Reform America
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Election '08

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Taxes & Government Spending

Why does it seem so difficult to find an equitable tax structure and intelligent budget plan for America? It seems like the politicians just can’t get it right despite having over 60 years to refine the tax code to make it fairer and over 200 years of national budgets to figure out smart spending. The middle class pays the majority of taxes in the U.S. despite the fact that they are not earning the majority of the money. Corporations have an abundance of tax loopholes to avoid taxation and get federal subsidies so they can make more money while middle class workers who drive the economy have very few tax deductions or government grants available to them and most of those few that exist require extensive effort to be taken advantage of.

So where is the answer? What is the brilliant solution to solve this horrific inequity? If you listen to the politicians, it’s right around the corner waiting for them to have the reigns in their hands. They have the plan to save us all. OK, so why is it that every time we elect one of these people that has the plan to solve all of our financial inequity problems they still don’t get fixed? Money is the simple answer. Those who have it, use it to keep it above all else. The rich lobby Congress, finance campaigns and give billions in “soft money” to the political parties so that you and I have to work that much harder for them in order to make ends meet from the table scraps they throw at us in the form of wages after taxation.

How can we solve this problem? There are many potential solutions. We could attack the waste issue first so that government would not need so much of our money. We could have a top to bottom audit of the federal government conducted by an independent auditing firm and find all of the waste that needs to be removed. Then it would be a matter of removing it and passing on the savings to the taxpayers.

Or we could attack the taxation issue first. We could move to a flat tax system without loopholes for anyone. We could set higher capital gains taxes for people earning more than $500,000.00 per year in investment profits and limit the reinvestment break for reinvesting those profits to bring some equity into the tax system. Another approach to taxes could be to eliminate taxes for people earning less than $50,000 per year as individuals and $150,000.00 per year as a family of 8 and re-tier the taxes of upper income earners to reflect their ability to bear the burden of taxes without jeopardizing a reasonable quality of life for them.

Those could all make a difference, but the big money savings to Americans would come by addressing big money spending by our government. We could eliminate corporate welfare and require that the federal government not subsidize any profitable companies for any reason. (True conservatives should like that one because it requires the corporations to sink or swim purely on their strength within the free market.) I would argue that the government should not be simply paying costs for profitable companies regardless of the nature of their business. If the government is getting a good or service for their money then there should be a bid process and a contract in place requiring results. Companies that make billions in profits should not get any subsidies from working Americans which is where the majority of the money is currently coming from.

Every working American pays for those subsidies out of our taxes. We all work and pay taxes so that those taxes can go to the people we work for!?! That’s insane! That means that if the company you work for receives federal funds, you are paying some of your own salary, your boss’ salary and the salaries of all of your coworkers with no say as to how much anyone gets paid. That’s like your employer drawing your paycheck out of your personal savings account. You get a check but the money was already yours. As an example, if your company gets $10,000,000.00 in subsidies from the federal government and the employees pay an average of $7500.00 a year in taxes, it took all of the taxes paid by 1333 people that year to pay for the subsidies your company got. Those 1333 people spent all of the hours required to earn that $7500.00 working for the company for free. The money they worked for went directly back to their employer. If their CEO made $10,000,000.00 then they all worked simply to pay the CEO’s salary. If the workers averaged $20/hr they worked 500,000 hours collectively to pay the CEO’s salary. That’s 375 hours each they worked for nothing more than their CEO to take a piece of their paycheck home. Over two months of 1333 people’s work for nothing more than one person to earn their money! That is unconscionable! There is no reason we should be working our tails off so that some person that is overpaid can be overpaid on our dime.

To put this in perspective it is estimated that the oil industry gets $3.6 billion dollars in tax breaks and subsidies each year from the federal government. At $20/hr it will take 180 million hours to pay for that tax break. That’s 450,000 work weeks. That works out to the sum total of 86,538 workers’ pre-tax annual salaries at $20/hr to pay for one industry’s government assistance. At the same time, oil companies are reporting record profits and raising prices nationwide. When you take into account that Chevron alone made over $17 billion in pure profits last year, this level of government irresponsibility with our tax dollars is mind-numbing.

How is it that people are not outraged? Why are there not protesters in the streets? Why are we all still dutifully paying our taxes and not voting the bums out? Sadly it seems that we as a nation have become complacent and oblivious to the actions of our leaders. We pay our taxes. We pay the high prices. We watch the rich get richer and keep playing our lotto in the hope of hitting the “big one”. We don’t think that it might be the fault of the politicians that oil companies are making money hand over fist while we struggle to fill up our tanks because we don’t take home more of the money we earn. We accept the things that the politicians say as being genuine and their motives as being pure without questioning them. Didn’t we learn anything from Watergate? ABSCAM? Iran-Contra? They not only can lie to us, they do it fairly regularly. We need to watch them like hawks. Any time a politician says he or she needs to spend your money you need to tell them to show you the justification for the spending. “Prove it!” should be the first words out of our collective mouths when they talk about the “need” for any government subsidies.

If we really want to get their attention, we all should change our W-4’s to Exempt and refuse to pay taxes as a nation one year in protest. If just one year nobody in the middle class paid taxes, it would force the politicians to do something about our broken system. If even 10% of the middle class went on tax strike, it would make a big stir. Let’s face it, the IRS, FBI, CIA and Secret Service combined couldn’t arrest 10% of the middle class all at once. They don’t have the capacity and they would be cash strapped because of the missing tax revenues from the people they would be arresting. (Quick caveat though: if you do decide to go on tax strike, to avoid the seizure of your assets, you should do what the rich folks do. Put your property in a trust for your kids. The fed can’t touch it if you don’t own it and if it’s not in your name, technically, you don’t own it. You’d be amazed at how many rich people put assets into trusts for children to avoid higher taxation rates and to protect them from seizure.)

So after all my railing you might be wondering if I have a plan that could work. As a matter of fact I do. The solution as I see it is to take on all the problems at the same time because leaving part of the system broken wouldn’t really fix it overall.

Here’s my plan:

1. A complete independent audit of federal spending should be conducted to determine where waste exists in government programs and agencies. (Waste such as overpayment for goods, exorbitant no-bid contracts and redundant staffing should be relatively easy to find with a careful review of the records.) Recommendations should be made as to how to eliminate the waste found with department heads responsible for elimination of all waste within five fiscal years. If waste is not eliminated by the second audit after five years, department heads would be released from the department and their pensions reduced to middle management levels. (No golden parachutes for incompetent government officials.)

2. A cost benefit analysis of all foreign aid should be performed to determine what benefit if any to the U.S. and larger world community being gained by the spending. Any foreign aid that is being given to governments who are uncooperative with the U.S. should be closely scrutinized for possible elimination. All military aid to nations that do not follow the advice of U.S. State Department officials for maintaining stability in their regions should be immediately terminated. (The money is not well spent if the actions of the nation being aided necessitate the involvement of U.S. troops or resources to correct situations created by their failure to heed our advice.)

3. Corporate subsidies in all forms should be removed from the current budget and outlawed in the future. (Any need based emergency funding to corporations to preserve jobs or support infrastructure should come in the form of federal loans only.)

4. All government monies going directly to corporations not requiring repayment should require a contract that has gone through a bid process and that stipulates the specific scope of the contract, the not to exceed dollar amount of the contract and penalties to the corporation for not meeting the goals of the contract.

5. Subsidies that have gone to corporations with net incomes of over $10,000,000.00 per year in the past should be reallocated to low interest micro-enterprise and small business loans to encourage small business growth in the U.S. and create an interest base of return on tax dollars spent on business.

6. Subsidies going to corporations with net annual incomes under $10,000,000.00 in the past should be reallocated for infrastructure and environmental programs to undo the damage done by corporate interests to the infrastructure and environment of the U.S.

7. Farm subsidies should be converted to low or no interest loans with limited eligibility for private farms without corporate backing. No funding should be allocated for price supports. Excess crops should be used for international famine relief with farmers being compensated a reasonable reduced rate for those crops that they were encouraged not to grow to support price stability in the past.

8. Corporate taxes should be restructured to give tax breaks only for investment in American jobs (including incentives for hiring ex-convicts to reduce recitivism), American education or necessary research and development with all deductions requiring documentation of the use of the funds. No deductions for those uses can include monies spent on salaries in excess of $150,000.00 per year.

9. Federal income taxes for individuals earning less than $50,000.00 per year, couples earning less than $75,000.00 per year and 3-4 member families earning less than $100,000.00 per year should be eliminated entirely. An additional $12,500.00 per child cap raise should be instituted up to 6 children for the no-tax income level with a maximum of $150,000.00 per year household income federal tax free for a family of 8.

10. Tax levels should be tiered above the no-tax income levels as follows:

  • Up to $500,000 per year income – 20% federal tax
  • $500,001-$750,000 per year income – 30% federal tax
  • $750,001-$1,000,000 per year income – 35% federal tax
  • $1,000,001 and above per year income – 40% federal tax

11. For the above taxation levels, the only deductions should be for investment in businesses that primarily employ American workers, donations funding public education, donations funding social services and donations funding disease research.

This is a simple plan. It does not make exceptions to every rule and addresses both the root causes of waste and inequitable taxation of our populace. Any politician who will commit to supporting a plan of this nature will get my vote provided upon taking office they introduce the legislation within the first 100 days of their term. Otherwise, they wouldn’t get my vote in the next election. Taxes don’t need to be unfair or complicated. We need tax dollars to run the government but we also need to make sure they are used wisely and equitably.
Troy Wilson-Ripsom - Staff Writer | Give your feedback on this article.

Campaign Finance Reform

With another presidential election looming, the airwaves are soon to be buzzing with commercials telling us whom to vote for, what to vote for, what to vote against, whom to vote against. All of these commercials cost money. They cost money to make. They all require research on when to air them costing more money. They cost the most money when it comes time to actually air them. With all this cost, you would think that campaigns would be less and less able to afford the costs as campaigns get longer. The funny thing is, the campaigns seem to be making more money and airing more spots.

Given the laws governing campaign contributions to support individual candidates or measures, this shouldn't be happening right? Well, yes and no. The individual campaigns are limited by campaign finance law governing hard money donations. There are strict limits on how much money anyone can give to one campaign. The trick to big money politics is the elephant in the room that no politician wants to talk about. That elephant's name is Soft Money.

Soft Money is the money that can be given to political parties outside of the limits of Federal Elections Commission guidelines because, the money is not officially being given to elect a specific individual. So while you can't give more than a couple thousand dollars to an individual campaign, you can give unlimited amounts to a party that supports the candidate running for office. So the politicians have "party" fundraisers and closely keep tabs on how much they raise so that the party will in turn spend that money to support their campaign. Neat trick when you think about it. They can't take the money directly and therefore come off looking clean but they can take the money indirectly and still cater to the wishes of their donors with a money trail that is harder to follow.

So how are we impacted by this? Well, in 2002 the oil industry gave over $10 million in soft money donations to the Democrats and Republicans. Approximately 85% of that money went to Republicans who controlled Congress and the White House. In 2003 the Energy bill that passed the Republican controlled Congress included over $23 billion in tax breaks with the oil industry getting the lion's share of the windfall. That same year the oil industry spent another $57 billion on lobbying for more giveaways and tax breaks. If anyone is wondering where the money you're putting into your tank is going, there it is. The taxes you pay every day, week, month and year of your life are also paying for the tax breaks the fat cats are getting. The government still needs money to run and if they aren't getting it from the rich folks then you can figure out who they are getting it from.

Is one party cleaner than the other? Not really. Both the Democrats and Republicans raise millions in hard and soft money every cycle. So far in the 2008 Presidential race the Democrats have raised over $94 million and the Republicans have raised over $57 million in campaign contributions. The election is still over a year away and the two parties have raised in excess of $150 million with no slow down in sight. It would seem that neither party can claim to be above the big money politics game.

What's the solution to the money madness controlling American politics? Sadly, the solution is political will and faced with so much easy money it seems that no politicians in Washington have the will to stand up and fight for the American people who ultimately pay the price for the profits of the greedy. The one bright light in all of this is the fact that Independent candidates are growing more popular with voters and the two party system may not be invulnerable to the will of the people forever. There are Independents out there who are committed to eliminating Soft Money from the political landscape and curbing lobbying in Washington. If we vote for them and vote the other bums out, we eventually might actually be represented by the people in Washington.

For more information on poltical fundraising and lobbyist spending visit OpenSecrets.org today.


Troy Wilson-Ripsom - Staff Writer | Give your feedback on this article.



Get Involved

Do you sit and yell at the TV when politicians come on? Do you shake your head sadly whenever you see a homeless veteran? Is that all you tend to do?

It's time to put up or shut up America. We all love to talk about how we could do things better or how we would do it if we were in charge. Well, it's time to put your money where your mouth is. If you can think of it, you can write it down. If you can write it down, you can type it. If you can type it, you can e-mail it and if you can e-mail it, you can send it here.

We at Reform America are committed to giving voice to anyone who wants to put their ideas out there to make our nation a better place. As the readership grows, we are able to take those views to a wider and wider audience. Grassroots campaigns begin with voices speaking out. You have opinions. Voice them. We aren't about conservative or liberal. We aren't about pro-this or anti-that. We're about Americans and the First Amendment. Reform America is about politics by, for and of the people. You are the people. You only need to speak up. America is listening. Send your article to: stories@reform-america.net



Have You Been Downsized Due to Outsourcing?

For several years now we have listened to some within the business community tell us that America can't compete on a global scale unless they send our jobs overseas where they can be done cheaper. The question becomes, if we don't have good paying jobs here, how can we sustain our own economy? We want to hear from you. Have you lost your job? Have you been forced into a lower wage job due to outsourcing? Has outsourcing been a success for you? Did you end up in a better job?

Tell us your story so we can make sure the politicians see how outsourcing really impacts the workers who are backbone of America. Send your story to stories@reform-america.net

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