The Elephants in the Room

As we are approaching the 2012 presidential election, Republican candidates are vying for the G.O.P's nomination.  Here is a run-down of some of the most prominent candidates.

Michele Bachmann
Bachmann's top priorities are to "

• Restore our economy and create millions of new jobs.
• Repeal Obamacare and its unconstitutional mandates.
• Achieve deep cuts in spending to reduce America's debt.
• Strengthen the family and defend marriage.
• Rebuild respect for America as the shining city upon a hill."

She has developed  the "American Jobs: Right Now" plan, which is an eleven- stage plan to create more jobs for American citizens.  This plan includes cutting government spending, cutting taxes, securing the U.S- Mexican border, stimulating innovation, and repeal both Obamacare and the Dodd-Frank Act.

Bachmann is currently ranked 6th in polls for the GOP nomination.

Herman Cain

Herman Cain's focus is primarily on Foreign Policy and the economic situation. 

Cain's plan, the "9-9-9" plan is an economic plan centered around the idea of a 9% flat business tax, a 9% flat individual tax, and a 9% national sales tax.  This plan also includes repealling the death tax, reducing governement regulation on the economy, and works toward the Fair Tax system.

Herman Cain is currently ranked 3rd in polls for the GOP nomination.

*Cain has suspended his campaign.

Newt Gingrich

Newt Gingrich is focusing on:

• Job Creation
• The Economy
• American Energy
• The Right to Life
• Illegal Immigration

Gingrich's plan is the 21st Century Contract with America.  This plan includes a list of Executive Orders to be issued on Newt's first day in office if he is elected, as well as promises to stengthen the dollar, repeal Obamacare, stop tax increases, create jobs, secure the U.S-Mexico border, be open about military activity, and use military activity "judiciously and with clear, obtainable objectives understood by Congress."

Gingrich is currently ranked 1st in polls for the GOP nomination.


Jon Huntsman Jr.

Jon Huntsman's focuses are:

• The Economy
• National Security
• Energy Security
• Financial Regulatory Reform

Huntsman's plan includes tax reduction, reducing government regulations such as Obamacare and EPA regulations, increasing foreign trade, rebuilding America as an even more dominate military force, and supporting American energy.

Jon Huntsman currently ranks 8th in polls for the GOP nomination

Ron Paul

Ron Paul's focuses are:

• Abortion
• Healthcare
• Taxes
• National Defense
• Right to Work
• Immigration

Ron Paul's plan, the "Plan to Restore America" involves cutting spending, reforming entitlements, abolishing the death tax, extending Bush tax cuts, lowering the corporate tax rate, and repealing Obamacare and Dodd-Frank.

Paul currently ranks 4th in polls for the GOP nomination.


Rick Perry

Perry's focus is on:

• Jobs
• Fiscal Responsibility
• Security
• Healthcare
• Social Issues

Rick Perry plan to cut taxes, reduce regulations, cut spending, "pursue peace through strength", repeal Obamacare, and defend marriage and the 2nd Ammendment.

Rick Perry currently ranks 5th in polls for the GOP nomination.


Mitt Romney


Mitt Romney's campaign focuses include:

• Jobs
• Healthcare
• Foreign Policy

Romney plans to reduce taxes, reduce government regulations, retrain workers, repeal Obamacare, and use military influence internationally.

Mitt Romney currently ranks 2nd in polls for the GOP nomination.

Poll standings are taken from Real Clear Politics.com.

Social Security... Necessary Safety Net or Ponzi Scheme?

Today the government announced that Social Security recipients will begin receiving a 3.6% increase in their benefits beginning next January.  This increase is the result of a mandate that the amount of money in benefits will automatically increase every year based off of the COLA (Cost of Living Adjustment) which seems to adjust primarily based on inflation.  As we all know, Social Security has been an object of dispute in U.S government recently.  Governor Perry claims that the system is essentially a Ponzi Scheme, while others claim that Social Security is necessary and perfectly viable.  So is Social Security a safety net or a Ponzi Scheme?

As the system is set up now, the current recipients of the Social Security are being provided their benefits from the working citizens of America who pay Social Security taxes.  In the Ponzi scheme, investors where repaid with a profit based solely on money that the next wave of investors would invest.  The issue is that it relies on the next wave being larger than its preceding wave or the scheme just falls apart.  This can certainly be related to the Social Security system because it also relies on the next wave of people to repay the people that already paid into the system while they were working with the expectation of receiving compensation when they finally retire.  It is similar to the Ponzi scheme because it completely relies on the next wave of working tax-payers to provide them with their promised benefits.  However, it is dissimilar to a Ponzi scheme because the government is not looking to make a profit on this system, but to provide a pension for the retired citizens to live on once they no longer have an income from working.

Logically, we can not just leave the elderly and disabled to fend for themselves.  We live in the greatest nation on the planet and a major reason why we are so great is that we never fail to protect our own.  I would hate to see the day when society foolishly turns its back on our parents and grandparents who helped us all as we grew up and who took care of us when we could not yet take care of ourselves.  After all, we will all hit the the same point eventually and a little boost to what we can spend every month would undeniably be appreciated.  Even our oldest ancestors had systems set up in their very primitive societies to care for their elderly citizens.  They simply became "elders" and "witch-doctors", people with a lot of life experiences and wisdom to share with the rest of the community.  This abundance of knowledge and wisdom was enough for them to be provided for.  Today, our senior citizens can still provide us with marvelous gifts of knowledge and wisdom.... AND they have already paid into the system so that they will receive their pensions in return.  To try to strip these people of the service that they have already paid for and clearly need is just a crime against humanity.

There is just one problem...  Our government has already engaged in deficit spending and has created committees to try to find a solution to this problem.  President Obama is even now considering changing the way that the COLA is calculated so that it will have less of an annual increase.  With the national debt that we have already accumulated and continue to accumulate, we will now be adding approximately $26,000 million dollars to our government's annual expenses.  They are struggling enough to make ends meet already! (number of citizens to receive the increased Social Security Benefits. (55 million) and the average increase in dollars per year (about $467), provided by fox news and CNN)

To answer my question that was the reason for this article, I believe that Social Security is a necessary safety net and is NOT a Ponzi scheme because it does not have selfish intentions.  However, it does have the same failing strategy that the Ponzi scheme had, which is bad news for everyone retiring in thirty years or more since they will have been paying into the fund through their taxes, only to find nothing in the jar for them later on.  Something needs to change about this system and the answer is NOT to increase taxes on the working American citizens who are already being burdened by the downtrodden economy.  Instead my challenge to the people who run our government is to find a way to reform the Social Security system so that people are not getting screwed (for lack of a better term).  So to those who want to keep Social Security, what other government services or agencies are less important and that we can do without so that we can fund Social Security?  We are going to have to make some sacrifices.  To those who believe that Social Security needs to be discontinued, is there something else that we can remove to trim the fat off our countries deficit spending without throwing our seniors into the lion's den?

A New Revolution

In the years prior to the American Revolutionary war, which created the great United States, Great Britain continually issued more and more taxes on the colonists after they had enjoyed years of salutary neglect.  The colonists revolted in the face of these taxes.  Our nation was created when it was because the people were being forced to surrender too much of their own earnings to a government that was using the money for its own personal agenda.  The first tea party occured and we fought a war.  The modern Tea Party is "Taxed Enough Already" and the countless citizens who are occupying Wall Street are calling for the wealthy to carry the tax burden.  Both wings of politicians are struggling to come up with a solution that will benefit their consituents and keep the government floating.  As always, I find my solution in our good friend logic.

My plan to make everyone happy, or at least to leave no one room to complain, is to eliminate income tax and to reduce capital gains tax.  In exchange, we must increase sales tax based off of a much simpler tax code.  We could separate all purchaseable items and services into three categories: Necessary Goods, Standard Goods, and Luxury Goods.  The way that this plan differs from the FairTax plan is that we put even less stress on the middle class by increasing the tax more on the items and services included under "Luxury Goods", which would include items such as higher-end automobiles, televisions, and other top- quality items, so that we can keep the sales tax on "Standard Goods", being anything from simple, but unnecesary items from chips to basic computers and laptops, lower.  Instead of increasing the tax on the goods that the average or "99%" of Americans do purchase, we can make the people in Wall Street happy as well as those of us who enjoy some tea with our tax breaks.  Furthermore, this, if anything, would lower the burden on the lower class because they would not have to pay any tax whatsoever if they only stuck to the basic necesities.  The FairTax proposes to increase sales tax to about 23%.  With the separation of goods into these three categories, the "Necesary Goods" can have no tax, the "Standard Goods" could have something along the lines of 18% tax (give or take a point or two), and the Luxury Goods could have something along the lines of a 32% tax.  This should accommodate the loss of income tax revenue at least, since it does not abolish all capital gains, gift, estate, social security, or Medicare taxes (so the suggested sales tax percentages may even be lower!).  Of course, none of these figures are exact, just very rough estimations.  The details, of course, could be worked out be the Bureaucrats who actually get paid to figure all of that out, but the basic idea should not be altered much, if at all.

Let's first take this from the perspective of the average American citizen.  Say Billy makes $80,000 a year.  He would have to pay approximately $16,125 in income taxes (according to moneychimp.com).  This leaves poor Billy with only $63,875 to use for the year.  If he owns a modest house, he has to more into his morgage bill as well as his electrical bills, water bills, and gas bills every month.  At the end of the year, Billy really does not have a whole lot of money to use to try to push himself upward on the economic later and fulfill his American dream.  He could make an investment in real estate, but then has has to worry about a second mortage and, in this economy, what if he gets laid off?  That does not seem like a likely choice, it is too risky.  He could also invest his money in a CD at a bank, but, again, what if he gets laid off and needs the money before he can withdrawl it without penalty?  His other reasonable choice is to invest his money in the stock market, but he could loose value there, and even if he does manage to pick a stock that goes up, he still has to pay transaction fees and capital gains tax.  But, if he had the $16,125 back he would have more money to potentially invest or to just improve his lifestyle.  However, with the increase of sales tax, he would still be giving the government the same amount of money in tax revenue.

Next let's take a look through the eyes of a lower class citizen.  They really do not make very much money at all and would be very upset if they suddenly had to pay more money for the goods that they need to buy.  I say fear not.  Everything that they need to live would be absolutely tax free.  In addition to this, all people in a current lower level income zone could be given a card that excuses them from sales tax on other goods that would not be in the "Necessary Goods" category up to a certain amount.  Then they would actually be paying even less tax than what they are now.  So now the middle and lower classes are happy, and; therefore, so is the Occupy Wall Street movement.

Next, the upper class.  Yes, even the Upper Class should be satisfied with this proposal.  They will understand that there is a clear correlation between how much they buy and how much they pay in taxes.  This will be a relief to them because it will be a change from a correlation between how much money they earn and how much money is taken away from them.  They simply would not have any ground to complain with because if they do not want to pay taxes, then they do not have to!  So for all citizens, this plan would work out well.  However, there is one group that this would not work out very well with.

This new kind of tax code would just be horrible on the student population.  Most college students do not have massive incomes to be taxed in the first place, so they would not benefit from the removal of this policy.  They would also feel the heat very strongly from the increase in sales tax when they are trying to buy all of their electronic gadgets that they use for studying and class projects.  The logical counter to this issue is to exempt all college students from sales tax all together.  This will not pull from overall tax revenue too much and it will help the hard working students, the employees of tomorrow to get through college easier and get into the work force.

Of course there would be other benefits to this policy and if any of these are brought up or challenged, I would be happy to defend them.  Everyone wants a change to our tax code.  This seems to be at least one of the most logical solutions.

Disclaimer: I am NOT trying to start a revolution or revolt, I am just suggesting a new way to implement taxes.