Wednesday, July 1, 2009

More Q&A

Clyde, an economics professor from Cleveland, Ohio writes:

Q: Charlie - Here’s my take on your financial/social proposals. On the plus side, your estimate of 22% tax proceeds on our $15 trillion GNP seems reasonable.

I can also see a 50% increase in total tax bites paid daily, and incorporated in retail prices as Europe’s VAT as less painful than our existing yearly tax crisis on April 15th. None of us want our grandkids to shoulder the coming tax burden, and we don’t want another Boston Tea Party to end all Boston Tea Parties—full revolution is not the answer in 2010, as it was in 1776.

On the flip side, I see serious problems you haven’t addressed satisfactorily. What makes you think that Joe Councilman can replace Uncle Sam in administering social services like health care, unemployment, disability, homelessness, and economic destitution? They’re 50 million Americans in this leaking boat. The local yokels we have today are pathetic political hacks—no Yale; no Harvard; no M.I.T; no Stanford, much less anyone out of Oxford or Cambridge.

A: Point well taken, Clyde, but all national political problems boil down to local political problems, and I vote for the local guy or gal to deal effectively day-by-day with their neighborhood constituency—South Boston; South Bronx; Southside Chicago; East L.A.; Chinatown, San Francisco; and all the rest of perennially restless America, today enlarged by 20 million illegal immigrants, 12 million of whom will be sent back to Mexico or elsewhere to apply for re-entry.

Local problems are a microcosm of national problems, and it all comes down to the local tax bucks needed to solve neighborhood destitution, foreclosures, unemployment, healthcare, old age, war veterans, youth gangs, and drug proliferation—just to name a few.

So, I propose a dominant grass roots approach based upon a well-paid councilperson. Where do we find these local heroes and heroines? The same place we have historically found them—from a pool of talented, patriotic, educated co-citizens. We give them a 300 grand salary, an aggregate budget of $1 trillion; a year-to-year mandate, and let them run with the ball. They either clean up their neighborhood social/economic mess, or they don’t, in which case they’re toast.

Tough job and tough rules? Yes. Well paid? Yes, with a shot at mayorship or local congressman ($2 million), mostly money put aside for their next self-financed political campaign.

I propose a free enterprise incentive for the best and the brightest, and ignominity for the worst and the dullest—each first Tuesday in November.

Clyde, I don’t have an army of computer modelers to validate my financial proposals, but I’m glad you agree generally with my 10% of everything/replacement of everything, idiot-proof 2-page tax code.

I’m delighted that you recognize the exclusions to double taxation. You’re right. When Joe the Plumber buys his new house, he does not pay 10% for the loan, and then another 10% for the purchase transaction. This is where escrow comes into play—passage of title triggers the taxable event, as it does on Wall Street and other Stock Exchanges, which transfer trillions of dollars every year from one foreign country to another. It’s a safe tax haven to preclude taxation on pass through transactions that do not involve purchase of American assets. On this same note, you’re also right in assuming that New York, Boston, Philadelphia, Chicago, Memphis, New Orleans, San Francisco, and L.A. make out like bandits with their local stock exchange share of financial transactions. But these big city folks need all the financial help they can garner to eliminate despondency; despair; drug trafficking; high school dropouts; unemployment; and every other social ill we can think of. It’s a start on 21st century American renewal.

Clyde, all local and national problems come down to local wealth accumulation from mom and pop to G.E.—how to create it, and how to tax it fairly. My proposed new middle class will end up having 95% of buying power, and 80% of assets—while the top 5% millionaire/billionaire entrepreneurs will have 20% of assets, and pay 40% of taxes. In my mind, it’s a fair compromise to create an adventurous, 21st century America that will outdo our 19th century in Wild West boldness.