I’m a Teddy Roosevelt Conservative and Republican. Both TR and President Taft supported ratification of the Sixteenth Amendment in 1913. However, that “Narrow Base Taxation Protocol” that targeted the incomes of High-Income Americans in 1913 is very different from the “Broad Base Tax Code” that targets in 2022 almost every worker with some Federal Income and/or Payroll Tax. That's why I'm a Teddy Roosevelt Conservative. What about you? Are you comfortable with who’s paying the taxes in America today?
MY PRIMARY GOAL: Revive the original 1913 Taxation Protocols. Tax "America's 15%" as originally agreed to fully fund the Operations and Entitlement Programs of the federal government. With the cost of Entitlements to be absorbed by the wealthy Investor Class ... then, share the growing economic prosperity with the American worker by supporting their individual right to then convert those still “Compulsory Payroll Taxes” into “Mandatory Tax-Free Investment Capital” … transforming these average working Americans into a class of "Working Capitalists". In an economy that I suggest should grow to $70 trillion by 2045 (3% Real Growth, 2% Inflation) with a then 70% Debt-to-GDP Ratio, these suggested legislative tax reforms implemented by 6/20/23 will cause the Wealth Gap Ratio (WGR) to fall from 78/22 today to 60/40 in 24 years.
PLEASE NOTE:
The 1913 financial logic limiting the implementation of the Sixteenth Amendment’s tax on income to High-Income-Earners was as follows:
First, unlike America’s working class whose Median Household Income (MHHI) in 1913 was $750, proponents of the taxation strategy reasoned that High-Income Americans could easily afford to pay the proposed tax without creating a financial hardship.
Second, the advocates argued wealthy taxpayers also owned most of the assets and were therefore likely to disproportionately benefit from federal policies to be funded by the tax. Reinvesting the tax revenue in the country, cleaning up its Balance Sheet, adding to its infrastructure, and strengthening defense capabilities would all serve to increase the value of their personal and business assets. As such, the public re-allocation of the collected tax would provide both tangible and intangible benefits to these asset owners essentially at no cost.
That was the argument used to persuade average American workers to support a law that in 1913 began to tax the incomes of the wealthy investor class.
Fast forward to 2022. Does the 1913 logic limiting taxes on income to High-Income Americans still apply?
Can wealthy Americans like Amazon’s Jeff Bezos afford to pay taxes on income without creating a financial hardship? Absolutely!
Does Bezos, as one of Amazon’s largest shareholders and the owner of the Washington Post, disproportionately benefit from … and/or … have influence into Federal Polices that might affect his asset values? No doubt!
Bezos owns 53 million shares of AMZN. The government lock-down (federal policy) shuttered Mom & Pop businesses around the country leaving only AMZN and a short-list of Big Box Retailers for consumers to buy from. As a result, AMZN’s share price soared to $3200 on 12/31/20 from $1400 on 1/1/20 adding $70 billion to Bezos’ Net-Worth (policy benefit).
The government spent $6.5 trillion in 2020 fighting Covid19 (federal policy). A lot of that spending went to consumers who then bought products from AMZN (policy benefit). As business faltered tax revenues fell. 2020 Federal Tax Revenues totaled $3.4 trillion so Uncle Sam added $3.1 trillion to the National Debt.
Considering the facts, why wouldn’t taxing a portion of Bezos “$70 Billion Unrealized Gain be appropriate”?
"Noblesse Oblige" ... With Great Wealth Also Comes Great Responsibility … doesn’t it?
From the perspective of the “Ultra Rich” if the only criteria for the taxation of capital gains is the "Realization Of Income At The Point Of Sale" why sell anything? … ever?
Simply borrow against the value of those appreciating assets for the rest of your life and let someone else pay the taxes … or better yet … let Uncle Sam borrow whatever it needs. Never pay a dime of income or payroll taxes again.
Point of fact … nothing economically or financially has changed in 100 years to cast doubt on the 1913 arguments calling for an exclusive Income Tax on the Investor Class.
So, if Congress doesn’t have the “Political Will” to apply what amounts to a Progressive Flat-Tax to “Any Income From Any Source In Excess of $120,000”, to be paid by those who can afford it … then who is left to fund the operations of the Federal Government and service its debts?
That’s right. You and me … and Uncle Sam’s Credit Card … for as long as it lasts.
LOOKING BACK, ORIGINALLY CONGRESS WAS GOOD TO ITS WORD
America’s working poor in 1913 were receiving less than $.36/hr.
To encourage and retain political support for the Sixteenth Amendment Congress set the Standard Income Tax Deduction (SITD) at $3,000 (4x the $750 MHHI) which is where it remained for several years.
Hence, from 1913-1920 with the “Income Tax Bar” set at a very high level, tax returns were filed by only 15% of the workforce. 85% of the workforce continued to receive their income Federally Tax Free. In truth, that Tax-Free Income was arguably like any other Employee Benefit today being paid by the employer.
True or untrue?
Today 89% of all employees/employers pay 15.3% of their incomes on up-to $147,000 as Payroll Taxes to support the financial needs of retirees … and … 41% of the workforce pays some Income Tax because the “SITD to MHHI Ratio” fell over the years from “4/1” (3,000/750) to “.33/1” (12,000/36,000).
As a result, the 2022 Income Tax Bar now rests at a very low level … and of course to my point … "That wasn’t the deal the average American worker signed-up for."
SUMMARY
If the people who can afford to pay the taxes are successful in achieving their “Zero Tax Objective” … and federal spending continues to grow as Gross Domestic Product (GDP) climbs … then who pays the taxes required to fund federal operations while servicing $30 trillion of Debt?
ANSWER … Either the average American worker or Uncle Sam and his credit card.
The original tax protocols were developed to tax 15% of the workforce. If 41% of all workers are now paying that tax then arguably 26% of the workforce (predominantly Middle Class > $50,000 of income) are today paying taxes that by all rights they do not owe.
And America’s working poor and middle class through the Payroll Tax System are today also paying more than $1.0 trillion annually to cover retiree costs (estimated $35-40 trillion through 2045)
There are 165 million people in the workforce so it follows arithmetically, that roughly 43 million workers, all earning less than $120,000 should arguably now be receiving their income federally tax free.
Furthermore, I contend, 120 million workers earning less than $120,000 per year should all have the right and be given “The Choice” to instead save and invest up to $18,360 of the Payroll Taxes they are now required to pay Social Security … because over time that invested capital will not only enrich them … but their ensuing financial independence will also in time reduce the future cost of Federal, State and Local government services that would otherwise be required during their retirement years.
So, who then do you believe should make-up the tax revenue shortfall created by the proposed changes in Federal Tax Policy?
Should that obligation fall to Uncle Sam and his credit card? …
… or to the 15% who live comfortably at the top of the pyramid with 78% of the nation’s $115 trillion Net-Worth … Americans who we all agreed in 1913 would henceforth be responsible for paying all Federal taxes on income?
My Vote: "I’m with TR .. Tax the 15%."
Because when you think about it … isn’t the $30 trillion of National Debt by definition … also “$30 trillion of Uncollected Taxes”.
“So, hasn’t the 15%, already had full use of that $30 trillion of Tax Savings as it developed over the last 60 years? And, isn’t that already one sweetheart of a deal?”
Then why should Uncle Sam further burden the country with more debt to cover the lost revenue from a class of Essential Workers who candidly never should have been robbed by Congress in the first place of "Their Retirement Tax Savings" through the Payroll Tax System ... or ... systematically deprived by our political leaders of that $120,000 Standard Income Deduction?
You're a Taxpayer, Voter and I fervently hope ... also a "True American" ... with a God given right to live the American Dream.
“Over the next 25 years, what kind of country would you like to call 'Home'?"
Because America appears to be at a Crossroads.
Do you want to live in a country with the freedom to choose and pursue your own personal development and financial future? Or are you now looking for something else?
Because that choice in America … that choice to live free and prosper … is unlike any other in the world ... at least for the moment ... and that means that "CHOICE" still belongs to you.
MY SUGGESTION
The 70/70 Proposition: Shoot me an email, say hello on Facebook or drop me a tweet and tell me the America we all love and cherish can’t get a lot better for everyone.
My Primary Goal: Reduce the Wealth Gap Ratio from 78/22 today to at least 60/40 by 2045 by reviving the 1913 Taxation Protocols so that every hard-working member of the workforce can then share in the greatness that is America’s bounty!”
THE 70/70 PROPOSITION: SUGGESTED LEGISLATION
1) Congressional Performance: Establish Two (2) Financial Mandates to ensure Legislative Accountability
A) 5% Annual Nominal Gross Domestic Product Growth (GDP: 3% Real, 2% Inflation). Goal: 2045 = $70 trillion
B) 2.4% annual reduction in the "Debt-To-Nominal-GDP-Ratio". Goal: 2045 = 70% Debt = $49 trillion
2) Establish $120,000 Standard Income Tax Deduction ($120,000 Tax-Free)
3) Give every FICA Taxpayer (Social Security & Medicare) the right to redirect the Mandatory 15.3% Employer/Employee Payroll Taxes into a Self-Directed Tax-Free Investment Retirement Account. This legislation increases the annual Tax-Free Retirement Savings of every worker by up-to $18,360.
4) Replace $1.3 Trillion in Payroll Tax Revenues to be re-directed annually into employee funded Tax-Free Retirement Accounts with an “Investor Class 15.3% National Responsibility Flat Tax” levied on any income from any source in-excess-of the $120,000 Standard Deduction. The tax proceeds from the “National Responsibility Tax” will be used to fund the Social Security and Medicare Entitlement Programs. But, unlike the Payroll Taxes collected from American Workers ... taxes collected from the Investor Class never need repayment ... eliminating at least $35 trillion of debt over the next 24 years.
5) High-Income taxpayers will pay an additional 5% Flat Tax at each of five individual income brackets. The tax rate is defined by the Tax Bracket in which the Adjusted Gross Income falls (Gross Income - $120,000).
Personal Income Tax Table (1,000's, Consolidated Tax Rate)
INCOME ADJUSTED RATE
0-120 0 0%
120-250 0-130 15.3%
250-500 130--380 20.3%
500-750 380--630 25.3%
750-1000 630-880 30.3%
1000-1250 880-1130 35.3%
>1250 >1130 40.3%
Modeled after the 1913 Form 1040 this additional tax funds the balance of federal operations.
6) Establish "Corporate Net Revenue Tax" to augment tax on Corporate Income to ensure Growth Companies in-particular are not gaming the tax system.
EXAMPLE: An "Industry Specific Corporate Net Revenue Tax" using Gross Profit Percentages as "The Rate Tax Key" might stipulate that for established corporations with "Sales in-excess-of $100 Million" the "Corporate Business Tax" would instead be levied on:
THE GREATER OF:
1) 5% of Net Revenue on greater than $100 million of recorded sales
2) the Corporate Income Tax on Pre-Tax Income computed using the tax code.
Appreciate your consideration: If you made it this far … I love you for having an open mind :) Jim Macauley For Congress, June 7, CA District 20
