Tuesday, December 18, 2012

How to fix the deficit

It's not hard to fix the deficit and avoid the fiscal cliff. No one seems to have political will to do the right stuff. Here's what I would do:


  1. Do away with all federal income tax deductions and exemptions. This includes the charitable, mortgage, and local taxes deductions and the personal exemption.
  2. All tax payers pay the same rates - no married, head of household, etc.
  3. Treat all income the same. No special rates for capital gains or dividends.
  4. Set the rates to bring in about $200 billion more than is brought in today, but make them graduated. A single flat rate is regressive. These should be lower than today since more income is taxed. 
  5. Everybody pays at least 5% tax no matter how small an income.
  6. Tax all income, not just wages, for Social Security and Medicare/Medicaid. No income is exempt and no ceiling. Set the rate so that about $50 billion more is brought in than today.Because all income is taxed, it should be lower than today.
  7. Only provide Social Security and Medicare benefits to those who need them. Rich beneficiaries with high enough incomes ($1 million) or assets ($2.5 million) should not get Social Security and should pay the entire Medicare premium.
  8. Set the Medicare eligibility age at 67.
  9. Reduce our foreign military bases significantly. Close Okinawa. Only keep those that are absolutely necessary (Korea, Persian Gulf, some in Europe). Why do we need bases in New Zealand or Indonesia?
  10. Restructure our military to project our power from the US rather than have all kinds of personnel stationed all over the world. Build a few more aircraft carriers.
  11. Eliminate federal crimes that are more properly handled by the states. We have overfederalized criminal behavior. Traditionally crimes that do not involve federal issues, such as customs laws or interstate activities, are left to the states to handle.


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