Tax Reform in The United States....

I just completed my taxes. After all my deductions, adjustments, credits, etc. I ended up paying about 7.5% of my income to the federal government in the form of income tax. Medicare and Social Security are not included.

The process was long, painful, and despite Turbo Tax, it was quite confusing.

Interestingly, about the same time I was finishing my taxes, President Obama mentioned the federal government's need to live within its means and gave Congress the mandate to simplify the tax code.

So, I can't say that I was completely uninspired by the State of the Union Address this year. It spurred me to develop this idea: The IRS Form 1040 CS (Common Sense). This form not only actually complies with the intent of the Paperwork Reduction Act of 1987 (or whatever), but makes congress' job of allocating spending very easy. The taxpayer does it for them!

This way, each person knows exactly how invested they are - and how they are invested - in their "democratic" government. They have a voice in how their tax dollars are spent.

And budgeting is taken out of the hands of Congress and lobbyists. If an environmentalist feels strongly about National Parks, he can allocate more of his taxes to that budget line. If a truck driver feels strongly about the state of our highway system, she can voice that with her allocation.

Taxation with FULL representation.

Everyone pays 10%. Maybe there's a mandatory 1% point buy-in to each of the Life, Liberty and Pursuit of Happiness functions of government. That leaves the taxpayer 7% points to steer toward their interests.

Here's my form (click on it to see a larger image). It's a rough draft, but you get the idea.

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Deficits, Debt, and Unfunded Liabilities....

I think we have a problem.

I see that the estimated deficit for 2011 is projected at $1,500,000,000,000 (one point five trillion dollars). That’s just for the federal government.

The deficit is not the same thing as the debt. If we were talking about personal finance, we would equate the deficit with the amount of money we borrow, over and above our personal income, in order to subsidize our standard of living each month or year.

The debt would be the outstanding balance on our credit cards, student and car loans, and mortgage obligations. The national debt is somewhere around $14 trillion. This year Congress and the president want to increase our debt by the amount of our deficit - just put it on the card, so to speak.

In addition to debt, the federal government has a number of what financial regulators would call “unfunded obligations”. That is, financial commitments the government has made for which there is no money set aside. Among those unfunded obligations are social security payments for generations of Americans, pension payments for retiring federal employees, and other perpetual entitlement programs. Some estimates of the amount of unfunded obligations are around $100 trillion.

But if you take the current population of the US estimated at 300,000,000 and put that against the current true debt of roughly $100,000,000,000,000 then we see that each American living today must be responsible for providing more than $300,000 toward the debt. Bear in mind that this $300,000 individual liability does not account for funding the current operating budget of the federal government of an additional $3.5 trillion in 2011. That annual subscription price comes to almost $12,000 per person.

So, my little family (of 7) must make a one-time payment today of $2.3 million, and an ongoing payment of $81,000 per year.

And that doesn’t even START to pay for my state, county and local government.

I’ve said it before, and I’ll say it again. If every person in America got a bill for the cost of their government benefits, I am confident that we would be at least figuratively “up in arms” about the spending.

A Thought On "The Last Mountain Top"....

While I was eating my grilled buffalo chicken spinach wrap for lunch today, CNN was running its characteristically insipid fare of what someone thinks is "news".

The leading story - the one they spent my entire 8-minute lunch telling me about - was that Robert F. Kennedy, Jr. had helped make a film that was being shown at the Sundance Film Festival. The film is called "The Last Mountain Top" (or something like that) and documents a waitress in a small community and her struggle to stop open-pit coal mining in West Virginia.

One thing that RFK Jr. said stood out. In the same breath, he said that West Virginia is a poor state because the influence of organized labor decreased over time; and that his father, RFK, always said that West Virginia should be one of the wealthiest states because of its natural resources. If I'm not wrong, RFK was killed in early June of 1968. Union influence in American labor was near its all-time peak.

I wonder why West Virginia wasn't "one of the wealthiest" states in 1968. If RFK Jr. is right, and strong union presence in coal mining leads to prosperity for coal miners, then Loretta Lynn's song "Coal Miner's Daughter" should have sounded more like Madonna's "Material Girl" than a memoir of growing up poor, but happy.

If his dad is right, and having a vast wealth of natural resources properly extracted leads to prosperity, we have to ask what is pulling cash out of the hands of the good people of West Virginia.

Could it be that organized labor actually puts a drain on the wealth of its constituents? Could it be that organized labor actually puts an inordinate amount of financial strain on corporations?

I don't hate mountain tops or clean water. I don't hate coal miners or their daughters. I don't hate waitresses who get involved in their community. And I don't hate filmmakers who go to Sundance.

I really like clarity and intellectual honesty, though. And I really like seeing hard-working people keep the money they earn by an honest day's work.