Category Archives: tax related issues

the cost of our system

Path to a Balanced Budget

Broken in the USA, Finance, Government Issues, tax related issues

We spend far too much time arguing about increasing or decreasing taxes as a mean to stimulate the economy and solve the deficit issue. Our focus needs to be on spending. Following is a family simple and straight forward approach to balancing the Federal budget which I believe that the electorate, regardless of political “leaning” will support. For reasons that should by now be apparent, this will not be supported by our current elected representation:

1.     Despite our poor performance in providing quality health care our single largest area of spending is in this area. The solution is not to spend more. We have been doing this and it is not working. Available statistics show that our capita spending is more than double other countries that are providing a superior level of care. Our current level of spending for Medicare & Medicaid is $1.15 Billion. A new system of health care would conservatively save $500 billion.

2.     Our 2nd largest budget is Social Security. I am not in favor of cuts in this area. In fact, with the aging of our population this area will need to increase.

3.     Next largest area is Defense/War. I do not have a problem with Defense. I favor additional funding here as long as it spent efficiently. I have a problem with the “war”. Our current level of spending is over $630 billion. We the currently spent more than $2 trillion in “direct” costs to the offensive campaigns in Iraq & Afghanistan. This does not take into account the cost in human lives which now stands over 300,000 (125,000 of these have been civilians). Nor does it take into account the related costs to our dedicated warriors in terms of rehabilitation. It is estimated that if we withdraw now the total eventual cost of these incursions will exceed $4 trillion.  Other estimates put the total nearer $6 trillion. Currently about $200 billion per year (about $100 billion in each war zone) is being spent on these, so far unsuccessful, efforts. I am in favor of bringing our boys and girls home now.

Focus on just two areas of spending has the potential to balance the budget. The current budget deficit is running at $684 Billion. Financial opportunities would remain in the areas of: productivity/efficiency, civil service salary inequity, disability abuse & other income security reform.

New Tax Bill & the Debt Disaster

Broken in the USA, Government Issues, tax related issues

New Tax Bill & the Debt Disaster

Thinking in the very short term (and selfishly) I am happy about the newly passed tax bill. The bill eliminates the penalty for not having health insurance. Since I prefer to self-insure and pay my own way in regards to healthcare it will save our family money starting in 2019.  This year and next I will continue to pay my way (at full retail) plus another $1,000 in penalties.

What is wrong with the bill? It is true that most middle-class tax payers will save as much as $1,600 a year in taxes. Relating this to the average family income of $70,000 it represents about a 2.3% increase in income. While not that significant, it is an improvement. Families with incomes under $100,000 currently contribute to 20% to federal tax revenues. By comparison, high income families (incomes over $500,000) currently contribute about 38% of the total revenue. These families will lower their taxes by 4% or about $40,000 per year. While this seems to bother my more liberal minded friends it bothers me much less than the big issue.

It is easy to provide a tax cut when you do not have to pay for it. What seems to have been lost in all the rhetoric is the fact that this was not a revenue neutral effort. In fact, the promoters have admitted that the bill will add at least $140 Billion in additional debt per year for the next ten years. Combined with the current annual revenue shortfall of $660 Billion this means that we will add about $8 trillion to the debt by the end of 2027. If we do not take action soon the national debt will approach $30 Trillion by the end of 2028.

As a fiscal conservative and a patriot this is extremely alarming. Is this the legacy that we want to leave for our future generations? If you are a loyal Republican you now have the opportunity to beat your chest in the knowledge that “we” did it. We passed a tax bill that lowers taxes! I wonder if it was worth it?

I have one other issue with what we have done. In an earlier letter titled “Tax Tweaking” I detailed my concerns about our complex & broken system of taxation. I came close to having a hernia when Paul Ryan stated that 90% of tax payers can file their taxes on a post card form. I’m not sure what he had been smoking, but this is far from the truth. I think the $11 Billion tax preparation industry and the $9 Billion IRS Budget would indicate otherwise. There are approximately 69 million tax payers that pay any tax. About 40% of all tax payers file their own taxes (most using sophisticated tax software). This leaves about 42 million that use 3rd party services. If you divide this into the tax preparation industry revenue it equals $260 that a tax payer is taxed just to file their tax return. Surely postcard filings can’t cost this much?

 

NPC (Not Politically Correct)

Broken in the USA, Health Care, tax related issues

Chapter 59 NPC (Not Politically Correct)

I’m fed up with politics and career politicians. I guess you could say I am reactionary when it comes to this. I’m in favor of going back the original concept of the founding fathers; the “citizen” representative that donates his time to governing the country, but that duty is not his or her main profession.  We need less governing and more common sense. Therefore, my view of PC is that some, if not much, of it is absolute nonsense. I do believe that we need to provide financial assistance to the injured and some of the less fortunate, but I do not believe that we should “dole” out money without the recipient making a contribution. Everyone that takes from the tax payer is capable of and should be required to contribute at least some of their time to assisting their country. Not only is this fair, but it is also essential to maintaining one’s dignity & self-worth. We all are aware of people on disability that are still working, some of whom are taking additional compensation in cash.

I also think that we should not reward families for producing more than two children. I think families should have as many children as they can afford, but paying them to have more than two is unjust to the taxpayers. When it comes to income tax allowances or income assistance the increased benefit should be capped at two children.

If I have ruffled your feathers, I’m just getting started. Let’s consider the issue that is having the largest impact of the tax payer (and the national debt). Our country is not healthy and overall the rate of ill health is accelerating. The primary contributing factors are over eating and lack of effective exercise. Over 68% of our residents are overweight and 35% are obese. The rate of obesity has more than doubled in the past 25 years and continues to climb. Less than 10% exercise daily for 30 minutes or more. It is no wonder that healthcare is so expensive in the US. Insurance rates and subsidy factors should take into account an individual’s BMI (Body Mass Index). Individuals with BMIs in excess of 30 should be paying about twice the average health care premiums and conversely those receiving subsidies should be penalized. Currently the healthy folks are being heavily taxed to support the folks that are using the health care system.

If you haven’t seen the following video I encourage you to check it out: https://www.youtube.com/watch?v=aUaInS6HIGo

We spend billions each year on health education and those dollars have been largely wasted. What we need is for all true patriots to take action. Wake up America.