A MODERATE PROPOSAL FROM A CONSERVATIVE

The president, and those of his defect, continue to call for tax rate
increases on the job creating investment class as the cure for budget deficits
and debt, regardless of our economic condition. Due to my earlier statements
regarding income taxes paid, and investments made, its obvious that this should
not be perceived as a wise proposal. In fact, it would likely result in further
harm to our economy, and to our governments balance sheet.

Leading conservatives believe that, if there is to be any additional money
confiscated from our economy, it is best to achieve this through the elimination
of special tax breaks, loopholes, deductions, and tax credits. A reaganesque
attempt to catch those who have, up till now, used the system... to cheat the
system. There are so many items in the tax code that could be eliminated, not
simply to raise revenue, but to allow for tax rate reductions that would
actually succeed in stimulating the economy, while also allowing for increased
tax revenue.

With all of the Keynesian economic stimulus attempts repeatedly coming up
empty in regards to actually lifting our economy out of the high unemployment,
low growth conditions were currently encountering, the call for the reduction of
governments size and scope, along with a more liberating, and less manipulative
tax policy, appear to be the growing louder. In this past century, we have
slowly transitioned into an ever-increasing semi-socialist economy, that has
placed our government in far too great a role for the free market to thrive. It
only makes sense that, when you get lost, you should back up to the point where
things start to become familiar, and then choose a different direction. We not
only need to unwind government back to its basic functions, and reduce the costs
involved to the taxpayer, we need to stop pussyfooting around and fundamentally
change the calculus of how government revenue is withdrawn from our economy.

There have been a multitude of tax plans proposed that would be an
improvement over our current tax system. Various plans propose different ways in
which to shift the tax burden, stimulate the economy, raise revenue or reduce
revenue while also shrinking the size, or slowing the growth of the federal
government. Most expand the tax base to the point where tax rates can be
dramatically reduced, and flattened. Now, some of these plans also propose a
reduction in business taxes to allow American products to become more
competitive in the global markets. This seems to address more than just
taxation, it repositions our standing in the global market place, and would
dramatically modernize our economy. So, yes, this should be the starting point
of any tax reform policy.

The problem with most proposed tax plans, is that they are merely adjustments
to the existing tax code, rather that a total rethink of the idea of taxation.
Former republican presidential candidate Herman Cain had garnered a massive
surge in support mainly due to his, "scrap it all, and start from scratch" 9-9-9
tax plan. Cain explains that businesses don't really pay taxes, their customers

do. But he did a pretty poor job of explaining what the "Fair Tax" people have
been stating for years. While undoubtedly the most radical and exciting plan of
recent history, it falls somewhat short of what I believe to be ideal. Mainly
because 9-9-9 continues the business tax farce, with a 9% business tax. His plan
continues to make businesses add the cost of a 9% business tax to the cost of
their products and services, and then imposes a 9% sales tax on top of that. So,
when you buy a product, you are paying the business tax, and that tax.. gets
taxed.. by the sales tax. While, I agree that his plan would reduce business
costs enough, so that the final sale price is somewhat less than what we pay
now, I still fail to see the reason for any business tax at all. Why would you
bother to expose a secret tax in our system, and then merely reduce its
size?

THE
IDEA

In the spirit of "The Fair Tax" and "9-9-9, I've come to the conclusion that
we do need to roll back the consumer price index. Reducing business costs,
through the removal of business taxes and ignorant regulation, effectively
causes a market deflation that does not deflate wages, or change the value of
the dollar. This would result in a lower cost of living and a higher quality of
life for all Americans. The current "hidden taxes", priced into the products and
services we purchase, is estimated at somewhere around 20%(+ or – 10%),
depending on the particular product or service. In fact, even the most
conservative estimates show price reduction averages of between 10-15%!
Personally, I think the conservative estimates ignore the cost savings
throughout the multiple stages of production. From raw material collections,
individual component manufacturing, assembly, shipping, marketing, wholesalers,
retailers, supporting businesses, etc. They also likely forgot to consider the
cost of tax management, from tax lawyers, tax accountants, tax lobbyists,
etc.

The reason for the wide range in potential savings has to do with what the
particular product is, the amount of supporting businesses in production, and
the number of middle-men between the production and the eventual final sale. The
cost of services is mainly a payroll and overhead calculation, and therefore
will not have as many cost reductions as products would. Also, products built
outside the U.S., or with parts not made in the U.S., will not benefit as much
from the reduced cost structure. Their cost saving will only occur in the
distribution and sales of the product. But, that’s actually a positive aspect,
not a negative one. Because American made parts and products benefit more,
American products will become less costly as compared to their overseas
competitors. American products sold overseas are not sales-taxed here, and along
with the business cost reductions, would be considerably less expensive to our
foreign customers. Making the American companies more competitive, both there
and here, means increased sales, creating more jobs, which means more economic
growth, and more government revenue.

For instance, if you were to purchase a $21,250 new car, and you will have to
pay a 15% sales tax of $3187.50. That would make your total sale price
$24,437.50. But remember, were it not for the regulation reductions, business
tax elimination, and all of the other cost reductions associated, they would
have priced that same car for $25,000. Sure, it may not be a huge savings, but
when paying a 15% sales tax can actually save you money, help our economy grow,
produce more revenue to the government than the current business tax structure,
and reduce unemployment, you have very little to complain about.

Due to the free market forces of competition, the cost of the products and
services we buy are reduced to the lowest level allowable, while still making
the sale of the product worth the time and energy involved. The company that
offers the product and/or service to the market place at the best value, usually
wins the larger market share and the profits that result.

Even in the worst case scenario, if you found a business adding that 15%
sales tax to the old, inflated price, you probably wouldn’t have to look too far
to find one of his competitors has chosen to pass on some share of their reduced
business costs to undercut him. It is this price war competition that will
eventually work prices down to the lowest possible margins the free market will
support. It is this competition that lowers the price of goods and services as
the cost of doing business in America is reduced.

THE
PROBLEM

While American ingenuity and innovation make us a leader in world, in terms
of productivity. Where we loose-out to our foreign competitors, other than the
massive regulatory compliance costs, is our cost of labor. Now, we can't reduce
our pay to match those of less developed counties, or force them to increase
their payroll to match ours, but there are other ways to reduce business costs,
that result in the narrowing of the sales price difference.

Simply reducing the price of American goods and services to that of our
foreign competitors would result in most American businesses drowning in debt
and closing their doors. Up till now, this has forced many businesses to either
outsource a portion of their operations to other countries, or relocate the
entire business overseas. This has resulted in a major reduction in the size of
the American manufacturing sector, causing our transition to a mainly
service-oriented economy. Haven't you noticed that nothing we buy is made in
America anymore?

The American government has been slow to action. It did not adapt with the
changes of the ever-expanding global market place. There were steps that could
have been made to address the shrinking manufacturing sector. There were actions
that could have been taken to prevent the outsourcing of many American jobs, and
the relocating of many American businesses. Would they have to be bold?..Yes.
Would they be politically difficult?..Yes. But they were necessary, and they are
still necessary today.

THE
SOLUTION

Steps need to be taken that would reduce the cost of doing business in
America. Steps that would reduce or eliminate entire segments of the business
model equation, used in determining the cost of American products and/or
services. These steps require the federal government tread more lightly on the
businesses that are responsible for employing the majority of the American
workforce. It is, after all, this workforce that provides the funding required
for all government functions. It is government that has reduced the efficiency
of our economy, and it is only government that can release the drag it imposes
on our economy. Government, at all levels, must remove itself from the private
sector economy as much as possible. Over-regulation, taxes, license and permit
fees... everything must go!

Governmental regulations are a necessity, sure, but they need to be limited
to the health and safety of the products and the workplaces. You will never
eliminate all risk, nor should you try, but there are obvious regulations
supported by all. The low-percentage hazards need to be ignored. Any company
found to be lacking in product or workplace safety, though not in violation of
governmental regulations, will either be fined by the courts, or judged harshly
in the court of public opinion. No, I'm not talking about returning to dirty
water and polluted air, but there does need to be a rational cost-benefit
analysis done before you go chasing every low risk to every small segment of our
society. There comes a point where sacrificing economic development for the
many, due to a possible risk to a few, hurts more people than it helps.

If businesses were immune to tax policy, there would be little need for the
government-corrupting tax lobbyists. Subsidies, tax incentives, and government
loan guarantees come from government corruption and politics that distort and
confuse governments function and the free market. Anything that could even be
perceived as favoring one business, or business sector, over another; corporate
welfare, subsidies, etc., need to be ended. I’m in favor of making American
products more globally competitive, but through regulation reduction and tax
elimination for all, not cash handouts to the few. In a truly free country, with
a truly free market, government should never be allowed to choose winners and
losers.

Businesses don’t really pay taxes now. They treat taxes like any other cost
of doing business, and pass the costs down to their customers, worked into the
price of their product or service. Rather than us secretly paying their taxes
through the inflated price of goods and services, we should instead pay a sales
tax. Even if it made no difference in the overall cost of the goods and
services, it would at least be up front and honest. And, it could be implemented
in such a way that it helps the average person with the costs of necessities. A
certain level of spending could be made sales-tax-free, through a tax credit,
allowing the purchaser to enjoy the full benefit of the lowered price that
business cost reductions would bring.

The most important advantage of this tax system is that it makes American
business more globally competitive. The implementation of a consumption tax,
that is placed upon all goods and services, including imports, but immune to
exports, would allow American businesses to become more competitive in the
world. It would result in American products becoming more competitive overseas,
while at the same time, making foreign-made products less competitive here. This
would then allow our economy to become more able to provide employment to the
unskilled manufacturing workers that our economy has been increasingly unable to
accommodate.

Prices of products and services will go down with the reduced business costs,
because the forces of free-market competition are strong. Costs of support
businesses, from the wholesale suppliers, shippers, packaging, just about every
line of the current business spreadsheet is reduced. This will allow businesses
to streamline costs and reduce prices, without any risk to their bottom line.
Accounting will be simplified, tax compliance will be easier, and the time and
money spent attempting tax avoidance will be pretty much eliminated. All these
increased business efficiencies and reduced business costs, will reduce the
costs that, up to now, were simply passed on to you in the inflated prices of
all the products and services you purchase. Add the savings of having less red
tape regulations imposed, plus the savings of not needing an army of lobbyists,
lawyers and accountants. All this money not spent by businesses, would be money
not added into the cost of every product and service that you buy. Remember, if
they pay it, you pay it, plus the acceptable profit margin that free-market
competition allows.

A shout
out to the 99%

Now, many are appalled that I am calling for zero taxes on "big business".
They claim more tax breaks for the rich is what got us into this mess. They are,
of course, out of their minds, and have no idea how the economy works, but that
is a topic another time. It is businesses, both large and small, that provide
what economy we have remaining. They have not taken income from you, but rather,
have created the means for you to have employment income in the first place.
Nearly every employed person in the private sector is employed by someone of
greater means. Knowone likes having to rely on another for their livelihood, but
it is a fact of life, so get over yourself and accept it. Much like the actions
of the labor movement, if we choose to bite the hand that feeds us, there will
be less fed.

Believe me, I hate sounding as if I am the defender of "big business". Truth
be told, I am a major critic of business and its involvement with, and its
corruption of, the American government. It is the practice of using
influence-peddling lobbyists, who push and bribe for what is essentially
anti-competitive tax and regulatory legislation(corporate welfare, tax breaks,
subsidies), that distort free and effective competition in the marketplace.
Business influence(money) is the source of the great majority of corruption in
our political system, and most of its influence over individual members of our
government is completely legal. It is for this reason, above all others, that I
have found the need to separate the two as much as possible. The need for them
both is clear, but their relations should be indirect and coincidental.
Governments purpose should be to respond to the needs of the people, and nothing
more. I don't want business to have any direct need of the government, and I
don't want the government to have any direct need of business. It is equally
critical to get business out of government, as it is to get government out of
business.

It may be of some interest to you "Eat the Rich" morons, that this plan does
not really untax business profits.

The tax plan eliminates the corporate and business taxes, but still taxes
business owners and shareholders profits the same as any other income, after
exemption and deductions have been removed. It simply looks at business as a
non-person, and recognizes the reality that only people actually pay taxes. Any
business profit, not paid out to the owner/shareholder, is invested by the
business into our economy. Any proceeds from that investment, if and when it is
paid out to the owner/shareholder, will then be taxed, right along with all
other sources of profit, if and when it is finally paid out. So, bottom line,
all business money remaining after expenses, is eventually taxed. Either by
income, capital gains, or as dividends. My plan taxes them all equally, so that
there is no advantage to any particular tax avoidance strategy.

Yes.. I know, imports are not persons either, but other countries add taxes
to the price of our goods, and we need to reciprocate to level the global
playing field.

THE
PLAN

The plan eliminates all types of federal corporate and business taxes
completely, and imposes a sales tax on most products and services, set at 10%
initially, but after the economy settles in to its new environment, the sales
tax rate is made adjustable, on a year-by-year sliding scale between 10% and
15%, based on the economic growth rate of the prior year. In a 2.0% growth
economy, people need help, so only a 10% sales tax would be imposed. In a 4.5%
growth economy, people need less help, so a 15% sales tax would be imposed. It
is at this time, when the economy is doing the best, when more attention can be
focused on paying down the national debt. No matter the sales tax rate, only 10%
is government revenue for spending, all additional sales tax revenue between
11-15% is solely devoted to debt. This variable sales tax also provides the
added benefit of helping hold down inflation during the higher growth periods,
without the federal reserve getting involved and raising interest rates that
creates undeserved hardship on American businesses and markets.

All exported goods and services, and used goods, are sales-tax-free.

The sales tax is applied to the sale of every product and service not
exported, but the plan allows for a 10-15% of poverty level income tax
credit(basically a sales tax refund of below poverty level income) on your
income tax form.

Most businesses will charge the 10-15% sales tax, which essentially works out
to between 9.09% and 13.04% of their gross receipts. Each month, those
businesses send sales taxes in, and file a sales tax report stating all taxes
collected, and any sales taxes they have paid-out for business-supporting
products and services.

Even though untaxing business and imposing a sales tax should work out as a
net savings at your local department store, I still see the need for income tax
reform as well. Not a plan that aims for a certain revenue amount. Not a set of
numbers that sound cute! But an income tax based on principles regarding which
of your dollars the government should be taxing. Should all income be taxed at
the same rate? Is that even practical? Could we shield low-income families from
the heavy burden of taxation, while still collecting sufficient revenue from the
upper income families? If we do, would that overburden them to the point where
less investment and reduced economic growth set us on a path to ruin?

The plan sets a 25% flat tax across the board, but incorporates a poverty
level exemption to shield the lower-income earners. It also provides incentives
for getting health insurance and a college education through making health and
education costs tax-deductible. These tax deductions not only save your dollars
from a 25% tax, it also reimburses you the cost of health and education sales
taxes. In total, it works out to be a 40% health and education subsidy!

The plan provides for a poverty level income tax exemption(personal / family
exemption of income below poverty level), based on the poverty guidelines issued
each year in the federal register by the Department of Health and Human
Services. This is a huge exemption compared to anything ever proposed, but it is
based on a principle that government should keep its hands-off of at least that
amount of your money. Yes, I know, using H.H.S. guidelines reinstates the
marriage tax penalty. I searched high and low to correct this, but finally
decided to leave it as is. If your going to forgo marriage for cohabitation, in
order to save thirty bucks a week, you probably shouldn't get married.

The plan permits the costs of education, health care, and charitable
contributions to be deducted from gross income. The maximum amount you may claim
as a deduction is based on the nationwide average of the prior year. If the
average four-year college education in 2011 is $24,000. You may claim a maximum
deduction 115% of the annual average, or $6900 per year, per student. If the
average for health insurance coverage is $5000 for an individual, and $15,000
for a family. You may claim a maximum deduction 115% of that average. $5750 per
year for yourself, $11,500 for a couple, or $17,250 for a family. Why 115% of
the average, you ask? Because education and health care will be sales taxed, and
this plan allows you to claim sales taxes paid in addition to the health
insurance premium or college tuition costs. The average charitable donations
made per year is 3-5% of gross income. Feeling charitable, I doubled that to 10%
of gross income.

Don't forget the sales tax credit equal to 10-15% of your families poverty
level income. This is a full reimbursement of all money you paid out in sales
taxes up to the poverty level.

Capital gains, interest from bank accounts, and dividends are income, and are
to be treated no differently. But capital gains and interest are only taxed as
they are withdrawn. A statement will be provided at the time of a withdrawal,
that indicates what percentage of your account is not from your deposits. That
same percentage of your withdrawal is new income. When the income amount of your
withdrawals are in excess of $200 in any given year, it must be included on your
gross income statement portion of your tax return.

Social Security is a mess, and for those under fifty, it will not be
available in its present form. Retirement assistance will be part of an
"assistance to the poverty level" benefit program that no longer mandates
payroll tax contributions, but is instead funded by general revenues. Government
will keep your head above water, but it is your responsibility to invest and
save for a comfortable retirement.

The plan eliminates the alternative minimum tax(AMT). the estate tax, the
payroll taxes, and all federal excise taxes. (gas, energy, communications, cigs,
booze,etc.)

That's it....no if's, and's, or but's! I leave very little for tax lawyers
and accountants. The point is, once put in place, filing your taxes will be
simple! There is no hidden tricks or procedures. My plan is meant to be so
simple, that even a grade school student could do your taxes, calculate the
sales tax, or report total sales tax collection of a large business.

You'll simply need to gather a few numbers; your gross income earned,
including capital gains, interest and dividends collected, your health and
education expenditures, and your contributions to charity. From there it is
simple addition, subtraction, and multiplication. There would be a single page
worksheet, with the top half being step-by-step instructions, and the bottom
half being a the tear-off tax return slip. The most current poverty level income
figures for various sized families will be provided, along with the 10-15% of
poverty tax credit allowed for each situation. All you will need to provide is
the few numbers that are particular to you and your families financial
situation.

Your tax deduction claims will require a vender number and a client account
number, provided by each tax-deductible servicer(charity, health insurance
company, doctor, college, etc.). Each account, kept in record by the servicer,
and provided to the I.R.S. annually, will be cross-referenced to check the
validity of your deduction claim.

The upper-middle and upper income people who have not been taking advantage
of the current labyrinth of tax avoidance schemes will notice a tax cut. Those
who have had tax lawyers and accountants help them game the system, will finally
be paying taxes for once. Even though they really do not need the poverty rate
exemption and tax credits, plus whatever deductions apply, in the interest of
equal rights under the tax code, they are entitled to it.

Again, you "eat the rich" morons should not worry about the size of the tax
cut the wealthy receive. First, it is their money. Mind your own. Second, when
they spend it, it is tax revenue for the government, which is good for everyone.
Third, if they don't spend it, it is saved in banks or invested in our economy,
which is also good for everyone. All of us, not self-employed, owe a debt of
gratitude to those who provide the jobs, whether it be directly(your boss) or
indirectly(an investor).

Middle income people, who currently pay a 7.6% payroll tax and a couple
levels of the progressive income tax, will essentially be asked to pay an
equivalent of twice their current payroll taxes instead. They too get a poverty
rate exemption and a sales tax credit, plus whatever deductions apply. Don't let
the sales tax scare you. The final price of the goods and services, that you are
used to purchasing, should work out be the same...or less.

Low income people, who currently pay no income taxes, but pay the payroll tax
will not be taxed anything on their "sub-poverty" level income, and they get all
"sub-poverty" sales taxes returned in the form of a tax credit. The only money
the government charges them is 25% of all income earned above their poverty
level, after health care and education dollars have been deducted, and 10-15% of
dollars spent on products and services above their poverty level. The sales tax
should not be of any actual increased cost, since it is merely a substitute for
what used to be business costs. All of this, of course, is true for all
taxpayers, but it is most important to those who have little to contribute.

THE
GRAND BARGAIN

An optional proposal, but one that I believe is critical to reducing the
size, scope, and cost of government, is the grand bargain provision. Essentially
it is a negative taxation provision, which is income redistribution in its
purest form, but is done in trade with closing down the federal governments
socialist safety net programs. The plan is generous in that it provides income
assistance, up to the poverty level, for the working poor. In return, food
stamps, welfare, and all other financial assistance programs administered by the
national government, are gone forever.

This negative income tax provision is intended to ensure a minimum level of
income for all those who actually work. With this N.I.T., all need for
nationalized government assistance programs is eliminated. Those who do not
work, or who are unable to work, would remain in the current safety net
programs, but those systems would be administered by the states, who would have
the independence to decide the best way to provide for their citizens. The
states are then left with the responsibility to provide for the
"non-working" segments of our society with welfare, health and education
programs. This type of assistance was always intended to be provided by the
states, and other than this tax policy, any and all future domestic programs
should be reserved to the States.

The grand bargain provision removes the socialist programs and departments
that the national government never had constitutional authority to begin in the
first place. While the income assistance provision in this plan was also not
envisioned by our founding fathers, pandora's box has been open far too long for
us to return everything that socialism has taken. Strict conservatives and
libertarians who wish to completely dismantle the socioeconomic safety net, are
only fooling themselves to think that it could ever really happen.

At the federal level, this would reduce government administrative costs to a
fraction of the current system, as well as eliminate the inefficiencies and
disincentives created by multiple overlapping aid programs designed for the
working poor. Currently, when minimum wage workers earn a little more, they "net
out" with less income because they become ineligible for the aid. They become
ensnared in a socialist trap, with little incentive to seek a higher wage.

In this income assistance provision, the amount of assistance is limited to
the poverty level, and is not to exceed the gross income actually earned by the
filer. In this plan, if they work, and make at least 1/2 of their poverty level
status, they are income-assisted up to the poverty level, without imposing any
additional burden on the bloated federal bureaucracy. If they happen to earn
$5,000 more over the previous year, but still qualify for assistance, their
income assistance is reduced, but only by 50% of that $5000. So, they would
actually have income $2500 over their poverty level status. It is this split, of
the savings to government, that provides the incentive to seek a higher wage,
and eventually climb out of the need for income assistance. Truth is, these
people are going to get assistance one way or the other, and being able to
deliver assistance based on a tax return filing, rather than through a bloated
bureaucracy, seems much more efficient.

The poverty level tax exemption, income assistance provision, and the health
and education deductions, all work in conjunction with each other to replace all
of the current assistance programs of the federal government. Health insurance
and education is made more affordable without a government regulated take-over
of those systems. It is my belief that, providing income assistance to the
poverty level, plus providing what is essentially a 40% subsidy of health
insurance and educational costs, should be all that you can realistically expect
from the federal government. Any additional welfare programs, educational
grants, or financial loans still needed, can be provided by the states and
privately run charitable organizations.

The simplicity of this plan saves you money, saves businesses money, saves
the economy from a great deal of inefficiently spent money. It will improve your
ability to purchase health care, pay for college, save and/or invest money,
which will add to your personal wealth, and improve our nations economic health.
The business sector will be unleashed in a way never seen before. New businesses
will sprout. Hell... foreign businesses will want to move here. The
manufacturing sector would be rejuvenated. Unemployment would not be a problem.
... trade deficits would vanish ... and government revenues will increase at a
record pace.

It's finally time to tell the world,