Friday, November 16, 2012
Now that the election is over, the American people are now repeatedly inundated with media reports regarding the US Economy on the brink of going off of the “fiscal cliff." What's worse, depending on which network you watch, the reporting is framed to inform the viewer as to which party is ultimately responsible for failing to strike a deal. Whether it is the Tea Party faction of the House Republicans, the Obama Administration, John Boehner, Harry Reid, Nancy Pelosi, Mitch McConnell and/or Grover Norquist, the result of their failure will be the same, we the people pay the ultimate price in inflation, a double dip recession and continued grid lock exacerbating the situation. However, rather than focus on the areas of disagreement, there are a host of areas where compromises can be made in order to grow the economy, rebuild the country and solve many of the nation’s most contentious issues in one “Grand Bargain.” Though these ideas are very general in nature, policy makers should consider these as low lying fruit to a possible cure to the scurvy-like epidemic that all parties, Democrats, Republicans and Mr. Norquist have created. The Basics: Taxes, Dividends, Corporate Rates and Loop Holes Regardless of what Paul Ryan and the Republicans say, when it comes to taxes, President Obama did win a mandate specifically on the tax issue. It was the only issue that he actually articulated and thus did give the American people a clear ‘choice’ between he and Mr. Romney. Moreover, on this particular issue, he won in exit polling of those who voted either for or against him. However, there is room for compromise, which I am sure that even President Obama would agree. Now is not the time to dig in his heels just for the sake of sticking his chest out and saying ‘I am the leader of the free world’ despite what the extreme right wing would have you believe. Individuals – Simplify, broaden and deduction exchanges Rather than raising taxes on individuals making $250,000 or more, raise that number to individuals earning a million and above in personal income(notice I said personal making a clear distinction from a business and what a business owners business earns, not the owner with regards to personal income). Additionally, rather than raising personal income taxes to the tune of the 39% like under President Clinton, make it 38%. Couple this with an extension the Bush era tax cuts for those earning under this amount with one caveat specifically regarding loop holes and deductions. Mitt Romney had a great idea of creating an ‘exchange’ regarding deducations that individuals could select up to a certain amount based on personal income¸ capital gains etc. If you make a million or up, then 25,000 in deductions, and then have a sliding scale downward all the way to the $250,000 bracket. This includes charities, homes, student loans, child credits, religious donations etc. Anyone under 250,000 continues with the Bush era tax cuts, deductions, the AMT etc. Finally, simplify the code ranging from 10 million and up, 1 million to 10 million, 250,000-1 million and 250,000 and below. Of course you create the deduction exchange with a sliding scale based on income, but this will ultimately simplify and broaden the code for everyone. Small Business’, Corporations and Multi-Nationals The mischaracterization of small business with relation to corporations and multi-nationals based on the size of a corporations Board membership is grossly misleading. Secondly, in order to create a more fair and progressive tax rate for business’ the tax base must also be broadened in order to guarantee not only fairness, but that the backbone of America, which is the small mom and pop business remain a thriving entity, and the heart of communities all across this great nation. Like the tax code for individuals, this should also have a sliding scale, and all loop holes removed, which currently grants corporations and multi-nationals the ability to pay the highest paying tax attorneys and accountants to find ways in which to skirt their taxes. This is not only unfair, but in all honesty un-American given the fact that tax dollars fix our roads, fund our schools and military and drive R&D in this country. That’s just a fact. GE paying $1 dollar in taxes is offensive. Period. Currently, I work for a small family owned business in Lower Manhattan while searching for a employment more suitable to my education level, experience and financial commitments. In all honesty, I wish I could assist in taking the fourth generation of this business on to number five. However, like most small family owned business's, highly educated and skilled labor tends to be out of the price of viable employability. This is an unfortunate reality with regards to rising cost of education, student loans and cost of living on people seeking a higher earning potential. My employer is the quintessential family business and can’t offer someone who has obligations like student loans, credit cards and all the trappings that an individual takes on while striving for a high level high priced education. Be that as it may, they are the backbone of their community, and in order to pay their employees a proper living, provide health care and the potential of stability, they must not be taxed into submission which would stifle their growth and possible expansion should they consider to do so. Corporations and multi-nationals face a much different set of issues, mainly languishing beneath one of the world’s highest and most burdensome tax structures, and essentially driving them to set up shop overseas, or offshoring their profits. However, they are also granted so many loop holes that they are also able to skirt the majority of those taxes as well. The solution to this is simple. Drop the tax rate to 28% and eliminate all loop holes. Period. The Revenue Wild Card: Immigration Reform Ok Republicans, here’s your chance to make good with Latino’s, and show collective bi-partisan innovation, compassion and revenue generation in one broad stroke in the least likely of places. Rough estimates put the number of illegal immigrants working in this country at about 10-12 million. Imagine if rather than those individuals working under the table in many times slave like conditions with no rights as workers, they were legitimized by one stroke of the pen generating not only tax revenue from individuals, but from the very business’ that are employing these people in the form of pay roll taxes now that they will be on the books. This would also allow the fed to reduce payroll taxes or business’ due to the increase in payrolls generating revenue. Now, how could this work you ask? Through a joint effort of both immigration and customs and the department of labor, both immigrants in the country illegally and their employers will be given a one year period, or moratorium if you will, in which their employees can apply for green cards given the fact that they can provide their employer, where they live and how long they have been here without any concern of current or retroactive punishment, in exchange for no less than a two year work permit with the possibility of a green card and/or a pathway to citizenship. This area is a cash cow in terms of revenue, however, it will require both parties and the White House the chutzpah go after it. Once the moratorium expires, the federal government must put in place unprecedented penalties for both business’ and individuals who are caught with the old practice. The problem is so widespread at this point, you would essentially have to shut down every restaurant, farm, construction site, landscaping crew etc. However, this will be much easier to enforce should we bring these people from the shadows to legitimacy. Trust me, the overwhelming majority of those here illegally would have no issue with paying taxes. They will take legitimacy above all else. This will show a sign of compassion and understanding on such a level with regards to civil and human rights, that the US will once again be the standard bearer for the world to marvel at. Finally, the holy-grail and, holy cows: Entitlements and Defense Spending After talking ad nauseam about how to generate revenue, we must also make widespread cuts in our two biggest parts of the US Budget, entitlements and the Dept. of Defense. First the Democratic party Holy-Grail so to speak, entitlements. Entitlements can be reduced without having a loss in benefits. There is so much pork written into the policy that is syphoned off by one succubus after another which is inherently corrupt and dishonest. We could start by offering seniors the option of medicare or private insurance. Of course, the majority of seniors would stick with medicare, regardless those who choose to use private insurance, not to mention the conderation of phasing out high income earners from eligibility, would apy immediate dividend. Next, continuing the mechanisms put in place with regards to wellness programs, digitizing records, and a host of other areas can save billions. It will just take an honest overview, and commitment to making the programs solvent. Next is Defense, the Republican holy cow. The fact is, with the modernization of our military, the conclusion of two wars and the upgrading of useless dated equipment, we have a chance to nip the military industrial complex in the butt, all the while creating jobs, continue to lead in technological innovation (who do you think really created modern telecommunications, Al Gore?) and remain the most respected if not feared military in the history of human kind. The beauty of this scenario is that we can do this cheaper, quicker and in the very near future. In actuality, this is something that the military requested in their own budget, and in fact, then Defense Secretary Gates said the cuts could go much further. The culmination of cuts to these programs, as well as a consolidation and combination of various overlapping agencies, this country could be put on the path to fiscal responsibility and balance before the end of the year. The real question is, will the powers that be execute, or continue with the status quo that created the problem in the first place? We will know soon enough.