Posts Tagged Warren Buffet
As a Precinct Committee Person for the Washington County Democrats, I’ve taken it upon myself to meet my neighbors and update their voter registrations. As I speak with people about various topics, including the budget, and as I’ve spoken with people in the past about the budget, it has become clear to me that virtually nobody knows what the budget actually looks like. People have their ideas, but they’re often skewed, misinformed or just plain wrong. This has an obvious negative impact on any budget discussion in our country. If people don’t know where their money is going, how can they effectively debate what should be done?
Part of the reason for this is an intentional mingling of all income and expenditures from all sources, even if taxes are raised and distributed independently from one another. Some examples of this are, Federal Insurance Contributions Act-Old Age, Survivors, & Disability Insurance (FICA-OASDI, commonly referred to as Social Security), FICA-Medicare, and Unemployment Insurance (UI). These funds are raised, administered and distributed as trusts, separately from the general budget. Unfortunately (from a clarity standpoint), these trust funds have been combined with other federal funds, resulting in a picture of the budget that looks like this. By combining these trusts with the general budget, it makes it appear that Defense is 18.74%, interest on the debt is 4.63%, and all the other departments of the government are only 19.89% of spending. This provides an inaccurate description of how our taxes are spent (and how they’re raised).
What happens when you separate the trust funds (aka. “mandatory spending”) from the rest of the budget? The Defense Department suddenly looks much more robust at 43.32% of “discretionary spending”. This is followed by interest on the debt at 10.7%. Everything else is a total of 45.98% (the next largest expenditure is for the Department of Health and Human Services at 5.13% and it shrinks substantially from there). Looking at discretionary spending will allow for a more honest debate about what we can/should cut and possibly where we need to raise more revenue.
But how can we educate people most effectively? That’s where the idea for a “tax receipt” comes in. The idea of a “tax receipt” is that the government should start sending out receipts that break down each taxpayer’s share of taxes into easy to understand information and graphic depictions. A simple mailing like you receive yearly from the Social Security Administration detailing your Social Security Account would be all that’s needed. It should separate out social security and medicare, showing personal contributions to each program and each program’s revenue and expenditures as well as projections into the future. This would give people the knowledge to address problems with these specific programs (or not touch them if they’re working). It should spell out what your amount of income tax paid was and how it was spent, line by line. This way, people could see that they spent, $XXX on the military, $YYY on veteran’s benefits, $ZZZ on highways, bridges and transportation, etc. This type of mailing should detail total revenues, disbursements, and projections into the future. It should also show the current and projected deficits, the national debt and “your portion”. Reigning in the debt is not a conservative issue, it is an American one and this would help clarify the conversation on how to do so.
A statement of this sort would help to redefine the debate, changing the focus and bringing the conversation out of the realm of the imaginary budget into the realm of the actual budget. If expenses were broken out so that it was obvious that the military is almost 45% of all discretionary spending, nearly equal to all other government spending on everything else, perhaps more people would see the need to cut it back.
This may even bring on more support for certain tax increases. It would help groups to point out that through tax breaks and loopholes, the wealthy are able to substantially lower their tax burden. It would also make the comparison more stark when someone looks at the total amount they pay compared to corporations. By using the tax receipts of wealthy people who are willing to pay more (like Warren Buffet), you could easily demonstrate the need to eliminate the cap on Social Security taxes and apply them to all sources of income. Currently FICA-OASDI (Social Security) taxes are only applied to the first $106,800 of “gross wages”, but does not apply to investment income (interest, dividends, capital gains).
There are many proposed solutions out there regarding raising taxes, but I like the Schakowsky Plan for adding new brackets for income above $1 Million. This would be a lot cheaper for the rich than the Eisenhower era tax brackets were, while providing stability to the system so they could continue their lifestyle. A tax receipt would help provide the knowledge base to balance the budget through this or other progressive means, such as those outlined in the People’s Budget.
As Jim Wallis said:
Budgets are moral documents.
We need to educate people on the facts if we want to establish a moral and just budget. This idea will help do just that.
Cross Posted on Daily Kos.