Election 2020 – 2 - Debt

Posted on 9/10/2019 by Jim Pickerell | Printable Version | Comments (0)

Reducing The Debt


Candidates running for public office tell us is that we need “New Big Ideas.” And they’ve all got them. The “New Idea” this country needs is to “Pay For” what we want and need rather than expecting someone else to bail us out.

The number 1 issue of the next election should be finding a way to reduce the debt and get the country on a sustainable economic path.

Reducing the debt does not mean just cutting federal government services. In many cases the most efficient and cost effective way to provide services individuals need is on a national, federal scale. It is the job of the President and Congress to oversee the effective management of such services, not eliminate important ones in order to cut costs. We must look for the most efficient and cost effective ways to deliver government services, but not do away with them simply because they are costly.

Transferring costs from the federal government to the states is not an efficient solution. State taxes go up while federal taxes may decline. In addition, there may be duplication of efforts adding more costs, not less. With 50 different programs some states may focus more heavily on one program than others and the citizens of those states can suffer when the state devotes less resources to certain issues or programs than the federal government might have supplied.

In 2015, (the latest detailed information I could find) 141.2 million taxpayers reported earning $10.14 trillion in adjusted gross income and paid $1.45 trillion in individual income taxes. Thus, the average income tax is only 14% of gross. Granted, individuals pay other taxes such as FICA, State, Sales taxes, Gas and Estate, but it is still not enough to cover the costs of needed services and those costs continue to rise.

In 2019 the Federal Budget is $4.4 trillion and we are only scheduled to take in $3.5 trillion adding over $900 billion to our $22,541,570, 655, 903 (that’s trillions) in outstanding debt. Currently we are paying $382 billion in interest on that debt. That’s $382 billion that can’t be spent on other services American taxpayers need. See here.

As of October 2018, foreigners owned $6.2 trillion of U.S. debt, or approximately 39 percent of the country’s public debt of $16.1 trillion and 28 percent of the total and U.S. debt of $22.5 trillion as of August 13, 2019. See here for an update.

Based on 2016 IRS figures (Table 1.2 - the latest I could find)  53% of taxpayers with AGI of less than $40,000 generated only 12.1% of gross income.

Adjusted Gross Number Percent Combined Current
Income Ranges Returns Returns Gross Revenue Tax Rate
No AGI to $40,000 79,649,584 53.0% 1,235,903,936,000 12.1%
$40,000 to $100,000 44,863,959 29.9% 2,889,739,684,000 28.3%
$100,000 to $200,000 18,858,241 12.5% 2,552,480,810,000 25.0%
$200,000 and above 6,900,372 4.6% 3,547,814,048,000 34.7%
         
  150,272,156   10,225,938,478,000  

The wealthy 4.6% of the population needs to pay a higher proportional share of the costs of essential services. Granted they already pay the highest percentage of their income in tax compared to other tax payers, but in order to pay the country’s bills we must collect a larger share of gross revenue. Those with lower incomes cannot afford to pay more. The wealthy can pay more without serious damage to their lifestyles. We need a fairer “progressive” tax.

How much would individual tax rates need to be raised to produce a fair “progressive” tax? The tax rates for the 143,371,784 taxpayers with adjusted gross income (AGI) of less than $200,000 should remain about the same as the current rates.

Individual
    $0 - $9,525                   10%
    $9,526-$38,700            15%
    $38,701-$93,700          25%
    $93,701-$195,450        28%
For those with AGI greater than $200,000 based on 2016 figures their rates for all income in excess of $200,000 should be raised to approximately the following levels. While it is unlikely that rates would be raised to these levels immediately, there should be staged increases with the aim of eventually reaching these levels in order to create a fairer tax structure for all citizens.

Range of Adjusted  Number Total Gross
New Tax
Gross Iincome Taxpayers
Taxable Income
Percentage
$200,000 under $500,000 5,582,552 1,588,349,368,000 39.6%
$500,000 under $1,000,000 893,378 599,623,741,000 45.0%
$1,000,000 under $1,500,000 192,849 232,559,675,000 48.0%
$1,500,000 under $2,000,000 77,783 133,632,583,000 52.0%
$2,000,000 under $5,000,000 111,096 329,910,864,000 55.0%
$5,000,000 under $10,000,000 26,627 181,670,396,000 60.0%
$10,000,000 or more 16,087 482,067,421,000 70.0%
       
  6,900,372 3,547,814,048,000  

We’ve tried the Trump tax cuts and all they have given the average citizen is an additional trillion in debt. We’ve given the corporations a break. Rather that plowing the benefits into higher productivity, they’ve used most of it to buy back stock and pass the benefits along to the 4.6% and particularly the top 1%.

In addition, in order to make up the almost $1 trillion in annual deficit corporate taxes will need to be raised as well as taxes on Real Corporate Profits, Excise Taxes, Estate Taxes and Customs Duties.

Gas taxes should be raised at least $0.015 (1.5 cents) per year for the next 10 years to cover infrastructure and transportation improvements. See here.

We must acknowledge that the 2017 tax law gave too much benefit to corporations and the wealthy. The tax obligations of all citizens and corporations must be brought more into balance. The costs of operating the government must be shared more equally based on the ability of each individual or corporation to pay. The answer is better cost sharing, not reducing needed services. We must find better ways to care for the poor and middle class. We must elect leaders who will find a reasonable way to pay for the services society needs.

Of course, if corporations have less profits to pay out to investors that may begin to reduce our GDP, but is GDP really a good measure of the economy anyway. GDP primarily measures our production of goods. The U.S. is no longer the producer of goods it once was. The GDP concept was developed in the 40s when we were the major manufacturers of goods in the world. At that time, we consumed a high percentage of what we manufactured and exported less.

Now, we are consumer and service providers. Manufacturing is not going to return because much of what we want to consume can be manufactured cheaper somewhere else. Manufacturing employment has dropped from 26 percent of the workforce in 1970 to 8.5 percent in 2016.

The average income in China is $12,199 annually. A Chinese family can live well on that income. The average income in the U.S. is $46,800. If we try to replace Chinese workers with U.S. workers many products we need will just be more expensive. That’s not a win for the U.S.

Vietnam workers earn about $11,000 a year, workers in Thailand $5,500, in Indonesia $3,600, in India $1,500. If a product can be made in these countries U.S. workers are not going to be able to compete. When products we need can be produced more cost effectively by foreign workers we should applaud that and focus the energies of our workforce on other activities that cannot be done outside the U.S., not try to save jobs at the expense of U.S. consumers. 


Copyright © 2019 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

 

Comments

Be the first to comment below.

Post Comment

You must log in to post comments.

Stay Connected

Sign up to receive our FREE weekly email listing new stories posted.

Follow Us

Free Stuff

Stock Photo Pricing: The Future
In the last two years I have written a lot about stock photo pricing and its downward slide. If you have time over the holidays you may want to review some of these stories as you plan your strategy ...
Read More
Future Of Stock Photography
If you’re a photographer that counts on the licensing of stock images to provide a portion of your annual income the following are a few stories you should read. In the past decade stock photography ...
Read More
Blockchain Stories
The opening session at this year’s CEPIC Congress in Berlin on May 30, 2018 is entitled “Can Blockchain be applied to the Photo Industry?” For those who would like to know more about the existing blo...
Read More
2017 Stories Worth Reviewing
The following are links to some 2017 and early 2018 stories that might be worth reviewing as we move into the new year.
Read More
Stories Related To Stock Photo Pricing
The following are links to stories that deal with stock photo pricing trends. Probably the biggest problem the industry has faced in recent years has been the steady decline in prices for the use of ...
Read More
Stock Photo Prices: The Future
This story is FREE. Feel free to pass it along to anyone interested in licensing their work as stock photography. On October 23rd at the DMLA 2017 Conference in New York there will be a panel discuss...
Read More
Important Stock Photo Industry Issues
Here are links to recent stories that deal with three major issues for the stock photo industry – Revenue Growth Potential, Setting Bottom Line On Pricing and Future Production Sources.
Read More
Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More
Finding The Right Image
Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
Read More

More from Free Stuff