A Modest Proposition

This is my first post since the Trump Administration took over.

I will not reduce this piece in any manner towards the 'ad hominem,' attacking the individual flaws, not a rebuttal to the premise of the opposition, found throughout this nation today.  Remember 'ad hominem' is a fallacy.

We are at a juncture in our nation's life where decisions for the future are now being discussed.  Taxes, Health, and Life, Liberty and the Pursuit of Happiness....

To whit:

In my treatise Metaeconomics, I define a non-tax structure of currencies to create a greater and more abundant state of living;

Seven Market Categories each with their own 'Class' of currencies calibrated to each market need.

1. Survival

2. Social

3. State

4. National

5. International

6. Bourses

7. Macrofinance

The premise and conclusion is that we are commodifying the bare necessities of life, and by not having a proper Benefit-Cost structure for everyone to agree to and reference, we inadvertently have put an actual dollar amount to the Earth, humanity itself, and the individual lives of citizens in general.

As such, I now entreat my recommendations to our present Administration.

The above scheme is well too complex for our current governments systems.  That said we need to talk about Milton Friedman's tax proposal the ruling party are now distorting vastly.  That is the little postcards we will be sending in to address nominally our annual tax portion.

I feel the current Congress wants to eat their cake and have it too.  It seems legislators take to tax exemptions like a cat to catnip-- they cant but help to assist their "constituent(s)" in being picked to 'win.'  Government shouldn't be in the business of picking winners and losers!

I. When all loopholes are closed: we only need an across the board tax of 11%, no loopholes across the board, to over-fund the Treasury, and begin to pay down the debt, and balance the budget.  And to be clear this is across the board-- capital gains, passive income, asset transfer, etc.

1.  First tier, and first moneys are tax free!  The first earned annual $15,000 Single, $25,000 Joint, and $250,000 Business are not taxed.

By lifting the burden of the underclass, we will create an operating market that functions freely at the initial or lowest levels.  This ideally stimulates the creative forces to invest in themselves, but does not allow any taxpayer to 'subcontract' to themselves, so as to only declare minimum tax-free income in, say, five different Taxpayer IDs, that still wholly are the account of that prime TIN in order to avoid taxes altogether.

In other words, just as the FDIC insurance only covers banked money up to $250,000, many elite create "Account ladders," where each portion of their cash wealth is held in as many $250,000 bank accounts, as needed, to insure the whole fortune. 

Similarly, business declarations must be transparent-- that is the premise of the postcards.  We already have the means to audit in real time all the electronic transactions (that would include all Federally approved institutions) nationally.  Cash and assets would only be investigated on sums above this initial threshold.

2. Second tier, 10%-  No deductions no loopholes and no 'motivational tax.'  It is in the interest of the State to ensure that every citizen has the freedom and liberty to pursue their specific happiness. The abundant tax breaks are designed to encourage a citizen to (a) buy a home, (b) get married, and (c) have kids.  That is the formula to create more citizens, a natural resource.  The more citizens, the more tax revenue, and so tax breaks have been tinkered with to create the byzantine code extant.

After initial first tier clearance, this second tier would cap at $40,000 Single, $100,000 Joint, and $650,000 Business.

For example:

Ralph Doe made $38,000 in a year, he would only have a "tithe to the state" upon the remaining $23,000-- thus a tax of $2,300-- and Ralph can easily estimate how much to save, every year.  

The Smiths earned $55,000 jointly, and because they could anticipate and easily calculate, they saved to pay the 'tithe;' ($55k - $25k = $30 x .1 = $3,000).

Acme LLC, a small cap C-Corporation, earned $422,000 in a year, and having been granted the first $250k tax-free to do as they need and want, they then earned an additional $172,000 above the exemption ($422k-$250k=$172k x .1 = $17,200). 

Sorry no write offs or loop holes, because when Milton Friedman made the tax simplification argument, it included ending all the bizarre and overly detailed escapes from taxation creating an effective net zero. 

Large cap businesses currently operate with most or all of their tax liability erased by every esoteric tax break currently on the books-- not the nominal 39%.  The savings for larger companies will occur with the redundancy of certain financial specialists they require to staff in order to have the "net zero" tax.

3. Third Tier, 12.5% after second tier and up to: $100,000 Single, $250,000 Joint, and $1,000,000 Businesses, annually.

4. Fourth Tier, 15% after third tier and up to: $650,000 Single, $1,000,000 Joint, and $10,000,000 Businesses, annually.

5. Final Tier, 20% after fourth tier and after fourth tier annual maximums.

All loopholes and favors are closed, except the ability to write off only donations to any 501c3 non-profit organization.  Other 501s, such as political organizations, or any other TIN classes are not "Tax Free," and have to conform to the above scheme.  (Maybe also keep the Mortgage Deduction, [and the State-level taxes] but again that begins the slippery slope of horse trading for more esoteric tax breaks.)

This final nominal 20% should also be tithed upon all capital gains, estate, and transfer taxes above the fourth threshold-- and realize a net TAX CUT OF OVER 25%!

This is just a simple tithing scheme.

II. Trump Care (ACA)

Here I provide a simple testimonial;  The ACA saved my life.

I have been recovering my health since 2009 when I began experiencing what was diagnosed as Arthritis.  When I finally got ACA health care in 2014, I was allowed my pre-existing conditions to be treated, I began to successfully manage symptoms I would have died of probably by 2016 without healthcare.

It turns out I have been in chronic pain via fibromyalgia much of my life.

By creating a safety net for all citizens, we increase the Potential Energy of the Economy (promising intrinsic future GDP).

Health is critical.  I have argued in my last post extensively.

By allowing our overseas competition to fund free health care we compete with an implied reverse tariff against us.  By insuring their citizens, they relieve businesses of cost burden to carry Employees.

Further, if we just simply eliminate the age requirement for Medicare, and wrap the Federal Employee Insurance (that Congress and Federal Employees have), and the VA System in to the folds of Medicare and Medicaid, most citizens would be able to rid themselves of illness and diseases to improve our productivity.

This leads to one of the most serious issues for the general benefit and health of our citizenry: Environment.

III. Reconcile Environmental and Economic policies.

I am totally saddened by the situation in Japan of Fukushima.  The robots died within minutes of contacting the radiation pit spewing radioactivity into the Pacific Ocean and destroying our fisheries.  Not to mention Garbage Island.

We are at a juncture where if we fail to act and coordinate amongst ourselves as humans on this earth, Mother Earth will shake us off-- in 100, 1000, or 10,000 years-- at the rate we are going how much longer do you assume we can last?

The natural resources are being opened up to industry, and regulations are being diminished, destroyed and dumped like a bad habit.

Climate Extremity deniers have failed to prove their premise now for forty years!  Data regarding man-made carbon increases was first uncovered in the 1960's from a military surveillance in Hawaii.  By the 1980's James Burke appeared throughout the Western world attempting to explain the probabilities and ramifications of our unchecked growth.  In the 1990's Kurt Vonnegut, Jr., created the words, "thermodynamic system," in an earnest appeal to the public to help comprehend our situation of overall increasing temperatures.  By, 21st century, Vice-President Gore further explained that our ignorance is costing us RIGHT NOW, very dearly.

Which helps us to arrive at International Relations.

IV. The World occurs with or without us.

1. Environment: The Paris Accord has been the result of decades of International Negotiations-- Kyoto, Doha, and Paris-- representing monumental achievements of Diplomacy.

Our failure to embrace the completion of the International realization that we as a species have very little time to have any say in what world we leave the next seven generations is abysmal. This is no surprise to the "woke folk," including the 99.9% of Scientists that agree we are facing a Monumental Challenge as a species.

The people who doubt "Global Warming" have a point.  Earth still has winter.  But Snow (winter-- a Season, not a climate) doesn't disprove what is best termed Climate Extremity-- hurricanes needing a Category 6 level?  (Remember basic science: where if a molecule is heated the energy excites [expands], and that is how every day we boil water for coffee, tea, etc.-- hence oceans providing increasing water to the excited storms.)

2. Diplomacy: The 'talking tough,' emphasis on conflict in the International arena is a fools errand.

In my book (available as second draft [still haven't corrected the indexes]) Metaeconomics, I define Perpetual or Constant (k) Warfare (W).  Perpetual Warfare (kW) is impossible to sustain and is NOT STABILITY.  History bears this out over and over.

War makes profits.  It devistates the underclasses.  And it also destroys our Terra Firma upon which we succor.

V. Conclusion

We are simultaneously the Oldest Democracy, yet one of the younger nations.

In my various travels abroad, I have heard repeated many times the opinions that we are viewed as an Adolescent by the International community-- picking on the weakest Nuclear Power (NK), but also cozying up to the closest rival (Russia) and Bully.  We must shake off this juvenescence!

Until we can recognize the simultaneous pulls of on the one hand providing guidance to other democracies by best example and primary superpower, while on the other having the humility to learn from ancient nations (France, Japan, etc.), we will not be followed as a world leader within the International Community.

I hope we Americans can make something work to address all of the above.  But I wont be surprised if I am further ignored.... that's Okay, because I am pushing neither "Like," nor "Ignore" on my Social Media radar. Life is more subtle and complex than the simple binary matrices we prefer, just because it fits in our head.

In this day of instant gratifications, immediate knowledge, and mass sub-culturalism (where people only listen to what agrees with their world view, as opposed to facts of concrete reality) we must comprehend that facts, factors, and proven (amongst all the sciences here we reviewed, economic) theory should be respected, observed and obeyed.

I am not going to go for another 30 years with the elites arguing that 'trickle down economics' operates within the mechanics of economy, is somehow to the benefit of all, and good economic and social policy (lest we compare the environmental disasters we are regularly carrying out in this grand open chemistry experiment).

So 'snapoutofit' and create reasonable by-partisan laws with clear-eyed leadership, please.

New Tax Code

I really dont want to wade into the debate regarding the trial balloon, yet, but will say:

Close, but no cigar.

At least they didn't try to "please all the people all the time," and had political wisdom to understand that the recommendations wouldn't survive the congressional bile movements.

And I like they are starting down the road towards simplification, but some Tax deductions may be necessary.

That leads me to my only point;

They seem to forget that taxes, and the Relief therefrom, are the way to incentivize the citizenry and business alike.

Subsidies, tax breaks, and even certain "credit" type programs between the government and the citizens they propose to collect and protect (not be too cynical) from, can be made clear to create our future economy and growth from this recessionary hangover.

Ideas?

California Dreaming about Legal Hemp

Some may not have heard that now California has four pending Propositions to the public with Jack Herer's (CHI) Cannibis Hemp Initiative link.


The other three groups have filed proposed initiatives with the California Secretary of State for ballot measures that would legalize and impose a tax on marijuana:


Joe Rogoway, Omar Figueroa and James J. Clark filed the language for 09-0022 on July 15, 2009. They refer to their measure as The Tax, Regulate, and Control Cannabis Act of 2010. (TRC)

Richard Sieb Lee and Jeffrey Wayne Jones filed the language for 09-0024 on July 27, 2009. They refer to their measure as the Regulate, Control and Tax Cannabis Act of 2010. (RCT)

John Donohue of "Californians for Common Sense" filed the language for 09-0025 on August 4, 2009. He refers to his measure as the Common Sense Act of 2010. (CCS)


And if that wasnt enough Hempen news from the Golden State, there is also the February Assembly Bill 390 and the associated public effort to get that idea through the legislative process during California's fiscal crisis.

Jack Herer and many others have been beating the drum for legalization for decades.

I always argued for libertarian decriminalization and associated taxation, and now that the state is hungry to (a) save money, and (b) generate revenues-- it does seem the day is indeed nigh for legalization.

Herer's bill creates a limit on total taxation at $10.00 per ounce.

From what I have gleaned no other of the three initiatives have created a cap on the potential taxation.

If there is not a counterpart Senate Bill (to AB 390), then the idea that the legislature can impact this popular movement is moot. If the congress can get past the current Schwarzen-annegans, and head the voter's off at the pass-- a reasonable decriminalization scheme can be implemented.

More likely with the estimated over half the nation, and over half the state of CA supporting decriminalization, some or all of these initiatives could (I) end up on the 2010 ballot, and (II) PASS!

At that point, it will take the legislatures active effort to reconcile the differing versions of legalization and the methodologies prescribed by the voters.

Assuming those two (I & II) possibilities-- it would be well for the CA Legislature to get out ahead of this issue once they agree to fix the water distribution scheme!

New Tax Regime for California

The Commission on the 21st Century Economy released their report and recommendations - AP Release.


Notably missing were the calculations showing that their ideas would create a sustainable level of tax receipts at the 4% Business Net Receipts Tax level. The concern is that it may be a number too low that creates additional fiscal restraint, where fiscal restraint is a somewhat separate issue.


That said, the reduction of personal tax rates and small business tax rates (including an elimination of the $800 per year existence fee) yours truly is enthusiastic about (assuming the revenues would be sufficient to meet obligations)!


Further, the idea that they will simultaneously reduce the corporate tax, yet broaden the net to capture revenues generated within the state should seemingly drive new business to our state. But again there is no empirical data on offer to show anything to bolster my assumption here.


I would STRONGLY OBJECT to some final version of the recommendation to allow additional oil leases ABSENT any modernization of the oil extraction tax in line with the intent of the voted down (after a massive advertising blitz against) Prop 87. The commission recommends, "The state should permit new oil leases with royalty revenues going to a reserve fund," but if we are still taxing oil at 1.5% where most every nation and state is more towards 5% or above, then this is really just a gift to big oil!


I havent scoured all details of the Full text , but I imagine that by the time the Democratic Congress gets done with it it will change considerably from its current academic and nescient state.


In general I hope the 70% I like and the 20% I strongly dislike will be seriously considered by the legislature, but most the recommendations are common sense (like merging the existing two tax collection agencies). One hopes the common sense elements are left more or less in tact... We'll see!

Memo from the Peanut Gallery to President Elect Obama's Economic Team

There are a multitude of complex issues to grapple with which separate and as a whole are unprecedented.

Great minds and scholars have been hard pressed for solid answers amidst the crisis.

So the few relevant words from a man who has barely cobbled a career from giving advice on real estate, mortgages, and finance is probably pretty low on any priority list, let alone item on the agenda.

Yet here in my own fantasy world known as my blog, I first have to point out this item from June 26th, which clearly defines some of the precipitous issues as it relates to market speculation and its forthcoming consequences as warned in other articles.

Next I would like to point out this article/commentary from 2007 which illustrates clearly the point of view of a humble and honest broker well before the Fannie-Freddy debacle.

And as this is my first commentary on economics and policy since the events of September 15th (a day which will live in infamy), please let me first make plain my assessment of the outgoing W administration, and secondarily the up shot of the Republican's as leadership:

1. The Soviet Union was founded upon less of a Nationalization of private wealth than as what has occurred in the "bailout" package.

2. Unlike the Soviets overtaking means for Production, this is similar to the mulligan that Enron took (Bankruptcy protection) after siphoning off billions of dollars from consumers and state purchasers (notably California).

3. If I was to make the argument that the solution(s) posited by the W administration's Paulson to Republican/Conservative people any time in my life starting in 1970 through to the "Bail out package," I would be considered a 'Commie,' 'Pinko,' or at best 'Looney Liberal.' Luckily I dont believe this is the best solution, although a necessary minimum of confidence was restored to the capital markets.

4. Although anti-free marketers are quick to assert this is proof that its a failure of free market concepts, unfortunately its not quite that simple. True free market principles would then suggest that we allow Wall Street to shatter into a million pieces, and allow the Phoenix of the Invisible Hand to rise from those ashes. The risk of Anarchy, Revolution, and War should not be a hinderance to those stoutest in defense of these principlea.

Rather what has happened is that the curtain has been unveiled upon the Wizard of Oz. Or more accurately Wizards: Power Elite; Ultra Rich; Super Rich; and their operatives... and as Gomer Pyle would say, "Sooprize sooprize," the W administration fits neatly into that last category (if not others).



The doctrine known as "free market," and, often as not, ascribed to as "trickle down," has been a fallacy waiting to happen since I took Economics in 1986 from my perspective. The fallacy is that the pitch (or soccer field to define the metaphor more readily) is absolutely not level (a lack of transparency of markets, trades, and companies-- let alone parity amongst status of trading parties), everyone knows this, but the referees (power elite) assure us that indeed the market is trading at a free clip, and they are doing their best to weed out the inept and destructive government (singular as in government is bad) in order to get back to those players to whom that unfair pitch advantage works against.

It is, like many convincing fallacies, a perfect ecosystem of utter nonsense.

What was revealed when the Wizard came out from behind the curtain?

The rules of the road were designed to insulate power elites from those market forces that every small business owner (not suckling directly from the teat of one or more of the power elite) faces yearly, monthly, daily, hourly, and even at a moment by moment level, wherein one bad decision can have the whole house of cards tumble down on them, their employees, and their families.

Perfect capitalism for 96% of the business owners in America, and pure communism for the ~4% that retain ~92% of the wealth and direction of capital.

The main difference here? That fallacy of "perfect" and "free" markets has been unmasked. For me it doenst make me less of a Keynesian or Miltonian (of which I am only some part in either case), rather confirms the sound logic of truth found within the mathematical models.

For all practical reasons, it wasnt the theories that were flawed, rather the implementation of those theories. You dont go golfing with Tiger Woods, and on holes 3, 7, and 12 receive a "0" on your score (an impossibility), then go on to say you bested Tiger Woods at Augusta for the Championship!

For lack of a simpler explanation that is what Corporate America has been doing for decades!

My Miltonian Tax suggestion of reducing tax paperwork to the size of a postcard, is premised on the fact that massive corporations with armies of lawyers can end up getting paid by the government, whereas the business owner will typically pay between 12 and 44% of GROSS EARNINGS in a profitable year to the Government!

LEVEL THE PLAYING FIELD, PLEASE!!!

So, what are my suggestions?

A. Simple, Fair, and Flat Tax for individuals, businesses, and everyone and everything in between. I think if you make annually inflation adjusted exemption provisions for the first $22K individually, $38K jointly, $6K per child, and $40K for business plus $6K per employee, then a 13% flat across the board on first moneys and profits tax should suffice to amply maintain the Federal treasury. Double tax only counts in certain specific cases, but honestly the concept of a "double tax" is in itself a product of the Labyrinthine tax laws themselves. Simple, plain, and honest: You earn money, invest it and make more... you are taxed on the money you earn. So called "death" tax is a myth, and any exemption should be put onto a matrix which allows for inflation and number of legatees, but otherwise massive fortunes do need to have the same 13% (a lowering of current complex statues) flat tax after expemptions upon transfer of estate.

B. All regulation needs to be put into Plain English. There needs to be a rule book for all people that everyone who speaks a 7th grade level of English can understand, but moreover, each field of employ and oversight needs a smaller and comprehensive annual rule book for the relevant profession(s). If you are a Stock Broker, for instance, the SEC needs to publish a Plain English Guide to all relevant laws (including definitions of crime and punishment) which is the basis for testing and licensure. How do we expect companies to follow laws their people couldnt understand without a law degree? This will facilitate whistleblowing, self governance, and enforcement. (On that note free markets if given clear straight, and bright lines do have the ability to self govern.)

C. International Harmonization. Its well time to beat our swords into plowshares. NATO can also be an economic body which assists in (a la Bretton-Woods) harmonizing economic functions. Why limit it to NATO? Trade Areas can work, and do work. However, just as we need to (for lack of a better word) admit that NATO is also an economic force, we also need to create Fair Standards in order to proceed honestly with our Trading Partners-- applying that standard basket of goods (environment, civil rights, and labor standards) as a preset disposition for negotiations. If any free trading regions partners can all agree to certain basic workers rights, then there is no price advantage to using slave or child labor in order to queer the productivity quotients and balances. This esoteric set of ideas (which I have simply called Fair Standards) is the nutshell of why we have lost so many jobs over seas-- not just "tax advantages" as certain groups would have you believe.

D. Mortgage Relief. I will be writing a more defined explanation of this soon, but here it is in the nutshell version. There are many of the steps necessary to implement a comprehensive relief in place under the current "bailout" plans passed, but my addition would be EVERYONE NEEDS TO FEEL SOME OF THE PAIN. Borrowers should still be on the hook for the full amount of the mortgage when enjoying payment reduction, Lenders should be on the hook to not get their money back in time, and all the middlemen, servicing agencies, and investors need to accept such bi-lateral intervention (as negotiated in mathematical formulation by the FFT [Fannie-Freddy-Treasury] guidelines and agents) regardless of how much money they stand to lose-- BECAUSE THEY ARE JUST MIDDLEMEN! Investors, sorry, but tough turkeys, you put money on those bets, were told the money was at risk, otherwise the SEC and FBI can arrest the brokers for non-disclosure... that said I think most licensees put investment disclosures on their business cards (a financial industry joke). The Government should tread very lightly in using its power to "renegotiate" existing agreements, and that said it is the Lenders right to refuse a renegotiation and foreclose... otherwise we strip Rule of Law (and contracts).

E. Stimulus. See my article on what we can do with the money we save by ending the War. more... more....

Just my two cents.... you can pay me later.

What is a True, Simple, and Fair TAX?

Strictly speaking we believe that Milton Friedman's critique of Keynes is the best available science to date-- although he is still technically a Keynesian. Our Party is eager to find the next discovery in Economics, as with all the sciences and arts.


The maths which if you are really curious you can look up in a variety of publications, such as;


Taxing Sales Under the FairTax:
What Rate Works?
By Paul Bachman, Jonathan Haughton,
Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, and David G. Tuerck


Other equations may apply, but at the end of the day 11% tax on all income (personal, business, etc.) only once (no sales, estate, savings, or other "double taxation") would basically allow the US Government to have about as much revenue as it currently collects.


The primary distinction is that the tax forms (and there are tentatively only two, one for business and one for personal) are potentially postcard size.


Current Republican "Fair Tax," is a virtual VAT, or National Sales Tax. Although this would be a simplification, the enforcement mechanism would be burdensome to the states (relying upon their existing enforcement of retailers and wholesalers), and we believe this system is open to fraud.


Dick Armey's Fair Tax, (although eventually was combined with the VAT to essentially kill the deal, as Democrats feel this unfairly squeezes the middle class consumers) was close to the Miltonian tax with the rate set at 17% and an exemption for first moneys earned (to exempt lower income earners from tax all together... which led to Republicans hybridizing this reasonable proposal with the National Sales tax).


So we believe, although its not perfect, a straight tax of 10% (1% less than what the government currently anticipates to collect in revenues) would save enough money on a macro level to justify the required budget constraint (with say a reintroduction of congress and the executive to pay-go and balanced budget commitments), and possibly make up for the 1% shortfall.


As for the poor, and low income earners, The State needs to have a social apparatus for any number of reasons (for instance taking care of Veterans who defended our country and come home with mental or physical disability), and as such can issue vouchers as part of that apparatus which (like food stamps) can be used to allow the government to pay itself "agency to agency," so to speak-- transferring treasure from one department back to the general funds.


One final note, as an extension of this Miltonian Postcard, we believe every citizen (even those paying with vouchers) should have a vote on the back of the form to fund any one or more major committee(s). 33% of taxes paid come with Taxpayer discretionary allocation, whereby the Taxpayer can select one or more of the several dozen major committees held by both houses of congress which they would like to see their moneys forward to directly-- without commingling into the general fund.


I wonder what our Education Budget would look like, then, eh moms?


This would further restrict our leaders from improbable spending habits which conflate deficit spending and create rediculous loopholes.