Economy, Debt & Taxes

Economy

Between rising gas and food prices, the devaluation of our dollar, and the financial fiascos in our housing and banking industries, many Americans are struggling. We must address these issues head-on immediately and bring security to families across the nation.

I believe that we can work to improve our economy and our environment in tandem. Through investment in renewable energy and improving our nation's infrastructure, we can create vast numbers of green, living-wage jobs. In doing so, we not only stimulate our economy in the present, but we create a sustainable model in which future generations will also thrive. Imagine the opportunities that lay ahead of our youth in fields like green transportation, renewable energy, and even sustainable farming! Instead of doling out checks and crossing our fingers that the economy will improve on a short-term basis, we need to take responsibility for the long-term, and for leaving our children a stable world.

A better balance must also be achieved between free enterprise and government regulation. The subprime lending disaster is a fine example of what can happen when this balance is neglected, and our government must do a better job of regulating that market to make sure this scenario never repeats itself.

Debt & Taxes

The devaluation of our dollar is certainly no mystery: with the national debt estimated soon to exceed $10 trillion, we have mortgaged our future. I don't see any other way to explain this but "irresponsible." We simply cannot continue increasing our federal deficit and ignore a structured debt service, and the longer we fail to address the problem, the more painful the solution. Instead, we need a new tax system that is equitable to all, requires participation of all, and is simple to understand and administer. Our current system costs over 500 million dollars a year to administer, and the average tax return takes 40 hours to complete; that is a lot of wasted time and money!

I believe the best path to tax reform is through restructuring to a transaction fee system, as was proposed in 2005 by Congressman Fattah. (For details on the proposal, click here.) Under this plan, 20% of tax revenue goes straight to repayment of the national debt, allowing us to take responsibility for the legacy we will leave behind. This plan solves our problems without putting unnecessary pressure on already-struggling families.

In a transaction fee system, tax revenue is generated through fees that everyone pays on electronic transactions, and payroll, income, and corporate taxes are eliminated. Exemptions for families and individuals who are below the poverty level are built in, as cash transactions under $500 are exempt.The middle class is able to pay far less because immense revenue is captured through stock, commodity, bond, currency, and general business transactions. As an index, on June 19, 2008, a relatively slow day on the New York Stock Exchange, over $85 Billion in shares traded hands. A transaction fee of only 1% (which is more than is needed) would yield $850 Million/day in federal revenue from that source alone.

Translated to a family of four with a combined family taxable payroll income of $60,000 in 2007, the $8,249 federal income tax would be $0, and the approximate FICA Tax of $4,590 would also be $0. For a family of four with the 60K income noted, in the case of a transaction system, a plausible estimate of fees/taxes might be approximately $10/month for mortgage payments, $20/month for credit card transactions, and $10/month for all other electronic transactions. For businesses and investments, federal income tax and FICA would also be zero.

The current system for federal "earmarks" needs to disappear entirely! Social Security taxes should be phased out and replaced with a means-tested system that provides a basic subsistence income to those who need it under specified conditions and age levels. A portion of the general tax/fee revenue should be dedicated to funding the new Social Security system.