Category: Politics

I was reading this historical summary of how income tax has evolved in the United States over the last 200 years.  What struck me was the notion of citizens not paying any income taxes (as was originally the case).  When you do the research, it’s actually viable that we could pay zero in income tax today, yet raise all the same revenues for the federal government to maintain current spending levels (although our government should spend less anyway!). 

First let’s consider the two biggest problems that burden our economy today:

1. The Foreign Trade Deficit.  American’s send $1,000,000,000,000 (one-trillion) more overseas each year than we bring into the US. There is no funny-math here.  Certainly everyone can understand that if they spend $100,000 more than they make each year, it won’t be long before they are so far in debt that they can’t repay their loans, will go bankrupt, and will spend the rest of their days unable to get a loan due to poor credit.  Our government’s ledger has bigger numbers, but the concept is the same.  Our spending pattern is simply NOT SUSTAINABLE.
2. Massive Federal Debt.  America has amassed a nearly $10T debt.  This is money we owe that needs to be repaid.  We currently have no plan for how to repay it.   That’s $33,000 for every man, woman and child in America.

Unfortunately, with our shopping mall culture, we think we need to buy cheap $4 dolls made in china so we can have a Merry Christmas.  We buy so many of those stupid dolls that we end up sending $250M more each year to China than they send to us.

The solution:

If we were to switch our government’s revenue basis from income tax to import tax, we could solve both of these massive economic problems.  The prices of foreign goods would go up, having a temporary impact on our standard of living (ability to buy lots of $4 dolls).  But, those dollars would be directly put back into the pockets of Americans.  This means you’d have more money to spend.  New American businesses would be built offering prices competitive with their foreign counterparts, and within a few years, you’d still have your $4 doll again for Christmas, but it would be made in America.  Plus, you wouldn’t have had to earn $6 to afford the $4 doll in the first place.

Does the math add up?

It would be silly to say this is simple; but a rough cut says yes:

Currently, we import $2.2T of goods each year (2006).  We export $1.4T. 

US Revenues from income tax in 2006 was $2.4T. 

This means that if we phased in a 200% import tax over 8 years, we could eliminate income tax and maintain federal spending.  It means the price of your $4 doll would now be $12.  Of course, you’d have to expect the increased price of foreign goods to decrease American demand for them, which would further increase their price. 

If America were to institute a policy like this, we’d have to expect other countries to react.  Of course China wouldn’t like it – they just want our money in their pockets.  Even with taxes, most of the trade with China would still occur, but the net export:import ratio would drop significantly, especially a American businesses grow. 

Is there an alternative?

There is no doubt that this change would be scary.  But, is there a choice?  We can’t continue to spend like we do.  We have to pay off our debt.  What other policy do we have available to us which can decrease our spending while simultaneously paying off our debt and putting money back into American’s pockets so that we can live?  I haven’t heard of any.

Sadly, we’re going to “spend till we die”.   We’re too chicken to do this.

Tell me what is wrong with my plan; other than that you want your $4 doll.

Being in California, there are a lot of Democrats around me.  Most will vote Democratic next year, primarily in hopes that they will end the insanity in Iraq.  Unfortunately, the Democrats won’t do it.

Democrats had the opportunity when they were given the majority in both the house and senate.  Instead of ending the war, they approved Bush’s request for more funds.  What a bunch of wimps.

Here is what will happen if we elect Clinton or Obama. “I’m putting together a plan which will reduce our troops in Iraq by 50,000 immediately, and bring all troops home within 5 years”.  Yes, it’s going to be years.  Both Obama and Clinton have confirmed their intention to reduce troops; both neither will commit to bringing them all home.  These politicians are too weak to actually do what we need.  Worse, they both have said they’d agree to spending billions of dollars for reconstruction in Iraq.  Hello?!  These are people that burn their own libraries.  Why would we build them?

Ironically, the Republicans aren’t any better.  Desperate for Bush’s blessing, and scared to admit “we were wrong”, they take the view of “we need to stay in Iraq”.  Equally insane.

When will one candidate; any candidate – come forward and say “immediate, unconditional, 100% withdrawal”?  The brave candidate that does this will have my vote.

We’re not getting enough American college engineering graduates to fill the jobs we’ve got.  We’re in a global economy, and companies like Google and Microsoft are not only doing business for our fellow Americans, but also for the entire globe.  Each of these companies (like most other large US businesses) is generating more revenue outside the US than inside the US.  To continue to build, we need more college-educated Americans ready to dive into tech.  At the same time, in China and India, “they have more honors kids than we have kids“.  Is it any wonder that we need to import so many workers?  Don’t get me wrong; I’m not against international workers; I think it’s fine.  But, America needs to grow its educated workforce if it wants to compete.

At the same time, we’ve got looney politicians like George Miller, introducing legislation to cut funding to schools that don’t police illegal music trading by its students.  WHAT?  Since when do colleges need to do the RIAA’s dirty work in order to get federal funding?  This politician needs to take a broader perspective – he’s just wrong. 

It’s so sad when our politicians are prioritizing the music business ahead of our nation’s future.  We need to make lobbyists criminals.

In 1950, Social Security was funded with a 3% payroll tax.  There were 16 workers for every 1 beneficiary.

In 2007, Social Security is funded by a 12.4% payroll tax.  There are only 3.3 workers for every 1 beneficiary.

To help out, I hereby promise to never file to collect Social Security benefits.

Other interesting opinions:  Carpetbagger, Economist’s View

I just got spam from Sam Brownback.  Not only is this guy sending unsolicited email, but he sends me some drivel about wanting to overturn Roe vs Wade.  Dude- we’re in a war, with millions of people that are alive being killed, losing their homes, or losing family members every day.  And you want to write about Roe vs Wade?  Get some priorities!

Last November, for the first time ever, I voted for all Democrats.  I’ve usually voted almost all Republican.  However, on this ballot, I felt that whatever tax increases the Democrats might pass would be better than the war in Iraq.  So I voted for them, in hopes that they would stand up to President Bush’s crazy plan.

Now, however, I realize I was completely wrong.  Not only are the allowing Bush to continue the war, but they’re throwing in an extra $20B in farm aid, social programs, and Federal hurricane relief! 

This is the worst of all worlds!  Because I didn’t vote Republican, we’ve got both a stubborn, silly war and increased taxes for ridiculous social programs.   I should have voted Republican.  I don’t agree with Bush, but at least he does what he says he will.  The democrats say that they’ll stand up to Bush and then they fall over like a bunch of dominoes.

I’m such an idiot.