This post is somewhat redundant.
Last week, I identified the biggest problem facing our Nation – and that was the Republican party (and don't ask me why it's called a party when none of those people are any fun at all). Clearly when a group of people take over a portion of your Nation's Government and proceed to do things that are destroying it from within – THAT's a MAJOR problem! Other than the country actually being on fire or sinking into the ocean, it's hard to imagine something worse than that.
Since we are not on fire or sinking (at the moment – Global Warming is a slow process), we now need to look at the next thing that is causing our Nation to self-destruct which, I believe are lack of adequate (or fair) taxation. I know that this issue has been twisted and framed as a spending issue and yes, we do spend a lot, but not compared to other developed countries. In fact, we collect 33% LESS taxes as a percentage of GDP than the average of 33 OECD nations and that, of course, INCLUDES us dragging down the average!
Not only that but our Defense Spending is LARGER than ALL of the other OECD nations COMBINED. NOT including our $300,000,000,000 annual war spending which is, in theory, temporary – the US budgets $546,786,000,000 per year for the Pentagon, that "Military Industrial Complex" that President Eisenhower warned us would grow to pose a threat to "the very structure of our society." General Eisenhower said:
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the Military-Industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
Two hundred years before Ike, Benjamin Franklin observed that "they who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." This is not, however, an article debating the size and scope of our military spending but we need to set a realistic background for a discussion of taxation when US military spending is now approaching 1/2 of all Government spending outside of Social Security and Medicare – two programs that are self-funded and STILL running at a current account surplus.
Notice that, since 2000 – our taxes collected have dropped from 29% of our GDP to 24% of our GDP while Defense Spending (and these charts never include debt on Defense Spending, of course) has grown from 2.5% of our GDP to over 5% of our GDP. It does not take a math wiz to figure out that those two figures alone put us 7.5% of our GDP behind each year. On a $15Tn GDP, lower tax collection and higher military spending combine to put our Nation $1,125,000,000,000 deeper in the hole each year. THAT is your Deficit – plain and simple!
The fact that we don't even talk about these two factors in a rational matter is why I still believe the real problem is Republicans – it takes a massive propaganda campaign to convince an entire population that the two biggest issues affecting our National Budget are not the real issue. It takes a constant stream of lies and deflection to keep people distracted from such an obvious truth – that the reason we are running a $1.4Tn deficit is NOT because NPR has a $1M budget and it's NOT because little Jimmy needs a science book that was written this century but VERY SIMPLY because we collect less taxes than we ever did before while we spend more money on the Military-Industrial Complex than we ever did before. The elephant in the room is, ironically, completely ignored by the Party represented by an elephant:
What I find most interesting about the Conservative pundits (and their rabid fans) is how they generally claim to be successful capitalist but continue to push for decisions on our Nation's economy that would drive any corporation into bankruptcy. If you look at the US as a business, we have $15Tn of outstanding debt, we have $15Tn in revenues (GDP) and an operating profit (taxes) of $2.2Tn and $3.4Tn in expenditures. If we cut our expenditures in half without raising taxes, we would have a $500Bn surplus and it would take us 30 years to pay off our debt (assuming interest rates remained this low for 3 decades). This is very simple math yet to hear the Punditocracy discuss it, you would think just dropping teacher's salaries to minimum wage would fix everything.
When you have a company in this situation, you cut what you can, of course – but you can't cut all of your staff and you can't cut all of your rent or equipment etc. Cutting Education, for example, is like a company deciding they should not devote money towards training employees. Just keep randomly throwing people into jobs and hope for the best. Corporations pay for "Infrastructure" all the time – it's necessary if you want to expand – anyone who's run a large business can tell you that but, according to many – all those programs can be cut as well from our National Corporation.
So cut, cut, cut – cut it all until we are nothing BUT an army with a $1Tn budget and the discretionary spending of a 3rd World Nation and that still won't be enough to pay down our debt with just $1.3Bn of non-FICA collections. A large part of the idiocy in the argument to cut SS and Medicare is that $850Bn comes in and $770Bn goes out so what would be the point of cutting it unless the intention is to force those earning under $106,800 to contribute 6.2% personally for SS plus another 6.2% from their employer plus 1.45% for Medicare or $14,791.80 (13.85%) to be used to pay off other debts while terminating the program the taxes were originally scheduled for.
Let's pretend, just for a second, that we could get the "job creators" to realize this would be unfair – taking away retirement benefits but still taking the money away from the, what do you call them if you a Conservative bent on dehumanizing American workers? – job TAKERS. If we could just get over that logical leap of faith and cut SS and Medicare out of the conversation, then we'd see that the US collects just $1.3Tn in other revenues or just 8.66% of GDP, just barely 1/4th of the OECD average (which is dragged way down by our ridiculous 8.66%).
NOW we are beginning to get a look at the real numbers! Notice that Corporate Income Tax Collections are just $191Bn or 1.27% of our GDP while individuals pay $899Bn or 5.9% of our GDP or 4.6 TIMES MORE than Corporations pay, which is kind of funny because JUST the Fortune 500 declared a NET, AFTER TAX PROFIT of $758,820,700,000 last year. Since ALL 1M US Corporations paid $191Bn in taxes last year and since $191Bn is ONLY 20% of $950Bn (pre-tax profits) we can see that even if the other 999,500 US Corporations made ZERO, and paid ZERO taxes, we would still have an effective tax rate for the Fortune 500 of just 20.1%.
The reality is that the 999,500 US Corporations who can't afford armies of accountants, lawyers and lobbyists actually pay MOST of that $191Bn in taxes while the Fortune 500 walk away virtually tax-free on their $10.7Tn in sales. More idiocy in the Conservative camp when they talk about Marginal Corporate Tax Rates – it doesn't matter what your posted rates are if nobody pays them, does it?
Do you really want to balance the budget? It's VERY simple. We need $3Tn and we have a $15Tn GDP so just charge 20% on all transactions and there's $3Tn collected an no one has to pay a penny of income taxes, corporate taxes, SS or Medicare. There, wasn't that simple?
The only people who don't want to see a flat, no-loophole tax like this one in place are, obviously, people and Corporations who are paying LESS than 20% in taxes. As a consumer, even if Corporations passed the entire 20% VAT Tax on to you (but supply and demand will not allow that), 20% is still a lot less than most people and most business owners pay in taxes. You can even get fancy and exclude food ($600Bn a year) and clothing ($200Bn a year) from the VAT and maybe put a 5% tax on incomes over $10M a year for individuals and over $100M a year for Corporations to offset it.
There are many merits to a transaction tax. We wouldn't need the IRS, we wouldn't need tax accountants or tax lawyers, we wouldn't need complex accounting in small businesses and, best of all, foreign corporations selling INTO our market will pay their 20%, just like we do – NO LOOPHOLES! Our consumers are the greatest in the World – we SHOULD command a premium for our services…
Very simply, when you sell something, you give 20% of the revenues to the government – end of story. This will also have the added benefit of having the taxpayers subsidize unprofitable businesses by allowing them to accumulate write-offs, even when they are making sales.
If my daughters open a lemonade stand and sell a $1 glass of lemonade – 20 cents goes to Uncle Sam. If the market will bear $1.25 – then they clear $1 and, if not, then they clear .80 on a $1 sale and if they can't run a profitable business for $1 – SHUT IT DOWN!
THAT is Capitalism folks – taxes are a cost of doing business and all we have to do is cut out all the BS, eliminate the 16,845 pages of the US Tax Code and get America back to business. You would think Conservatives would be thrilled because those poor people buying a $300 refrigerator will pay the same 20% tax ($60) that a rich person buying a $3,000 refrigerator pays ($600) and the poor person buying a $199 flat screen TV will pay the same 20% ($40) that a rich person buying a $3,999 flat screen TV ($800). That is what we call FAIR!
Best of all, by eliminating the need for half the lobbyists, we weaken the stranglehold Corporations have on our Government. Also, if the Government wants more revenue, the simplest solution is to work to boost our Nation's GDP – finally all of our interests begin to become aligned as the Government, Big Business and our Citizens all want to grow our GDP – just like any good business should seek to expand its revenue stream. No more game playing – just make stuff that makes money and everyone is happy.
Let's talk about that!
