From: johniac@johniac.austin.ibm.com (John Iacoletti)
Subject: Re: Clinton Policies
Date: Mon, 05 Oct 92 17:55:53 GMT
Distribution: usa
Reply-To: johniac@austin.ibm.com (John Iacoletti)
Organization: IBM Advanced Workstation Division, Austin, TX

In article <1992Oct2.203245.18119@mksol.dseg.ti.com>, mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
|> In <1992Sep30.213640.31229@watson.ibm.com> johniac@johniac.austin.ibm.com (John Iacoletti) writes:
|> 
|> >Scenario 1:  Go bankrupt, default on the debt, and start over.  This
|> >sometimes happens to organizations that can't control their spending.
|> 
|> This is generally considered a Bad Thing (tm) when done by
|> governments, and particularly bad when done by the governments of
|> major nations.  If you don't understand why this would be so, I'm not
|> sure where to even begin explaining it.

I'm just trying to enumerate the ways to get us out of the massive
federal debt.  I didn't say they were all good ideas.  We need to
examine all of the scenarios though.  If we really want to get rid of
the debt, it's going to hurt.  The question is, how much "hurt" do we
want to inflict on ourselves.

|> >Scenario 2:  Stop all government spending, except to pay off the debt.
|> >Start again in four or five years with a balanced budget based on poll 
|> >tax revenues, with no deficit spending allowed, for any reason.
|> 
|> This is a terrible idea for more reasons than I have time to go into.
|> Not allowing deficit spending for any reasn is a bad idea.  No
|> government spending except to service current debt is a bad idea.  A
|> poll tax as the only tax is a bad idea.

Argument by assertion.  Isn't that special?

|> >Step 1. Flatten the income tax to 15% of earnings above $10000.
|> 
|> This is a good idea.  It is also where this should probably stop,

Absolutely not.  This is just the first step in changing from the
"soak the rich" method of taxation to a "pay for what you receive"
method.  If you stop here, it's not much of an improvement.

|> since most of the rest of this is bad ideas, IMHO.  It will require,
|> however, some *HUGE* cuts in spending.  What gets killed?

Everything gets cut, but you can start with Defense, Health and Human
Services, FICA, Agriculture, and congressional and presidential 
salaries.

|> >Step 2. Replace the income tax with a sales tax of 18%.
|> 
|> Presumably with no exemptions?  You've just lowered a bunch more
|> peoples' incomes to below what they need to live based on the
|> additional tax you just hit them with (18% of everything under $10k
|> plus an additional 3% on everything else).  Rotten idea, except for
|> the folks who make their livings by shuffling money around.

Again, this is an interim step to shift the burden of government
equally onto the people who benefit from it.  You don't want to stop
here.  You also want to cut government spending and pay off more of
the debt every step of the way.

|> 
|> >Step 3. Require referenda for changes in taxes or increase in 
|> >        government debt.
|> 
|> This one I think is probably a good idea.  However, I'm not convinced
|> that it's a WORKABLE idea.

But it's necessary.  The only way to cure runaway spending is to have
the people control their own pursestrings.

|> 
|> >Step 4. Eliminate all other taxes and fees, except customs, fines &
|> >        the 18% sales tax, and implement the contract recording fee.
|> 
|> This refers to "the contract recording fee" as if it is a well-known
|> thing.  What does it refer to?  Is there a proposal someplace for such
|> a fee?  What is the expected income from such a fee and what is the
|> expected loss in income from doing away with all those other taxes?

Sorry.  I pulled this out of an ongoing discussion, in which (I
assume) this fee was described in more detail.  At this point, I'll
have to cop out and say that the fees will have to be set at a level
necessary to finance government spending at the level you have
acheived at this point in the conversion process (not the current
levels).

|> >Step 5. Lower sales tax to 10% and implement head tax of $400/family 
|> >        member/year.  (Reality check: $400*260*10^6=$104*10^9)
|> 
|>                                                     What this shows is
|> that $5k/family member is the break-even point for this proposal, and
|> that the taxes of anyone making LESS than that go up.  In other words,
|> more people fail to make it, and we increase the tax load on the poor,
|> who are least able to afford it.  At the same time, those who are
|> better off get a tax cut.

You're looking at this from your "soak the rich" mindset.  Again, one
of the purposes of this tax restructuring is to share the burden of
government equally--this makes sense in a system where everyone has an
equal say in how tax money is spent.  As others have pointed out, this
will discourage the lower income people from voting in bread and circuses
for themselves at others' expense, which is how we got into this
spending mess in the first place.

|> >Step 6. Eliminate customs taxes.
|> 
|> Replacing them with?  Cutting what?

Replacing them with nothing of course.  The idea is to reduce federal
spending.  Cut everything equally to achieve the lower spending level.

|> >Step 7. Eliminate sales tax.
|> 
|> Ok, net government income is now down to that $104 billion from head
|> taxes plus whatever this 'contract fee' is expected to bring in.  We
|> can probably no longer service the debt, much less do anything else.

By this time, the debt would necessarily have been eliminated or
reduced well below $104 billion + contract fee revenue.

|> >Step 8. Replace head tax with government participation tax of $100/year.
|> 
|> Reducing income to less than 15% of what it was, in one fell swoop.
|> Now what?  You now have an income of around $10 billion, IF YOU ASSUME
|> THAT ALMOST ALL ADULTS ELECT TO PARTICIPATE.
|> 
|> Why not just say that we're not going to support a central government
|> and secede?  You've created the same net effect.  Of course, since the
|> State is now going to have to do everything, you're probably paying
|> just as much to fund the same services at the state level.

Not the "same" services, but the services that the people of that
state agree are necessary and are willing to pay for.  That way you
don't have Texans paying for Byrd's West Virginia pork, etc.

In 1800, this country spent about $1.08 per person.  In 1910, this
country spent $6.81 per person.  $100 is rather generous, even when
you consider inflation.  $5000 per person is outrageous and it's just
getting worse.

-- 
John Iacoletti       IBM AWS Austin       Internet: johniac@austin.ibm.com
        My opinions do not reflect the views of the IBM Corporation
"It takes a big man to cry.  And it takes a bigger man to laugh at that man."
                                                              -- Jack Handey
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