Guts

Stop the Insanity.

You know the situation. You spend 50% more than you take in.
This year your income is $60,000, but you will spend $90,000.
Your family is entitled to it.
You can’t deprive them!
Plus, your creditors are cooperative.
They understand, and they encourage you to use your good credit to borrow the one third of your expenditures that you can’t cover.
No problem.
Just wish you didn’t do it year after year. The debt is mounting.
In fact it’s now almost 6 times your yearly revenue.
You know in your heart you’ll never dig out, but you just can’t help yourself.
You know it’s insane, but you just can’t quit.
You’ve got to keep your family happy.

You are the US Government.

You heard it right. The plan this year is for roughly $3.5 trillion in expenditures on $2.5 trillion in revenue. The debt will climb to $14 trillion, or 6 times revenue.
I’m not making this up.

In the recent election, the tidal wave was for “reducing the deficit.” We’re all concerned. Congress is concerned so it looks like the last thing the lame ducks will do is pass a tax reduction that will INCREASE the deficit another trillion or so.
Do you get the feeling they throw around a trillion like you throw around a ten?

But taxes aren’t the problem. It’s how they’re assessed.
Here’s my proposal to fix it once and for all, forever.

A Flat tax that is assessed on all income at a rate that will equal the projected yearly budgeted outlay.

Now, we hear about flat taxes all the time, but they’re always full of the same BS. My proposal is pure as the driven snow in the Metrodome.

Every single American Wage Earner will pay the same income tax rate.
Every single corporation doing business will pay that same rate.
Every dollar of income is taxable.
No exemptions
No deductions.
No graduated rates
No excise tax
No payroll tax
No estate tax
No health expense deductions
No mortgage deduction.
No marriage penalty.
No earned income tax credit.
No alternative minimum tax.
No capital gains tax.
No income tax dodges at all
No trying to figure out what’s fair.
No incentivizing behavior,
No rewarding investment.
No complicated tax returns
No lobbying. There’s no tax breaks to lobby for.

We tax income once.

Taxes are there to provide revenue for the government, period.

It was the 16th amendment to the constitution that started us down this road. It’s commonly believed to have allowed income tax. But what it really did was allow the government to do it anyway it wanted – which the constitution had prevented. Thus, the government has constantly changed the tax code, chasing concepts like fairness, investment, home ownership, conservation, and whatever the whim of the decade was.

My proposal: All Men are created equal.
Every one pays the same rate.
Doesn’t matter if you make $10 a year or $10 billion.
All men are created equal.
That’s what this nation was founded on, so everyone pays the same.
But what rate?
Simple, the rate that puts revenue equal to our projected expenditure.

So, every year the tax rate would be predicated on balancing the budget.
For example, (and these numbers are very rough):
2010
Total personal income in the US is estimated at 13 trillion dollars.
Total corporate income in the US is estimated at 2 trillion dollars.
The budget was $3.5 trillion, so the tax rate would be 23%, and that includes everything – social security, medicare, everything.

Flat tax.

Look at your paycheck. You probably take home about 70% of your gross – so not that much really would change for most of us, even after all of our deductions and games we play.
It just eliminates every single tax dodge on the books.
This year the government will collect only $2.5 trillion and just borrow the rest.
It’s called the deficit, and it amounts to a third of what the government will spend.
Again.
It will bring our deficit to $14 trillion.
It’s got to stop.
It’s ridiculous. Who among us can spend 50% more than we bring in?
What company could do this year after year?
There’s only one way to eliminate this idiocy and this is it.
A Flat tax that brings the budget into balance.

Our tax code has morphed into this giant animal that no one understands, volumes and volumes of it. It’s an accountant's dream but it's a national nightmare.


I’ll take questions:
But Rick, what about the mortgage deduction? The housing market will collapse.
No it won’t. They’ll be an adjustment period, but a homeowner’s taxes probably won’t increase much if at all.

But Rick, how do we get people to do things, like go green, go to college, go exploring, go to war, etc.
Simple. Vote on it.
If we want to incentivize something, give them a grant.
It will be up front, transparent, voted on, and visible, not hidden in a tax code too complicated for anyone to understand.
If people see it up front, they can judge it. Right now we don’t know what the government is doing, we just know they spend too much money.

But Rick, what happens if the economy improves?
Great, the income increases and the tax rate goes down, as long as we hold government expenditures in line – which there will be tremendous pressure to do.

So, let’s say in 2011, the incomes go up from $15 to $16 trillion, but we can hold the government line at $3.5 trillion. Great – a real tax decrease from 23% to 22% - which should further stimulate the economy and encourage job growth.

But Rick, what if we go to war?
Here’s a novel concept – we pay for it. The tax rate will go up. Let’s say we were going to declare war, and it was going to require another 1 point increase to fund it. Every American would pay. Think we’d have a real debate on the need for war at that point?

But Rick, What about millionaires? Shouldn’t they pay more?
Why? Because they’ve been successful? Look, I wouldn’t mind a surcharge on high incomes, like an extra point on every million dollars, but it should go to retire our debt. I also wouldn’t mind a surcharge on non-citizens working in the country. But, that’s an argument for another day, once we get the fundamentals in place.

But, Rick, What about poor people?
They pay. Everyone pays. A flat tax that makes everyone pay may encourage people to become participants in the American dream instead of observers.

It will probably require an amendment like this:

The Congress shall levy a uniform tax on all personal and corporate incomes at a yearly rate that projects to meet the budget of the U.S. government, and the balancing of the budget is mandatory.

Everyone will hate this idea because it's so simple we may not even need tax returns.
Every now and then someone brings up a flat tax, but not like this one.
This is simple, fair, easy, and direct.

Think about it.
Isn’t this way better than what’s going on now?
I know no one likes taxes, but why are we all whining about taxes all the time and how the government spends borrowed money?

What if you owed 6 times your yearly income?
You’d be a gone pecan. People have been abandoning houses because they were under water, but that’s small potatoes compared to where our government is, and they will continue it, no matter what the tea party says, unless we put a stop to it - and this is the way to do it.
The flat tax would eliminate every conceivable tax break (dodge) there is and put us back on a path to national solvency. It’s tough medicine, but all men are created equal, and would share the pain in relative equality.

If you think I’m crazy, take a number.
If not, let’s get this ball rolling. Forward a link to this blog to everyone you know, including your congressman with one simple sentence – “I agree with this.”
I call it the National Guts Campaign for a Flat Tax.