ENGLISH
FOR
CONGRESS POSITION PAPER (Revised January 2012)
The
current budget deficit of about $1,000 Billion understates the
true deficit incurred this fiscal year because it does not
include the diversion of any surplus Social Security trust fund
receipts of over into the general operating budget (which are
used to lower the publicized annual deficit total) and the value
of new expenditure commitments made this year that will have to
be paid for in future years. The recently approved
increase in the national debt ceiling to $15 Trillion equates to
approximately $50,000 per person for every resident and there
already is mention of raising the ceiling by more than another
Trillion. In 1940, corporations paid about 60 percent of
all income taxes, today that figure is about 16 percent.
Currently, about sixty percent of corporations pay no Federal
income taxes. Corporations should pay their fair share of
the cost of running the Federal government and not continue to
be subsidized by individual taxpayers. If they produce one-third
of the Gross Domestic Product, they should pay at least
one-third of the income taxes collected.
I propose that the Federal corporation income tax be eliminated
and replaced by a Federal gross receipts tax that would allow
taxable deductions only for domestic employee payroll and
benefit expenditures. Employee payroll outlays are already
taxed when received by the employees (employee benefits either
reduce costs for other government programs such as Medicaid or
are taxed after they are received such as retirement
annuities). The individual Federal income tax is itself a
gross receipts tax taken upfront off the top through mandatory
payroll deductions before net income is paid.
Individuals then have to file tax returns with approved
exemptions and deductions to recover the excess amount of taxes
withheld. Now that corporations have been given full
Bill of Rights protection by the Citizens United ruling of the
Supreme Court, why shouldn't corporations being taxed on the
same basis? A gross receipts tax on corporations would
eliminate all of the various sophisticated tax avoidance schemes
that have arisen to escape taxation. It would eliminate
Federal tax revenue losses from foreign tax havens and tax
losses from inflated transfer pricing cost deductions on
imported components and similar schemes by foreign companies
doing business in the United States. A third of the future
Federal gross receipts taxes collected should be disbursed to
the states on the basis of population in each state recorded by
the 2010 Census.
Finally, the incredibly complicated Federal tax code needs to be
greatly simplified by eliminating all tax deductions except the
individual personal income and standard deduction exemptions.
These should be calculated to determine localized tax-free
personal deduction amounts that should be set well above minimum
cost of living poverty income levels in the specific locations
where taxpayers reside. Federal civilian employee pay now
is adjusted for cost-of-living and pay comparability differences
according to the geographic locations where Federal employees
are employed. Why shouldn't individual income tax
exemptions and standard deductions be calculated on the same
basis? Personal taxable income and standard deduction
exemptions should be determined for each three digit postal zip
code where taxpayers maintain their permanent
residence. This procedure would equalize tax
exemptions for real localized differences in cost of living
expenses. Elimination of all other deductions would end
the grossly unfair subsidy that renters (especially the working
poor who cannot afford to buy homes) now pay through their
relatively higher income taxes, which are used to offset income
tax revenue losses from the mortgage and home equity loan
interest as well as the property tax deductions now given to all
homeowners. Special one-time only 20 year fixed-rate
interest and property tax-deductible FHA and VA mortgage
programs (with second mortgage lien prohibitions) should be
implemented only for the working poor with incomes below 150% of
locally-adjusted poverty levels that would be funded by Social
Security Trust Fund receipts. (also, please read the Financial Sector
Reforms, Saving
Social Security and Pension
Reform issue papers).
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Designed by Imad-ad-Dean,
Inc.