Tax The Rich: A Deficit Plan That Doesn’t Hit We, The People

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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.
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2 thoughts on “Tax The Rich: A Deficit Plan That Doesn’t Hit We, The People

  1. How about this?
    Lets tax Chinese imports for 5 to 7 years and take the billions we collect and turn them into entrepreneur grants in the amount of $250,000 each.
    The strength of our economy is individual ambition, good ideas, solid advice and lastly is the funding.
    Think of the innovation that has been created in the US economy with a good idea, 250 grand and the right mentor.
    Create $250,000 entrepreneur grants and give participating mentors access to a venture capital network willing to work with the program.
    Here is how it works.
    We The People, It is our money why can’t we choose who gets it?
    It is not the government or a banker who decides if an applicant is worthy of the grant it is a citizen who decides.
    Each citizen decider/volunteer/mentor has to be a proven business success (a multi-millionaire) and committed to working with 2 grant applications/business plans/entrepreneurs during a calendar year plus be willing to mentor the recipients and work with venture capitalists.
    The payoff for the mentor is a tax deduction that is residual.
    The tax deductions take effect and the percentage increases with each of the chosen applicant successes (they can pick a couple every year if the program is extended).
    Success is determined by a winning applicants hiring of a minimum of 4 employees the first year and keeping them employed for 365 days in the following year after their approval (it is a two year plan).
    If the approved applicant continues to succeed in the future years the “mentor” gets a tax break for those years as well and the more his choices succeed the smaller his annual tax liability.
    The well screened and pre-approved “mentors” (they have to apply to be a mentor) sign contracts not to steal ideas and can then scan through the web-based business plans database and choose the applicants/business plans they think have a real shot at success.
    Access to the venture capitalist database is for the mentors only.
    Millions of entrepreneurs could post their plans online and have a shot at not only 250 grand but also a top gun mentor with something to gain from their success.
    Even if the mentors game the system for tax deductions by assisting the winning applicants with funding or creating companies the American people still win and hundreds of thousands of jobs and businesses are created.
    If the business goes bust and the money is lost, so what it was spent here. losing the money here is a better than giving it to the Chinese. We enrich our country not China.

  2. I met Bill Gates, Sr. at a meeting of nonprofits.
    I asked if we could justify a progressive income tax by maintaining that people who own a lot of stock use governmental services such as courts, streets and other infrastructure, police to maintain order, and even education for their companies’ employees, much more than I.
    He agreed with me and suggested that instead of calling it a progressive tax, we should call it a PROPORTIONAL tax. Which is what it is.
    Carolyn Kay

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