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Wednesday, August 24, 2011

How Much Do You Owe?

Have you thought about the National Debt?

I mean have you REALLY thought about it?

The debt is growing at about $3M a minute, but for this argument, we are going to use a static figure of $14.639T. Yeah, that’s a little obscure, and really, most people can’t grasp the concept.

Written out with a little less shorthand, that is $14.639-trillion dollars.

Written out fully, that is $14,639,000,000,000.00

Yeah, that’s a lot of zeros to the left of the decimal place.

It’s also too big for most folks to comprehend.

Let’s just look a figure of $1,000,000,000 or 1-billion. That’s just 14.639T/1B of the National Debt, or only 0.007% of the full National Debt. Yes, way less than even 1%.

If we use the clock and roll it back by 1-billion seconds, we would find ourselves in the year 1980. Gas was $1.19 a gallon, and a new house was about $70,000 or so. Pac Man was just released, and those new camcorders were hitting the market in Japan. And you would be anxious to find out just who shot JR.

On the other hand, if we turn back the hands of time by 1-billion minutes, we are in the year 129. Jesus was crucified less than a hundred years ago. There may even be a few people alive who actually saw him.

Now let’s go back 1-billion hours…we are in the year 110,967 BCE. The last ice age was just starting. Anatomically modern humans would have been banging rocks together on the riverbanks trying to figure out how to kill a mammoth or two for dinner.

If we take the next step and go back 1-billion days, we find ourselves 2,739,726 years ago. There are no humans, only apes that have learned to walk erect. More than a quarter of a million years will pass before the first true humans arrive.

Finally, if the clock spins backwards for 1-billion years, there is life, but it is single-celled. Some of the cells haven’t even stumbled on the idea of a defined nucleus yet.

What if we used the real number from the National Debt? 14.639 trillion years ago, the universe itself didn’t exist. Nothing. This was before the time when God’s hand moved across the face of the deep. In fact, He hadn’t even turned on the lights yet.

My point is that the National Debt is a staggering number. If we use the figure from the start of this blog (it has grown by about $10,000,000 since you started reading), that means that every single person (all people, regardless of age) owns a share of the National Debt amounting to about $46,000.

In simple language that everyone can understand, you owe $46,000 per person in your household above and beyond the credit cards, mortgage, car payments, and all the rest of your bills.

And it’s time to pay the piper.

Keep Loving!

Melodee Aaron, Erotica Romance Author
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Saturday, August 20, 2011

Herman Cain's 9-9-9 Plan

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I can't seem to leave some news stories alone...

Herman Cain and 9-9-9

OK, folks, this just defined the GOP Presidential Race.

Herman Cain has detailed even more on his 9-9-9 plan for the economy, and it makes perfect sense.

In a nutshell, the three 9s stand for:

9% Flat-Rate Personal Income Tax

9% Flat-Rate Corporate Income Tax

9% National Sales Tax

The studies indicate this would actually generate MORE income to the government while lowering the tax burden of better than 95% of the taxpayers.

Let’s use Mr. Obama’s favorite term: Fair and Balanced.

What could be more fair? Everyone, individuals and companies, pay the same tax rate. No one gets off free. No one gets off easier. No one pays more than their share.

What could be more balanced? Everyone pays the same income tax, but those who buy more pay more in sales tax.

Let’s look at the ideas everyone else has, such as they are…

The Democrats in Congress want to raise everyone’s taxes. In a twisted sort of way, that’s at least fair and balanced. Everyone gets screwed.

The Republicans in Congress want to cut only the taxes on business. Nothing fair or balanced about that, but it would work to get the economy back on track. It’s a long-term deal, though, probably taking a 5 or more years to work.

The President wants to increase taxes only on business. This would only make matters worse. Business would stop growing and spending. Unemployment would skyrocket.

Other GOP hopefuls except for Cain and Romney don’t have a plan at all, just rhetoric.

Romney has an inkling of an idea, but no substance so far. We’ll have to wait and see what he comes up with. I’m not going to hold my breath.

Herman Cain is the only person out there with a plan. And the plan he has is one that will work, and it will work quickly.

Take at a look at this guy.

He’s on the right track!

Keep Loving!

Melodee Aaron, Erotica Romance Author
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Melodee's Books at BookStrand

Monday, August 8, 2011

Got A Flat?

Earlier today (August 8, 2011), I proposed via Twitter that to balance the budget and get spending under control, we should look at an option where for every $1 in tax increases, there should be a simultaneous cut in spending of $4.

Then I did a little research…

Not so many years ago, Canada was in dire financial straights, and their credit was in the toilet. The Canadians took just such an approach, but a little more aggressive.

For every dollar they increased taxes, fees, and other revenue sources, they cut seven dollars in spending.

That is even better. Someone care to do the math for me to see how fast we could reduce the debt to zero?

More importantly, this nonsense of a “fair and balanced” approach being to increase taxes on any one group is far from fair, balanced, or even workable. Tax increases must be across the board.

In fact, a flat tax is the way to go. Everyone pays the exact same percentage of their income no matter what. No deductions, no adjustments, no nothing. Also, the source of the income doesn’t matter. No exemptions for alimony, child support, retirement, Social Security, and all the rest. No lower limit on income below which you get a free ride. No upper limit on income above which you have a million loopholes. Finally, all individual taxpayers would be subject to this structure, and for the purposes of tax law, all businesses of any form would be considered “individuals” under the tax codes. Foreign businesses selling products in the US would be subject to a national sales tax. See later in this blog.

Caveat: Self-funded retirement accounts would be an exception. See later in this blog.

Just to pick a number, and I have no clue how close this would be to the actual number needed, let’s say the Flat Tax Rate (FTR) is set to 15%.

If you make $50,000 in income this year, you would pay $7,500 in taxes. End of story.

If Bill Gates makes $5,000,000,000 in income this year, he would pay $750,000,000 in taxes. End of story.

If Billy-Bob makes $400 in income this year, he would pay $60 in taxes. End of story.

I would bet dollars to doughnuts that for the vast majority of people, their tax rate would go down, while the Treasury would collect far more money.

Additional savings would come from the fact that the IRS is now redundant and could be fully eliminated. Your tax form just became a post card.

Again, I have no clue and no motivation to look up what the budget of the IRS is, but I will again bet that it isn’t peanuts. I also suspect the number would probably depress the hell out of me.


This needs to be coupled to a National Sales Tax. (NST)

Every item that is sold is subject to the NST. Again, there are no exceptions, exemptions, or other loopholes. If you buy it, you pay the NST on it.

Now, there may need to be two different NST rates: One for end-user sales, and another for items to be resold. That’s a detail for the economists to work out. Personally, I see no problem with a single NST that applies anytime an item is sold.

Also, the NST would apply to EVERYTHING, including items sold to government agencies, non-profits, and services provided.

Now, on to my vision of a few of the details…

I would see the NST as being fairly low, maybe as low as 1%, but probably around 2% is more realistic. I suspect that the FTR would be about 10% or so. Again, these numbers have NO basis in any calculations. They are 100% pure gut feeling.

Let’s assume a person making $60,000 a year and putting $12,000 a year into a retirement account. They would have the choice of paying taxes on the retirement account funding now or when they draw it out at or after retirement age. Let’s assume they elect to pay now.

Their taxable income is $60,000. Their tax due would be $6,000. This leaves them $54,000 in their pockets for mortgage payments, food, utilities, clothes, gas, and all the rest, but remember that everything they buy, including their mortgage, is subject to the NST.

Let’s assume that their monthly expenses, before the NST, come to $4,000 a month. At 2%, the NST would be $80. This puts another $960 a year into the Treasury.

So, for one taxpayer as above the total income would be $6,960 a year. That comes to a tax burden of 11.6%.

For someone making ten times the amount above, just multiply everything by 10 except the tax burden. It would stay the same.

Once our taxpayer reaches retirement age and starts to draw from their retirement account, since they paid taxes on that money when they deposited it, no new tax is due except on the interest earned. That is another detail that the accountants can work out.

Now that is fair and balanced.

I would love to see someone who has the time and expertise in accounting work out some numbers for the FTR and NST that would give the Treasury the same income as they have now. Then see what happens when we trash the IRS and the related maze of agencies that are involved.

I think it’s pretty clear that the income of the US Treasury could be increased while reducing the tax rate for 90% or more of Americans.

Couple this increase in revenue with a 1:7 reduction in spending, and we’re out of the hole in a matter of a few years.

More importantly, our kids and grandkids are out of the hole, too.

Keep Loving!

Melodee Aaron, Erotica Romance Author
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Melodee's Books at BookStrand