Ooooooh! Please Raise My Taxes!

For anyone who knows me or has read any of my articles, posts, etc. I am very much Center-Right on the political spectrum. While I do I lean toward the left on a handful of issues, I am most assuredly a solid Conservative when it comes to our economy and yes I am asking for a healthy tax increase!

To me, being a Fiscal Conservative doesn’t simply mean, cut-taxes/cut-government spending. Without a doubt, I would like to see both of the things happen, however, I am also very much a believer in paying for our obligations and not continually putting everything on the credit card. That holds true when my wife and I discuss our monthly budget. It should also hold true for a National Budget.

In order to move forward with this discussion, I believe it would be beneficial to understand, at least at a high level, our Federal Budget. Below is a high-level breakdown of that budget for 2019 with an approximate target $4 TRILLION dollars:

Based on the above, Mandatory Spending, items that cannot be reduced or suspended, represents nearly TWO-THIRDS of the budget. The below graph provides a breakdown of the Mandatory Spending bucket:

While the biggest ticket items in this bucket are Social Security, Medicare and Medicaid, there are other items like Veterans’ Benefits that are definitely top of mind for many people.

The below table provides a break down of the Discretionary Spending bucket:

We could spend a great deal of time diving into each of these macro and micro buckets, but rather than doing so, I simply wanted to bring these macro figures to everyone’s attention as I believe we can’t have a rational discussion about budget or taxes without understanding where the money goes or where from where the government gets its revenue. As for revenue, the following graph provides a breakdown of the revenue sources:

The above graph shows a few nuggets for us to consdier moving forward:

  • Individuals are providing roughly 68% of Federal Revenue through Income Taxes and their “portion” of the Payroll Tax.
  • Corporations are providing roughly 25% of Federal Revenue through Income Taxes and their “portion” of the Payroll Tax.
  • Payroll Taxes, which fund Social Security and Medicare, equate to roughly $1,247 BILLION dollars which is far less than the projected $1,550 BILLION dollar budget projection. Some of this covered by the Social Security Trust Fund, but we are still budgeting more than what we are projecting to bring in.

While there are many more points we could dive into, the third bullet is the issue I would like to focus on and ask the following question. Why are we even putting forth a deficit budget or r at least a deficit budget on the Mandatory Expenditures? While I would never expect the budgeting to come out perfect after a year of running our Federal Government, I would expect us to at least plan for relative balance. But we don’t and the answer to why is very clear. Our Government doesn’t have to. They can simply pass whatever budget they choose, print money at will, and by and large, most people won’t hold them accountable at the ballot box for their spending or their inability to reign spending in. Secondarily, most people don’t read about or understand what year over year of this disastrous policy making will do for the long-term future of our country.

So back to my request for higher taxes. I would propose creating three separate taxes to fund each of the Macro Budget Buckets:

  1. Mandatory Spending
    • Change the Payroll Tax to cover ALL Mandatory Spending plus 10% and adjust the limits/rates to allow for this to happen
    • Convert the Social Security Trust Fund to as a Mandatory Spending Trust Fund
    • In the event there are surpluses, all dollars should go into a trust fund and should NEVER be co-mingled with the Discretionary Fund
    • This will ensure that Individuals and Corporations are sharing more equally in funding the government as they both are served by the government
  2. Discretionary Spending
    • Change the Income Tax to cover ALL Discretionary spending plus 10% and adjust limits to allow for this to happen
    • In the event there are surpluses, all dollars should go into a trust fund and should NEVER be co-mingled with the Discretionary Fund
    • Corporate “rates” could be kept low as their overall taxation would increase under the Payroll Tax changes
  3. Interest and Debt
    • The “Death” tax should be used to cover outstanding interest AND debt reduction
    • Debt and Interest are expenditures that were incurred by people in the past, therefore IMO, built wealth should be used to pay for those items
    • People who have lived on the largesse of the Government should be the ones primarily responsible for the costs
    • IMO, that “Wealth” was also built in some part based on the Government incurring that debt so a portion of that wealth should be used to retire it

These proposals are not painless. Taxes will go up. I philosophically hate the “Death” tax but difficult times call for difficult decisions and I see this as the least impactful way to pay interest and retire the debt.

I know many Conservatives will read this and call BLASPHEMY but I challenge them to tell me how it is a bad thing to cover our expenditures and put money away for the future while paying down the debt with minimal impact to the current generation that did little to compile it.

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