxing businesses – any tax charged to a business increases its cost to produce whatever it sells, and gets factored into the cost of the product sold. In other words, business taxes get passed right along to you and me, whether it’s a direct tax, a value added tax, import tariff, etc. If you don’t believe me the next time you buy a cup of coffee look at your receipt and take note of who pays for it – it isn’t Uncle Starbucks. Or as Fred Thompson said it so well in 2008, "Now, our opponents tell us not to worry about their tax increases. They tell you they’re not going to tax your family. No, they’re just going to tax ‘businesses.’ So, unless you buy something from a business, like groceries or clothes or gasoline, or unless you get a paycheck from a business, a big business or a small business, don’t worry, it’s not going to affect you!"

Mentioning class warfare versus the wealthy and going after businesses was not something I wanted to bring up in this post, but I felt it had to be included to take away the left’s favorite arguments and to drive home my main point. Our federal debt is not somebody else’s problem; it is our problem, as in each and every one of us. We can impose whatever level of tax rates we want on the wealthy that we deem "fair", but the reason that no leftists supporting these proposals show their math is because any impact on our deficits will be negligible at best. Taxing businesses sounds easier until you realize that we already have the highest corporate tax rates in the world. And as The Nation pointed out, GE has over 900 accountants dedicated to finding every loophole they can in the system. The massive multinationals will always have the resources to avoid high taxes. The small and mid-size business do not. Saying that you favor a "balanced approach" that combines slightly lower than planned skyrocketing spending with impactless class warfare tax increases might play well to the disciples of Paul Krugman.

Without numbers at least somewhat grounded in reality

a plan like that is as empty as the person proposing it. This is the point I’m trying to drive home – you can propose any tax increase that you want. Unless we make fundamental changes to how our government spends our money, no level of tax increases will accomplish anything.

We can pretend that we can pass this off onto people who make more money than us or onto businesses, or future generations as we are doing now, but at the end of the day it all comes back to you and me. I know that nobody reading this is going to like what I’ve had to say here – that includes me. If you’ve got better ideas let’s see your numbers. I’ve shown you mine – you show me yours.

One other piece to not lose in all of this – my calculations only go through 2017. It makes no mention of what our bills will be in 2018 and beyond.

I have no delusions that my tax increase proposals will ever see the light of day, but every American needs to know about this. Hopefully if enough people see how badly our government is being mismanaged they’ll start to pay much closer attention to what’s happening, and voice their displeasure to their elected leaders. And hopefully this will happen in November.

Cross Posted from Brother Bob’s Blog

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Bravo!

The core problem remains: The US tax code is designed to rob Peter to pay Paul, and we have a *lot* of Pauls out there, and they vote.

Bread and Circuses for the masses brought down the Roman Empire, and unless we can change the mindset of the average American, and to a greater extent make the Democrat party less dependent on handing out goodies to stay in power, we may see the same end.

@Georg Felis: #2,

Actually it may well be argued that overwhelming TAXES brought down the Roman Empire.

You can add to the list of causes for its disintegration such things as Apathy, Abuse of Central Powers, Bureaucratic Sense of Entitlement, and of course broadly dispensed Ether in the form of Entertainment (Circuses).

. . . . No parallel to today’s situation, is there? Nah, couldn’t be. Pass the ether.

Brother Bob at his best.

THE DEMOCRATS KEEP ASKING MONEY, BUT THEY DON’T PAY FOR NOTHING, AND THEY TAKE ON AND ON, THEY HAVE THE BEST INVESTOR INFO AT THE TIP OF THEIR CLICKS, AND WHO IS CLICKING FOR THEM IS ABOUT A HUNDRED PEOPLE JUST GETTING PAID TO DO THAT, UNIONIZE AND ALL GOVERNMENT BENEFITS, PENSION AND ALL THE JUICE, AND THEY TAKE AND SPEND THE PEOPLE’S MONEY WHILE SECURING THEIR OWN IN GOLDEN DEAL THEY ARE PRODUCING THEMSELVES FOR THEMSELVES ONLY, THEN THEY GO HOME AFTER ACCUSING THE OTHER PARTY MEMBERS
THEY DO IT ON THEIR OWN DEDICATED MEDIAS ONE SIDE ONLY THE GOAL OF THEM NOT THE PEOPLE,
THEY LIE TO THE GOOD PEOPLE, THEY HAVEN’T DONE NOTHING FOR AMERICA, THEY WILL DESERVE WHAT IS COMMING TO THEM IN NOVEMBER,
AMERICA LET DEMS OUT

One thing left out, is that the government must stop spending beyond it’s means and must in fact reduce budget to a reasonable, manageable amount. Unless this is made to happen, no taxation plan will succeed. The politicians have been warned by the people, yet they ignore the us and continue business as usual. Clearly, those who are spendthrifts must be removed from office.

Why is it so hard for the federal government to get it’s collective head around the idea that you just don’t spend more than you bring in. PERIOD!!?????

*sigh*

Today is America’s 3rd year anniversary without a budget.
As IBD puts it:
GOP: 3 (!) years now since the Democratic Senate passed a federal budget

~~~~~~~~~~~~~~
Tell me how could even an individual could manage to come out even or ahead without a personal budget for so long?
Unlikely.
A family…..with more than one person’s hands in the cookie jar?
Impossible.
A nation with thousands of hands in the cookie jar?
Even if we grandly got our numbers back to zero for a day it wouldn’t last.
How could it?

Nan G.
hi, yes even the poorest of the poor, count his budget when the only check arrive,
every month, even if they cannot count they manage to fill the month without too much hunger,
and those who deliberatly fail to make a budget, give a poor image to all AMERICANS NO MATTER THEIR POLITICAL AFFILIATION, THEY KNOW IT IS UNACCEPTEBLE TO PROMOTE SUCH IGNORANCE AND
LACK OF RESPONSABILITY IN FRONT OF AN AMERICA HURTING BECAUSE OF THE GREEN SELLING GAMES WHICH ARE SOLD TO COVER THEIR INABILITY TO BE A REAL LEADER OF THIS AMERICA,
THE LEADER WHO MAKE SO MANY MISTAKES ON THE DOLE OF THE PEOPLE, BECAUSE HE DOESN’T UNDERSTAND THE COMPLEXITY OF AMERICA, THEY ARE UNFIT TO BE IN THE WHITE HOUSE SINCE THEIR FIRST DAY, WHEN HE FIRST BOWED TO THE FOREIGN COUNTRIES,EVEN THOSE WHO HATE AMERICA, HE CHOOSE THEIR SIDE OVER THIS AMERICA,
AND NOVEMBER COMMING, DON’T YOU FORGET THOSE INSULT MADE TO YOUR BELOVED AMERICA.

@James Raider: Jim, don’t forget the resultant super inflation from over taxing the Roman citizens. The poorer citizens rode the system. A flat tax was needed then and today.

@oil guy from Alberta:
Lest we forget: Rome was peopled with over 80% slaves.
When a once-rich citizen became poor because of tax grabs, tax hikes or crop failures he would free all of his slaves and end his life in a big bathtub while his friends partied around him on whatever he had left.
There have been many articles written about how only a few of the wealthiest taxpayers could leave a state (NY, CA, etc.) and the finances of that state would collapse.
Roman citizens did it by suicide.
Our wealthy are doing it by leaving some states in favor of others as well as leaving this country as citizens.
When you look at a pyramid graphic of where our tax dollars come from (wealth-wise) you see the danger.
Rome is actually a pretty good analogy.

Problem is, if you do manage to balance the budget, Ubama will just use it as a license to SPEND MORE.

You have to understand that Obama’s goal is not to make America strong.

Obama hates America and everything it stands for.

The destruction he has engineered was not a accident.

I have been saying this for years that the largest governments on the planet are following the economic model from ancient Rome, have a majority of our people on state assistance then wonder why there isnt enough money for infastructure. Go Figure.

Excellent points regarding how we have to cut spending and our relationship with the government. I would have liked to have gone into that but the post was getting longer than I wanted – definitely for another time!