We should all be disgusted, and embarrassed, by our government in the last 50 years. Criminal actions, constant fighting, constant lies, and perhaps worst of all, they have bankrupt our country and left our children to hold the mortgage.
Editorial based on data:
So let’s look at the data and see where we are. I have used 2016 as the baseline, as the numbers have certainly not improved. In 2016, the Federal government spent 3.85 trillion dollars and took in 3.27 trillion in taxes, leaving a .6 trillion dollar deficit. That added to the cumulative debt to total 19.5 trillion. TRILLION! I do not think many of us can fathom a trillion. Let’s look at it this way: the highest paid person in the US in 2016 was Marc Lore of Wal Mart (per CNBC). He made 237 million (yes, I realize this is absurd). So, if he donated every dollar he made to pay off the debt, it would take him about 82,300 YEARS to pay it off. The person making the most obscene salary in America could not pay off the debt for over 82 Thousand (!!!) years.
If we all paid every dollar we made, the total income for all Americans, it would take over a year to pay off the debt. Of course, we would all starve and be homeless.
So what can be done? Simply tinkering with the tax code, and/or reducing spending a little here and there will not work. We currently (2018) run about 500 billion in debt every year. At that rate, by 2040 we will be about 32 Trillion in debt. This clearly cannot continue.
I took the data (in the Excel table below- feel free to download the data and try your own scenarios) and tried various simulations.
In Scenario 1, I increased the tax rate on by 10% on individuals and businesses by 10%. Basically,no change to any tax codes. Everyone simply pays 10% more. If you paid $10,000 last year, this scenario has you paying $11,000. I reduced spending also by 10% on all categories except Health and Medicare, Income and Social Security, Veterans benefits and Justice. The outcome? The debt reduced from 582 billion to 302 billion. This is “chump change”. We are all paying 10% more, spending 10% less (where possible) and we STILL have a 300 Billion dollar deficit. This is the enormity of the hole our elected officials have dug for us.
Lets change tactics and try a flat tax. I took it a step further. Everybody pays a flat tax on everything they make. There are no deductions, no exemptions, no credits. If you live on the public dole, you still pay tax on what you are given by the rest of us. Think of it as giving something back to help fix the mess we have created and to help our future generations out of the mess we have left them.
So Scenario 2, I applied a 17% flat tax on ALL personal income, a 10% increase on business, and left the same 10% decrease in spending. This resulted in a 705 billion surplus! But perhaps this is too much?
In Scenario 3, I applied a 15% flat tax on all personal income, a 10% increase on business, and left the same 10% decrease in spending. Here we have a 386 Billion surplus. This seems reasonable. I think we could cut spending further and achieve a better result, but is probably politically impossible in the short term.
In Scenerio 4, I applied a 12.5% flat tax, along with the same spending reductions, and found that to be the breakeven point (where tax revenue equals spend).
So it seems that the flat tax would have to be greater than 12.5%, but less than 17%. So the 15% rate seems about right.
This means, using the 15% rate, that in about 50 years we will have achieved the point where our outstanding debt is 0.
So, for many our children will be dead, for many our grandchildren will be dead, and
our great grandchildren will celebrate "Financial Independence Day".
Hooray!! As they look back on our generation, will they say what wonderful caretakers we were?
Will they say thank you for leaving this legacy to us?
I think not. I think we will rightfully be considered the greedy generation that expected a free financial life. A complete and utter disregard for future generations, and consider us a completely selfish blight on American history.
Our generations created this impending disaster. To continue spending and low taxes at the current rate, we will bankrupt our children, and our nation. A 20 Trillion dollar, and growing, debt cannot continue. Are you willing to make changes?
How can we do this? Those who pay no taxes (about 48% of us) will scream bloody murder (even though the rest of us carry their financial burdens), The bureaucrats will scream, those paying more will scream. But you know what? You have to ask, What is fair? Obviously, the current batch of politicians are unable to implement a meaningful plan. They haven’t in over 100 years. My proposal: Next election, we ask every non-incumbent to sign a pledge backing this (or a similar) proposal. Those who do we elect. No incumbents are should be re-elected. They have already proved they are incapable of meaningful change. They are the “swamp” that needs drained.
In other words, vote for the non-incumbent and really send Washington a message.
Research Notes On Federal Spend and Tax Data (Excel)
Click on link to see the raw data for our governments spend and tax record. Be prepared to be angry, sad (at what they have done), embarrassed (we elected them after all), and many other emotions.