Financial Services and General Government FY2024

Financial Services and General Government FY 2024 Testimony for the Record, March 30, 2023

My testimony addresses increasing the DC Budget to include reimbursables mandated by the Home Rule Act of 1974 and removing later restrictions on billing for presidential motorcades. Next, I will address responding to the imminent financial crisis. Finally, I will offer a subcommittee realignment proposal involving the Commerce, Science and Justice subcommittee and the Legislative Branch Committee.

The District of Columbia was designed to be a creature of Congress. For this reason, funding payments to the District should be transferred to the Legislative Branch Subcommittee. While the advent of Home Rule, eventual statehood for Douglass Commonwealth and the decreasing amount of federal contributions has freed much of D.C.’s Budget (a term I coined as a member of the Stand Up for Democracy in Washington, DC Coalition), there are certain activities that require annual funding that have been ignored since the federal payment was ended and certain activities transferred to the federal government. Until subcommittee realignment, fund the following unmet obligations where this subcommittee has been negligent for almost fifty years:

1. Metropolitan Police activities associated with motorcades, particularly for the President. Indeed, rather unjustly, such funding was disallowed in amendments to the Home Rule Act without allowing the citizens of Washington to vote on such charter amendments. In no state or federal jurisdiction would such unaccountable governance be allowed. While in some states, amendments can occur if passed identically twice with an intervening election, the fact that District voters cannot vote for any voting member, much less all of them, implies that changes to the basic law, in essence the constitution, of the District must be put to a vote to be morally valid. The fact that the current regime of unaccountable governance has not been challenged in federal court does not prevent such a challenge from occurring in the future. Indeed, it is incumbent on the Council of the District of Columbia to place any such amendments on the ballot and to notify Congress of their approval or disapproval of the same. Once this action is taken, the Judiciary can settle the constitutional question.
2. Damage to District Roadways in and around the National Mall caused by the Congressional Steam Plant. This is one case where Congress is exacting tribute from District taxpayers for damage it is continually causing. Visitors to the District likely look at buckling roads and see it as a failure of local governance, which is the farthest thing from the truth.
3. Behavioral health intervention for homeless individuals, including veterans, who camp in the National Capital Service Area and in and around federal agencies, including providing housing first and continuing mental healthcare.
4. Mental healthcare for individuals who have been hospitalized at St. Elizabeth’s Hospital or other District of Columbia facilities, such as the Correctional Treatment Center and the arrest and incarceration of any violent protesters held in the District of Columbia jail awaiting trial for their involvement in the events of January 6, 2021. In the near future, this may include some members of the House and Senate, so funding this line item in this budget would be most apt.

A recession is already upon us as bank failures related to cryptocurrency have started, with housing bonds soon to follow. Anyone who is paying attention knows why crypto is crashing. In the bond market, commercial properties and properties that have been seized in foreclosure have been purchased with private equity and are so heavily leveraged that they cannot be sold until the holding company files for bankruptcy in the next Great Recession. Since the Great Recession and the Pandemic, many now have to rent or own leveraged properties. Absentee landlords have cashed out and left others to bleed us dry. Before the pandemic, Exchange Traded Funds have been all the rage. Who wants to bet on where the latest pool of junk is hiding?

The Dodd-Frank Act provides for liquidity when crashes, such as the upcoming disaster, occur. However, neither the law nor the Federal Reserve provide any relief to the renters, homeowners and credit card customers whose debts are being purchased by the Federal Reserve and remarketed.  When the Fed marks bonds to market, M3 is reduced. The money vanishes in the same way it was created, with a keystroke. This also deflates the financial markets. Experience has shown that simply throwing money out of the window of the Central Banks did nothing to improve the economy. Forgiving debt would have. Let us not repeat (or rather continue to repeat) the bad practices that left the economy in the doldrums. During the pandemic, the Federal Reserve has purchased bad paper, but without benefit to those whose debts are held in those bonds.

This time around, credit card balances and back rent should be forgiven when the Federal Reserve buys the bonds that hold the debt. Loans could also be written down, which would stop bondholders from benefiting from issuing bonds that should never have been issued in the first place. Renters of both commercial and residential property should be offered the chance to purchase their locations and homes, with assistance from Government Sponsored Enterprises, with their paper replacing the debt paper that has been securitized in Exchange Traded Funds. ETFs may take a hit, but what was falsely sold as AAA paper would actually become what was sold. Bad landlords, and Glantz demonstrates that Mr. Mnuchin and Mr. Ross truly are bad landlords, degrade properties so that the bonds that were issued for them to cash out are nowhere near the value at issue.

In 2009, the United States aided and abetted those who created the crisis. We are currently repeating the mistake. When the inevitable crisis occurs again, doing the right thing will also be the right medicine for the economy. I mention this issue here so that and General Provisions for this industry include these actions and because part of any bailout will require appropriated funds. In 2008, the bill passed with the promise that borrowers would be helped. Mr. Paulson lied. Let us act truthfully this time around. 

Add the Department of Commerce and related agencies to this committee, retaining the Department of the Treasury; Financial Service agencies, including CFTC, FTC, FDIC (Office of the Inspector General), NCUA, (Community Development Revolving Loan Fund), SEC, SBA and the United States Tax Court, thus creating a Commerce, Financial Services and the Treasury Subcommittee. 

Transfer the Department of Justice and related agencies to a Justice and General Government Subcommittee. The following general government agencies are included: Administrative Conference of the United States, FLRA, Federal Permitting Improvement Steering Council, GSA, MSPB, NARA, OGE, OPM and Related Trust Funds, Office of Special Counsel, Privacy and Civil Liberties Oversight Board, Public Buildings Reform Board, Selective Service System, United States Postal Service, Payment to the Postal Service Fund and Office of Inspector General, General Provisions, Government-wide. 

Move the Executive Office of the President and the Judiciary to the Legislative Branch Subcommittee is to assure that like the Congress, EOP is fully funded in the event of a government shutdown. Given the rising levels of partisanship in this Congress, this possibility is not unexpected. Because the salaries of the President and Judges cannot be constitutionally reduced, the funding of their staffs must also be as sacrosanct as the funding of congressional staff. If the Legislative Branch goes first, the Executive must go with it.

Inflation and Health Care Affordability/Fiscal State of the Union

WM Health: Why Health Care is Unaffordable: The Fallout of Democrats’ Inflation on Patients and Small Businesses, March 23, 2023

In one week, the Senate Finance Committee will be holding a hearing on Pharmacy Benefit Managers and the Prescription Drug Supply Chain: Impact on Patients and Taxpayers. I recommend you send staff to watch it, either online or in person. I have attached my comments, as well as an attachment therin referenced on single payer healthcare.

Attachment: Pharmacy Benefit Managers and the Need for Single Payer

Attachment: HHS Budget, FY 2022 Video

House Budget: Fiscal State of the Union, March 29, 2023

These are largely the same as those submitted to the House Ways and Means Health Subcommittee on Why Health Care is Unaffordable: The Fallout of Democrats’ Inflation on Patients and Small Businesses. I gore the oxen of both parties in these remarks as a prelude to bipartisanship. Without it, we are wrecked - especially if the debt is defaulted on (as I detailed last week).

The national debt is the issue of the hour. The limit needs to be abolished. It was only established because previously, each bond issue was authorized by Congress. That day has long since passed. In the first attachment, we detail who owns the national debt by income class. 

The bottom 60% of households own the debt held by Social Security as beneficiaries. The top 0.1% of households hold about a third of managed fund and bond assets, with the rest of the top 10% holding half and the bottom 90% one sixth. Federal Reserve, bank and long term assets are divided in roughly half between the top 20% and the bottom 80%. 

If the debt were to be defaulted on, a great deal of the damage would be to the top 10% of households. Managed fund and bond holders in the top 1% would take the biggest hit. The debt itself is owed by income tax payers. For every dollar of income tax paid, nineteen are owed. Those who pay and those who owe are the same people: capitalists. Without the national debt, leveraging private banking, debt and investment - especially  the intrinsically worthless assets in secondary markets - is impossible. This is far above historical averages and is unsustainable. The answer to this is increased revenue. 

The other pressing issue is inflation...

Both:

...We cannot say we did not see inflation coming. All through the Pandemic, I made the following points on several occasions:

In general, the current economy is more medical furlough than recession. Increasing and adding benefits for many turns it into paid sick leave funded by government, which is entirely appropriate. The danger is that if benefits are extended for too long a period, people will desire to stay unemployed, leading to a situation where more money is chasing a decreasing supply of goods and labor. If this turns into an upward cycle of more benefits and less economy, not just stagflation, but Hyper-Stagflation is possible. 

As a nation, we were very lucky - except for the million or so people who died because the Centers for Disease Control and the World Health Organization would not admit that the virus first presents as a cold. By trying to not minimize the virus, they turned it into a killer as people believed that their cold symptoms, which went away after the first week, would go away again after the third - that these were likely seasonal allergies. This led people to wait too long and get treatment - a fatal error.

Because people got back to work and, to a great degree, weathered the virus if they had healthy immune systems, the economy started moving fairly quickly and our engineered recession went away. The last vestiges of pandemic relief, expanded Food Stamps, have just ended. Whether this causes prices to decrease or leads us into a financial panic because many people can no longer pay their rent is the issue of the day.

Not all of inflation can be left at President Biden’s feet. Pandemic aid started with President Trump - or rather with Treasury Secretary Steven Mnuchin working out a deal with Speaker Pelosi. In large part, Mr. Mnuchin had a huge incentive as he was a major landlord whose property holdings in single family rental housing were leveraged by Mortgage Backed Securities. Pandemic aid, plus assistance from the Federal Reserve in securing his bond obligations kept the economy from collapse.

For more information on how Mr. Mnuchin got us into this pickle, see See Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream by Aaron Glantz. 

Since January 2020, we have been predicting another depression, which we define as a drop in asset values below what is borrowed against them. We no longer have to project, given the falling price of valueless cryptocurrency and the realization that mortgage backed securities holding single family rental  properties are nowhere near what they are rated - and that they have been hidden in exchange traded funds. The recent bank failures are only the beginning. 

It has been (correctly) reported that Congressional action to deregulate smaller banks contributed to the crisis. The other part, which has not been reported, is that Mick Mulvaney, as acting director of the Consumer Financial Protection Authority, deregulated certain other Dodd-Frank reforms. The most obvious are those in the New York Mercantile Exchange (NYMEX) Oil Futures Market. This nefarious activity left the market vulnerable for abuse when the Russians invaded Ukraine in an act of unprovoked aggression.

It is not President Biden’s inflation after all. It is Mick Mulvaney’s. I do not blame President Trump for this. He does not have enough knowledge of economics to have done anything but egg Mick on. Mr. Mulvaney, however, should have known better.

Returning the health care costs, we do not endorse the proposals made by President Biden regarding the funding of Medicare. As we commented to the Budget Committee last week:

Taxes to support Medicare should be broad based, funded either by an employer paid subtraction VAT or a border adjustable goods and services tax (credit invoice VAT). This would allow for the repeal of the ACA-SM surtax on higher income individuals enacted as part of the Affordable Care Act. Tax increases on higher income individuals should be dedicated toward fully funding net interest, eventually reducing the national debt, funding veterans healthcare and overseas military and ocean deployments. 

Having to rely on taxing the wealthy, rather than on a bipartisan, broad-based solution. His proposal doubles down on what was bad in the original Act. Again, from last week:

...ACA subsidies are too low and are funded by taxing the wrong people (investors). Families in the Silver Plan still have problems meeting copays and paying premiums. The funding is also unfortunate. Rather than expanding Medicaid, replace it for the non-elderly with the  Public Option proposed in 2009.  The public option should also be extended to individuals who are denied coverage under pre-existing condition rules. Such rules must be revoked as the price of passing the bill. Such a trade-off is necessary for enactment of such a proposal on a bipartisan basis. 

Now that I have wished a pox on both conferences, let us move to the cause of systemic inflation. It is not what you think. Returning to last week’s testimony to the Budget Committee:

Reforming Cost of Living Adjustments for Federal Employees, Beneficiaries and Contractors to deal with inflation

Inflation is the other big economic issue of the day. As Dodd-Frank rules are being restored, the NYMEX oil trading floor is again an honest market. Prices will go down and stay down to reflect the real availability of oil and gas. This is not to say that higher interest rates were not needed, but this is only so that families, especially retirees, earn a fair return on their savings.

How the pain of inflation is borne is more important. Households making under the 90th percentile have been losing ground for almost half a century,while incomes above that amount have increased on a regular basis.

The source of inequality, aside from abandoning the 91% top marginal tax rate, is granting raises at an equal percentage rather than by an equal amount. When the 91% rate was repealed, incomes were fairly equal, so it was not an issue. 

The federal government plays an outsized role in how salaries are determined through percentage based cost of living adjustments to government workers, beneficiaries, government contractors. The government can change this with the stroke of a pen.  The private sector will follow suit with a higher minimum wage, adequate child tax credits (as described below) and paying individuals in training from ESL to community college the minimum wage to purse their studies.

From here on in, adjust for cost of living on a per dollar an hour rather than on a percentage basis (or dollars per month or week for federal beneficiaries). Calculate the dollar amount based on inflation at the median income level. No one gets more dollars an hour raise, no one gets less dollars per hour in increases. Increase the minimum wage as above and consider decreasing high end salaries paid to government employees and contractors. Even without decreases, simply equalizing raises will soon reduce inequality. Why is this necessary?

Prices chaise the median dollar. The median dollar of income is actually at the 90th percentile, rather than the 77th percentile (which is about where the median is). This strategy will reduce inflation in both the long and short terms as prices adjust to decreases in higher salaried income.. Let me repeat this - prices chase income dollars, not income earners.

Aside from rolling back high salary adjustments for senior government employees, contractors and members of Congress, what can be done to help families and small businesses deal with inflation. 

Higher minimum wages are vital, especially for tipped workers. The President’s child tax credit proposals are simply too low for those families who need them most.We would make it $1,000 per month and phase it out from the median income to the 90th percentile. 

Some of the bipartisan opposition in the Senate came from those who consider direct subsidies from the IRS to have the “stink of welfare.” I advise such Senators in both parties to raise the minimum wage so that no one is having to work just to receive this credit and that the best way to distribute the credit is with wages.

For middle income taxpayers whose increased credits are less than their annual tax obligation, a simple change in withholding tables is adequate. Procedures are already in place to deliver refundable credits to larger families. 

Employers can work with their bankers to increase funds for payroll throughout the year while requiring less money for their quarterly tax payments (or estimated taxes) to the IRS. The main issue is working out those situations where employers owe less than they pay out. This is especially true for labor intensive industries and even more so for low wage employers. A higher minimum wage would make negative quarterly tax bills less likely. Again, no one should have to subsist mainly on their child tax payments.

This approach is superior to the prebate mechanism proposed for the Fair Tax and for the same reason. The government should not be the national paymaster for every family. 

Another note on the Fair Tax and the VAT: while the IRS does not credit the entire sales tax paid by those who themselves collect sales taxes, at least they deduct those tax payments from total income for small business owners (and we presume corporate employers as well). This subsidy is a transfer to states, however all such taxes should be credited rather than deducted. If this occurs, the Fair Tax would be a value added tax and would end incentives to cheat.

Most importantly, there are far too many people working as small businesses who are truly employees. While ramping up wage and hour enforcement will help, the better goal is to give companies tax incentives, such as the employer-paid subtraction value added tax laid out in our latest tax reform proposal. This should also be the bedrock for providing better health insurance than is available under the Affordable Care Act as currently constituted. Please see a third attachment for this plan - but take small bites and call upon me for more in-depth explanation.

Again, from last week’s Budget Committee hearing: Corporate income taxes and collection of business and farm income taxes will be replaced by the subtraction value added tax proposed in our attachment on tax reform.

Individual income tax rates proposed by the President are packaged incorrectly.They should be split between subtraction value added tax surtaxes on salaries, interest and dividends and an asset value added tax enacted to replace both the estate tax and capital gains taxes.

See our tax reform plan in the attachment for details. This plan does not close loopholes, it eliminates them. Consumption taxes proposed in our plan don’t care how cash is obtained. When it is spent, the tax obligation is between 13% and 19.25% (or more, depending on how contributions to FICA formerly paid by employers and Medicare taxes are included). 

Enacting an asset value added tax would allow the end of the inheritance tax. Inherited assets would be taxed when sold - and not until then - so that family businesses and farms would be held harmless. This would also end the need to retain preferred retirement accounts and life insurance policies designed for tax avoidance (aside from those favoring employee-ownership). 

Attachment: Tax Reform Videos included

Attachment: Debt Limit as Class Warfare Video (Budget Committee Only)

Transportation HUD/Energy and Water Development FY 24

H. Approp: Transportation and Housing and Urban Development FY 2024, March 30, 2023 

H. Approp: Energy and Water Development, FY 2024, April 17, 2023

This testimony to the Transportation, Housing and Urban Development/Energy and Water Subcommittee for FY 2024 proposes spending for a Department of Energy/Transportation  solicitation(s) for $500 million in grants (each) to prototype a tethered electric car system in the first year, first on a testbed and then in one or more small town. Change in Appropriation Subcommittee jurisdictions, and requesting a Government Accountability Office study of the distribution of funds by region will provide the balance of my testimony.

To pay for this project, I propose Congress ELIMINATE ALL FUNDING for designing intelligent cars and some of the funding for developing charging stations and better batteries. Enough batteries have caught fire and have questionable supply chains and resource needs and enough automated cars have crashed into trees or humans to know that it is time to try something else. There are better modalities and they are available now. We said this a year ago and, at least as far as self-driving vehicles, this is still true. Indeed, projects to design these monsters are being ended left and right in industry.

Research funds can instead focus on the development of automated cars with central control (rather than its own AI) and energy distribution (rather than being hampered by economically damaging battery development). This  is old and proven technology, i.e., electric trains and buses.

The first set of grants would be given to automotive companies with a matching funds requirement to develop the technical specifications, prototype design and testing.

The second set of grants would go to small cities or towns with one or two major employers. Employers, municipalities, financial institutions and local retailers, as well as a consortium of car companies who performed well on the first set of grants, as well as state government and existing road providers, power and internet companies would partner with the Departments of Energy and Transportation to install and implement the system tested in round one. 

At least one grant consortium will be for cities in a predominantly rural area. This project will develop interfaces between urban/suburban and rural transportation systems, as outside of urban areas, use of the current gasoline based infrastructure will be required - or some form of hydrogen combustion with hydrogen produced by vehicles through electrolysis while attached to the electric grid system.

Second round projects will, if successful, be a guide for funding these systems in urban areas.

A third round of grants (possibly concurrent) will design and prototype interstate systems with separate electrified roadways for passenger cars, high speed rail, busses and trucks and freight rail. 

As in urban areas, these roadways would be covered with a roof deck upon which grass can be grown in climates that allow this, along with the deployment of solar panels over the grass. Such a mixture provides shade to the grass and cools the solar panels so that they can operate optimally. Irrigation systems may also be included to accomplish both.  

The final project would integrate the system with the banking system and include both individual car ownership and cars for higher. Individuals could own cars, while some vehicles would be for hire (with monitoring, but not drivers). Car owners could even rent their vehicles to the system. Debit cards or a link to checking accounts would pay for the car itself (either to rent or own), the roadway and the use of energy and computer services. 

Prices for accessing the road network would vary based on congestion and vehicles could be taken to a public transportation hub (which might be located at their children’s school), with the vehicle returning home empty or going to the next fare. If congestion is low, it may be affordable to drive to work. If it is high, prices for public transit and commuting would be adjusted accordingly.

Energy infrastructure to power the system and facilitate communication would also carry energy and data services, so add xFinity and Cox to the consortium. This also gives us the incentive to improve the grid.  We only need willingness to do this. The technology is already there.

DOTHUD: For FY2025 (if not sooner),  to better integrate water and transportation projects and to end the link between transportation and killing urban neighborhoods, I propose melding Department of Transportation funding into eliminating the Energy and Water Development Subcommittee. This allows for a holistic approach to design the roadway of the future with tethered electric vehicles...  

EW: For FY 2025 (if not sooner),  to better integrate water and transportation projects and to end the link between transportation and killing urban neighborhoods, I propose eliminating the Transportation and Housing and Urban Development Subcommittee and moving Transportation and Related Agencies funding to this subcommittee. This is especially important to facilitating research into tethered electric vehicles and funding resulting systems...

... Move HUD funding to Labor, Education and Housing to better link housing and anti-poverty programs in labor and education. We have learned that housing must come first. We provide and fund it last (which is is counterproductive). HHS and Veterans Affairs would be combined for more health care synergy and to break up the Labor-HHS bill, which is too large.

I suggest that the subcommittees and full committee request a Government Accountability Office Study on how money is allocated in each federal region and state. 

  Reporting should focus on where money is actually used to mandate how funds are spent. This should focus on who benefits from spending rather than who performs the work. Pilot projects, grants to improve the grid, water development and anything administered out of a regional office (or supporting it - such as telecommunications) could be classified regionally. Research grants would as well. Other items, including those involving production of nuclear fuel, would be counted outside regional estimates.

These data likely already exist or can be easily collected from departmental budget offices. This should be true for both planned spending and historical patterns. Committee staff would then amend these data to take into account the appropriations bill. In the future, submissions will include state and regional data in the current services budget, as well as the President’s proposals.

This information will allow the public and the committee visibility on the distributional equity of the appropriation. Again, this is not to force conformity, however it will allow adjustments to certain projects to assure adequate support for legislation. Information should be for the total appropriation in each region and state, with the number of Representatives and Senators listed for each region and state. 

Explanatory material would address any imbalances in spending (for example, the fact that Massachusetts contains a high number of research universities and associated corporations.

Trade Policy 2023

Finance: The President’s 2023 Trade Policy Agenda, March 23, 2023

WM: Hearing on the Biden Administration’s 2023 Trade Policy Agenda with United States Trade Representative, Ambassador Tai, March 24, 2023

Within the past week, Chinese President Xi met with Vladimir Putin to strengthen economic ties, although any direct help with the Russian aggression in Ukraine (not a regional conflict) was not disclosed. If such aid is found to exist, it is news to no one that this would be very bad for our trade relationship with China.

Barring such stupidity, an agreement between Russia and China on energy and resources is geographically inevitable, although its instigation by authoritarian regimes is problematic for anyone outside the ruling oligarchy on one side and the Communist Party on the other. Revolution in both countries is inevitable and may occur sooner than later - which would be good news for the Mongols, the Uyghurs and the Ukranians (and many others).

The continuing conflict in Ukraine is not good for the Belt Road initiative. If China acts in their own interests in this matter, rather than in the interests of the strongmen, development will be good for all.

Until sanity returns, a reaproachment between Russia and China is all the more reason to dust off plans for the Trans Pacific Partnership (or whatever Ambassador Tai wishes to call it). We made our feelings about extra-legal provisions of trade treaties in regard to local law last year - and the years before. Global capitalism is bad enough. Global authoritarian capitalism is worse. Using right to work laws to leave American workers naked in the face of such power (including migrants to the United States) is a practice that must be ended if we wish to claim moral high ground in dealing with the Chinese.

The crisis on the border continues. The President is finding that dealing with it is not so easy as evicting Stephen Miller from the West Wing, which is why immigration reform must be part of the trade policy agenda. Workers who do not have documentation problems cannot be easily exploited - especially if they are able to unionize. This will also help level the playing field for American workers.

An analysis of how consumption taxes can improve our trade policy is found in our first attachment, as it was last year. We have updated our tax reform and debt papers, which are also attached. 

Congress has recently passed corporate minimum taxes to come into compliance with the OECD’s agreement on this subject. The President’s budget includes further proposals in this area. I am no fan of corporate income taxation when value added taxes (both GST/Invoice VAT and Subtraction VAT) are available.

Our proposal for an Asset Value Added Tax will require international cooperation. Part of trade is moving money around - including financial assets. An asset VAT as a replacement for capital gains taxes and capital returns must go farther than the border. It is too easy to shift to offshore stock exchanges where such taxes do not exist. International agreements on rates and enforcement structures are vital for such a tax to work. The model for negotiating the CMT on a multi-national basis can be used for this effort.

Again, please see the second attachment, which has been recently updated.

Given that there is still no agreement on extending (or eliminating) the debt limit, our national debt attachment is a must read for members of the Republican Conference. It turns out that much of the national debt is held by managed fund accounts and bonds held by the wealthiest households. GOP donors need to make some phone calls, as they are the ones who will lose the most money the fastest in the event of a default.

For more information on the debt, please see our study: Settling (and Squaring) Accounts: Who Really Owes the National Debt? Who Owns It? available from Amazon at https://www.amazon.com/dp/B08FRQFF8S  

I can provide free copies of the prior version upon request and will distribute the latest edition once it is completed. The most recent bottom line estimates can be found in the second attachment. This shows who is on the hook for the debt and who benefits from it.

A main conclusion of our analyses is that the national debt is the leverage for capitalism to the extent that debt securities allow Wall Street to offer riskier assets, such as mortgage backed securities embedded in Exchange Traded Funds, as well as more traditional offerings. Wealth held by the few (and the attachment shows how very few we mean), provides management absolute control of most workplaces. Employee-owned firms would not need such an unbalanced economy leveraged by American Treasury holdings.

Attachment: Trade Policy Video

Attachment: Tax Reform Videos included

Attachment: Debt Limit as Class Warfare Video

President’s FY 2024 Budget Request

House Budget: President’s Fiscal Year 2024 Budget Request, March 23, 2023 

The Center does not have an opinion on the following proposals. We hope that they may be enacted on a bipartisan basis, especially as they make life better in lower income states which are represented by members of the Majority:

• Two years of pre-K.
• Insulin Cost Cap for Private Insurance.
• Negotiate drug prices in Medicare Part D, $2 copays, SCHIP rebates and price negotiation on behalf of states.
• Improves long-term and home care for seniors and the disabled.
• Improve IRS customer service (not additional auditors).
• Increased WIC (also see child tax credit proposals below), renewable energy for farmers, and electrification loans.
• Increase Title I spending and support for pre-K, student healthcare, mental health services and educator shortages,
• Increased healthcare spending and medical research, especially regarding cancer. 

Two years of Pre-K

Childcare arrangements should be the responsibility of the employer. Tax incentives should thus be an offset to an employer-paid tax, preferably one on total value added (both labor and capital),  with either neighborhood care or care at or near the workplace financed by the employer rather than through creating a new federal program.

Free community college tuition

The President’s Budget includes funding the first two years of education at community college. The same level of funding should be provided to students in technical training after grade ten and should be available to students at both public and accredited private schools, including religious schools. In Espinoza v. Montana, prohibitions on funding private schools (Blaine Amendments) were found to be unconstitutional. New (and existing) funding should reflect that fact.

A main problem with current training regimes is that potential students have opportunity costs that are not covered by training. TANF is simply too narrowly tailored and directs too many people to low wage work, especially in the dirtiest jobs in the medical field. The woke among us do not have to look hard for the intrinsic sexism and racism in this scheme.

Payments for tuition, stipends and family support would be funded by employer-paid subtraction value added taxes. Ideally, both state and federal subtraction VAT will be enacted. A federal VAT would be levied to assure that a minimum amount of funding is available should states underfund their programs, which some will.

Extend ACA premium support permanently, extend low cost care in states that have not expanded Medicaid

ACA subsidies are too low and are funded by taxing the wrong people (investors). Families in the Silver Plan still have problems meeting copays and paying premiums. The funding is also unfortunate. Rather than expanding Medicaid, replace it for the non-elderly with the  Public Option proposed in 2009.  The public option should also be extended to individuals who are denied coverage under pre-existing condition rules. Such rules must be revoked as the price of passing the bill. Such a trade-off is necessary for enactment of such a proposal on a bipartisan basis. 

Increase Affordable Housing Supply

We disagree with the President’s proposed subsidies. The best cure for housing affordability is higher income. The President’s budget is on the right track regarding the Child Tax Credit. I would treble down on his amounts and distribute these funds through Old Age, Survivors, Disability and Unemployment Insurance payouts or with wages. 

Urban renewal, which relocates poor and largely non-white people, leads to redevelopment that chases the 90th percentile. The tax incentives in the President’s budget are exactly the wrong approach. Instead, reform the entire tax system so that most families do not have to file income taxes. By most, I mean 99%. 

Paid family leave

The free market cannot provide such benefits universally, so they must be required. To aid marginal firms, these benefits can be paid for as an offset to employer-paid taxes as above.

Increase Child Tax Credit

We agree with increasing the CTC to at least American Rescue Plan Act levels and refundability. We would make it $1,000 per month and phase it out from the median income to the 90th percentile. 

Some of the bipartisan opposition in the Senate came from those who consider direct subsidies from the IRS to have the “stink of welfare.” I advise such Senators in both parties to raise the minimum wage so that no one is having to work just to receive this credit and that the best way to distribute the credit is with wages.

For middle income taxpayers whose increased credits are less than their annual tax obligation, a simple change in withholding tables is adequate. Procedures are already in place to deliver refundable credits to larger families. 

Employers can work with their bankers to increase funds for payroll throughout the year while requiring less money for their quarterly tax payments (or estimated taxes) to the IRS. The main issue is working out those situations where employers owe less than they pay out. This is especially true for labor intensive industries and even more so for low wage employers. A higher minimum wage would make negative quarterly tax bills less likely. Again, no one should have to subsist mainly on their child tax payments.

This approach is superior to the prebate mechanism proposed for the Fair Tax and for the same reason. The government should not be the national paymaster for every family.

Extends Medicare Solvency: Strengthen Medicare by increasing NIIT (ACA-SM) and limiting pass through income reforms

As above, taxes to support Medicare should be broad based, funded either by an employer paid subtraction VAT or a border adjustable goods and services tax (credit invoice VAT). This would allow for the repeal of the ACA-SM surtax on higher income individuals enacted as part of the Affordable Care Act. Tax increases on higher income individuals should be dedicated toward fully funding net interest, eventaully reducing the national debt, funding veterans healthcare and overseas military and ocean deployments. 

State governments were under financial pressure as a result of the pandemic, especially in the area of healthcare costs, most especially for seniors in nursing homes who are “dual eligibles.” The heart of President Reagan’s Federalism Proposal was the transfer of state Medicaid expenses to the federal government, largely to fund baby boomers who would become dual eligible with time. Time is now up, or will be shortly. 

Welfare has been reformed, allowing state and federal governments to save money - which was part of the New Federalism bargain that was not accepted at the time. We will address this part shortly, but the irony is that federal money was reduced without the second part of the trade-off. Finish the process and create Medicare Part E for low income disabled and retirees.

Tax Reform: Reform Business Taxation/ Makes the Wealthy Pay Their Fair Share

Corporate income taxes and collection of business and farm income taxes will be replaced by the subtraction value added tax proposed in our attachement on tax reform.

Individual income tax rates proposed by the President are packaged incorrectly.They should be split between subtraction value added tax surtaxes on salaries, interest and dividends and an asset value added tax enacted to replace both the estate tax and capital gains taxes.

See our tax reform plan in the attachment for details. This plan does not close loop holes, it eliminates them. Consumption taxes proposed in our plan don’t care how cash is obtained. When it is spent, the tax obligation is between 13% and 19.25% (or more, depending on how contributions to FICA formerly paid by employers and Medcare taxes are included). 

Enacting an asset value added tax would allow the end of the inheritance tax. Inherited assets would be taxed when sold - and not until then - so that family businesses and farms would be held harmless. This would also end the need to retain preferred retirement accounts and life insurance policies designed for tax avoidance (aside from those favoring employee-ownership). 

The National Debt

The national debt is the issue of the hour. The limit needs to be abolished. It was only established because previously, each bond issue was authorized by Congress. That day has long since passed. In the first attachment, we detail who owns the national debt by income class. 

The bottom 60% of households own the debt held by Social Security as beneficiaries. The top 0.1% of households hold about a third of managed fund and bond assets, with the rest of the top 10% holding half and the bottom 90% one sixth. Federal Reserve, bank and long term assets are divided in roughly half between the top 20% and the bottom 80%. 

If the debt were to be defaulted on, a great deal of the damage would be to the top 10% of households. Managed fund and bond holders in the top 1% would take the biggest hit. The debt itself is owed by income tax payers. For every dollar of income tax paid, nineteen are owed. Those who pay and those who owe are the same people: capitalists. Without the national debt, leveraging private banking, debt and investment - especially  the intrinsically worthless assets in secondary markets - is impossible. This is far above historical averages and is unsustainable. The answer to this is increased revenue. 

Reforming Cost of Living Adjustments for Federal Employees, Beneficiaries and Contractors to deal with inflation

Inflation is the other big economic issue of the day. As Dodd-Frank rules are being restored, the NYMEX oil trading floor is again an honest market. Prices will go down and stay down to reflect the real availability of oil and gas. This is not to say that higher interest rates were not needed, but this is only so that families, especially retirees, earn a fair return on their savings.

How the pain of inflation is borne is more important. Households making under the 90th percentile have been losing ground for almost half a century,while incomes above that amount have increased on a regular basis.

The source of inequality, aside from abandoning the 91% top marginal tax rate, is granting raises at an equal percentage rather than by an equal amount. When the 91% rate was repealed, incomes were fairly equal, so it was not an issue. 

The federal government plays an outsized role in how salaries are determined through percentage based cost of living adjustments to government workers, beneficiaries, government contractors. The government can change this with the stroke of a pen.  The private sector will follow suit with a higher minimum wage, adequate child tax credits (as described below) and paying individuals in training from ESL to community college the minimum wage to purse their studies.

From here on in, adjust for cost of living on a per dollar an hour rather than on a percentage basis (or dollars per month or week for federal beneficiaries). Calculate the dollar amount based on inflation at the median income level. No one gets more dollars an hour raise, no one gets less dollars per hour in increases. Increase the minimum wage as above and consider decreasing high end salaries paid to government employees and contractors. Even without decreases, simply equalizing raises will soon reduce inequality. Why is this necessary?

Prices chaise the median dollar. The median dollar of income is actually at the 90th percentile, rather than the 77th percentile (which is about where the median is). This strategy will reduce inflation in both the long and short terms as prices adjust to decreases in higher salaried income.. Let me repeat this - prices chase income dollars, not income earners.

The Budget Process

Amend the Budget Control Act to include realistic, rather than punitive spending caps and automatic enactment of a budget resolution by a date certain a new one is not passed. Consider creating a Joint Budget Committee to expedite consideration and automatically pass current service amounts adjusted to these caps should appropriations legislation not be passed by the start of the new fiscal year. Amounts would be adjustable by supplemental appropriations and rescissions.

Budget Act Line Item/Appropriations Subcommittee Reorganization

Agriculture

Add consumer protection functions performed by Consumer Product Safety Commission and Federal Communications Commission. Transfer the Commodity Futures Trading Commission to the Commerce, Financial Services and the Treasury Subcommittee. 

Commerce, Financial Services and the Treasury 

Add the Department of the Treasury; Financial Service agencies, including CFTC,  Federal Trade Commission, Federal Deposit Insurance Corporation (Office of the Inspector General), the National Credit Union Administration, (Community Development Revolving Loan Fund), the Securities and Exchange Commission, Small Business Administration and the United States Tax Court. 

Transfer the Department of Justice and related agencies to the  Justice and General Government Subcommittee. 

Transfer NASA and the National Space Council from CSJ to the Defense Subcommittee so that reductions to defense research and procurement would be offset with increased budget for space exploration.

Energy, Water Development, Transportation and Related Agencies

Add the Department of Transportation to create synergies between energy and transportation activities, especially research.

Homeland Security - No change unless some agencies are spun off to Justice and General Government.

Justice and General Government

Add the Department of Justice and related agencies from CSJ. Transfer Treasury to CSJ. Transfer Financial Services agencies to CSJ. 

The following general government agencies are included: Administrative Conference of the United States, Federal Labor Relations Authority, Federal Permitting Improvement Steering Council, General Services Administration, Merit Systems Protection Board, National Archives and Records Administration, Office of Government Ethics, Office of Personnel Management and Related Trust Funds, Office of Special Counsel, Privacy and Civil Liberties Oversight Board, Public Buildings Reform Board, Selective Service System, United States Postal Service, Payment to the Postal Service Fund and Office of Inspector General, General Provisions, Government-wide.

Transfer District of Columbia, the Executive Office of the President and the Judiciary to the Legislative Branch Subcommittee so that the DC budget will be passed by the start of its fiscal year without interference, the White House is funded with the same staff levels as the Congress in case of government shutdown and the Judiciary is respected as a co-equal branch whose salaries may not be reduced (or unsupported) by Congress. Add D.C. related agencies now funded by the Interior and Environment Subcommittee to Legislative Branch.

Labor, Education, Housing and Related Agencies

Add Housing and Urban Development and Veterans Affairs Housing functions to reinforce synergies between housing, education and workforce development.  

Transfer out Health and Human Services to decrease the size of the LHHSE Appropriation package.

Health and Human Services and Veterans Affairs

Create synergies between human services and veterans health and other DVA functions.

Military Construction and Veterans Affairs

Remove Veterans Affairs

State, Foreign Operations, and Related Programs - no change

Transportation, Housing and Urban Development and Related Agencies 

Disband. Sever the link between developing freeways and warehousing the poor.

Attachment: Tax Reform Videos included

Attachment: Debt Limit as Class Warfare Video

Labor, (HHS) Education, and Housing Appropriation FY24

Labor, HHS, Education Subcommittee testimony. February 23, 2023.

1. The President’s Budget includes funding the first two years of education at community college. The same level of funding should be provided to students in technical training after grade ten and should be available to students at both public and accredited private schools, including religious schools. In Espinoza v. Montana, prohibitions on funding private schools (Blaine Amendments) were found to be unconstitutional. New (and existing) funding should reflect that fact.

A main problem with current training regimes is that potential students have opportunity costs that are not covered by training. TANF is simply too narrowly tailored and directs too many people to low wage work, especially in the dirtiest jobs in the medical field. The woke among us do not have to look hard for the intrinsic sexism and racism in this scheme.

Payments for tuition, stipends and family support would be funded by employer-paid subtraction value added taxes. Ideally, both state and federal subtraction VAT will be enacted. A federal VAT would be levied to assure that a minimum amount of funding is available should states underfund their programs, which some will.

The American Recovery Plan Act required payment of the child tax credit in advance of the annual tax filing. This is appropriate and will change the culture of such credits, which should be for continuing support, not an annual bonus. The current plan is for the IRS to manage payments. I submit that, over the long-term, it would be more acceptable to distribute them either through other government subsidies, such as Unemployment Insurance, Disability Insurance, or a training stipend OR through wages. In the latter case, until a subtraction value added tax is in place, the credit would be paid in advance by employers and then deducted from their quarterly tax payment.

2. Unemployment insurance must be less punitive, particularly where younger workers are concerned. In lower wage jobs, the preference is to find potential supervisors (whose compensation is usually subpar as well) and keep a file of infractions to justify firing workers who do not work out. A punitive work environment that does not exactly make any kind of work attractive. 

In certain circumstances, unemployment compensation should be available on a no-fault basis. Better still, employees should be allowed to voluntarily leave firms with a history of quickly dismissing employees without penalty. There should be no expendable jobs or workers. 

Current punitive taxes on employers would not be appropriate, so a more general levy, such as employer-paid subtraction VAT (if employers continue to pay former workers and help them find jobs or paid training) or a goods and services tax, likely levied, at least partially, at the federal level, with states providing most of the funding.

Unemployment Insurance would include CTC payments and automattic subsidized health insurance coverage with eligibility in the Public Option under the Affordable Care Act framework.

3. Developing the Public Option needs to be funded in this budget. Particularly, it should explore the impacts on coverage and cost of automatically enrolling individuals who are denied coverage under pre-existing condition rules. Such rules must be revoked as the price of passing the bill. Such a trade-off is necessary for enactment of such a proposal on a bipartisan basis. Healthcare reform should only be done in this way. Among our other proposals is to fund healthcare spending through an employer paid subtraction value added tax. This would allow for the repeal of the ACA-SM surtax on higher income individuals enacted as part of the Affordable Care Act.

4.  State governments were under financial pressure as a result of the pandemic, especially in the area of healthcare costs, most especially for seniors in nursing homes who are “dual eligibles.” The heart of President Reagan’s Federalism Proposal was the transfer of state Medicaid expenses to the federal government, largely to fund baby boomers who would become dual eligible with time. Time is now up, or will be shortly. 

  Welfare has been reformed, allowing state and federal governments to save money - which was part of the New Federalism bargain that was not accepted at the time. We will address this part shortly, but the irony is that federal money was reduced without the second part of the trade-off. Finish the process and create Medicare Part E for low income disabled and retirees. This will put investigation of nursing home conditions into the federal sector. States have done a poor job in enforcement of health and safety standards. It is time to make this a national responsibility funded by an employer paid subtraction value added tax.

5.  The hardest puzzle to crack in social welfare is housing. For this reason, starting next year, funding for the Department of Housing and Urban Development and housing related spending for veterans should be transferred to this subcommittee, with Transportation Department funding shifted to the Energy and Water Development Subcommittee.  Each change will provide synergy in both considering policy and incentive to fund certain expenditures over others. Related agencies of this subcommittee include the Barry Goldwater Scholarship and Excellence in Education Foundation, the Harry S Truman Scholarship Foundation, the Neighborhood Reinvestment Corporation and the United States Interagency Council on Homelessness.

The size of the current appropriation for this agency is massive. Adding housing would make it uncontrollable, so HHS and related agencies should be combined with the remainder of Veterans Affairs to form a new subcommittee. If reorganization takes place for the coming fiscal year rather than for the next, items  3 and 4 above would be shifted to the new body. 

HHS Budget FY 2024

Finance: The President’s Fiscal Year 2024 Health and Human Services Budget, March 22, 2023

WM: Hearing on President Biden’s Fiscal Year 2024 Budget Request with Health and Human Services Secretary Becerra, March 28, 2023 

I have put previous comments on orphan drugs, examining lessons learned from the pandemic that need to be noted, mental health hospitalization, getting to single-payer and establishing a Medicare Part E for Senior Medicaid and other long term care in the attachments. 

These comments will restate my upcoming testimony the the Labor, HHS and Education Appropriations Subcommittee and the House Budget Committee. I have not pulled any punches,

From LHHSE:

Developing the Public Option needs to be funded in this budget. Particularly, it should explore the impacts on coverage and cost of automatically enrolling individuals who are denied coverage under pre-existing condition rules. Such rules must be revoked as the price of passing the bill. Such a trade-off is necessary for enactment of such a proposal on a bipartisan basis. Healthcare reform should only be done in this way. Among our other proposals is to fund healthcare spending through an employer paid subtraction value added tax. This would allow for the repeal of the ACA-SM surtax on higher income individuals enacted as part of the Affordable Care Act.

From the Budget Committee Comments (PB proposals are in boldface):

Extend ACA premium support permanently, extend low cost care in states that have not expanded Medicaid

ACA subsidies are too low and are funded by taxing the wrong people (investors). Families in the Silver Plan still have problems meeting copays and paying premiums. The funding is also unfortunate. Rather than expanding Medicaid, replace it for the non-elderly with the  Public Option proposed in 2009.  The public option should also be extended to individuals who are denied coverage under pre-existing condition rules. Such rules must be revoked as the price of passing the bill. Such a trade-off is necessary for enactment of such a proposal on a bipartisan basis. 

Extends Medicare Solvency: Strengthen Medicare by increasing NIIT (ACA-SM) and limiting pass through income reforms

As above, taxes to support Medicare should be broad based, funded either by an employer paid subtraction VAT or a border adjustable goods and services tax (credit invoice VAT). This would allow for the repeal of the ACA-SM surtax on higher income individuals enacted as part of the Affordable Care Act. Tax increases on higher income individuals should be dedicated toward fully funding net interest, eventually reducing the national debt, funding veterans healthcare and overseas military and ocean deployments. 

State governments were under financial pressure as a result of the pandemic, especially in the area of healthcare costs, most especially for seniors in nursing homes who are “dual eligibles.” The heart of President Reagan’s Federalism Proposal was the transfer of state Medicaid expenses to the federal government, largely to fund baby boomers who would become dual eligible with time. Time is now up, or will be shortly. 

Welfare has been reformed, allowing state and federal governments to save money - which was part of the New Federalism bargain that was not accepted at the time. We will address this part shortly, but the irony is that federal money was reduced without the second part of the trade-off. Finish the process and create Medicare Part E for low income disabled and retirees.

The way to fully fund healthcare is through an employer-paid subtraction value added tax.

From Tax Reform Attachment: Subtraction Value Added Taxes

Subtraction Value-Added Tax (S-VAT). Corporate income taxes and collection of business and farm income taxes will be replaced by this tax, which is an employer paid Net Business Receipts Tax. S-VAT is a vehicle for tax benefits, including

• Health insurance or direct care, including veterans' health care for non-battlefield injuries and long term care. 
• Employer paid educational costs in lieu of taxes are provided as either employee-directed contributions to the public or private unionized school of their choice or direct tuition payments for employee children or for workers (including ESL and remedial skills). Wages will be paid to students to meet opportunity costs.  
• Most importantly, a refundable child tax credit at median income levels (with inflation adjustments)  distributed with pay. 

Subsistence level benefits force the poor into servile labor. Wages and benefits must be high enough to provide justice and human dignity. This allows the ending of state administered subsidy programs and discourages abortions, and as such enactment must be scored as a must pass in voting rankings by pro-life organizations (and feminist organizations as well). To assure child subsidies are distributed, S-VAT will not be border adjustable.

As above, S-VAT surtaxes are collected on all income distributed over $75,000, with a beginning rate of 6.25%. replace income tax levies collected on the first surtaxes in the same range. Some will use corporations to avoid these taxes, but that corporation would then pay all invoice and subtraction VAT payments (which would distribute tax benefits). Distributions from such corporations will be considered salary, not dividends.

The President has punted on reforming Social Security. This is a mistake - although Chairman Smith and the Majority will not like this proposal - probably because it would work and take the topic off of the table.

Individual payroll taxes. A floor of $20,000 would be instituted for paying these taxes, with a ceiling of $75,000. This lower ceiling reduces the amount of benefits received in retirement for higher income individuals. The logic of the $20,000 floor reflects full time work at a $10 per hour minimum wage offered by the Republican caucus in response to proposals for a $15 wage. Any increase to the minimum wage must fully cover tipped workers. The White House/Senate Majority/House Minority needs to take the deal. Doing so in relation to a floor on contributions makes adopting the minimum wage germane in the Senate for purposes of Reconciliation. The rate would be set at 6.25%.

Employer payroll taxes. Unless taxes are diverted to a personal retirement account holding voting and preferred stock in the employer, the employer levy would be replaced by a goods and receipts tax of 6.25%. Every worker who meets a minimum hour threshold would be credited for having paid into the system, regardless of wage level. All employees would be credited on an equal dollar basis, rather than as a match to their individual payroll tax. The tax rate would be adjusted to assure adequacy of benefits for all program beneficiaries.

Appropriations Subcommittees

Labor, Education, Housing and Related Agencies

Add Housing and Urban Development and Veterans Affairs Housing functions to reinforce synergies between housing, education and workforce development.  

Transfer out Health and Human Services to decrease the size of the LHHSE Appropriation package.

Health and Human Services and Veterans Affairs

Create synergies between human services and veterans health and other DVA functions.

Closing

We have serious concerns with the way President Biden is paying for the future of Medicare and extending Obamacare. Please share these with the Secretary and request a response.

Attachment: HHS Budget FY 2023 Video

Attachment: HHS Budget, F Y 2022 Video

President's Budget Treasury FY24

Finance: The President’s Fiscal Year 2024 Budget with Treasury Secretary Janet L. Yellen, March 16, 2023

WM: President Biden’s Fiscal Year 2024 Budget Request with Treasury Secretary Yellen, March 10, 2023

The national debt is the issue of hour. The limit needs to be abolished. It was only established because previously, each bond issue was authorized by Congress. That day has long since passed. In the first attachment, we detail who owns the national debt by income class. 

The bottom 60% of households own the debt held by Social Security as beneficiaries. The top 0.1% of households hold about a third of managed fund and bond assets, with the rest of the top 10% holding half and the bottom 90% one sixth. Federal Reserve, bank and long term assets are divided in roughly half between the top 20% and the bottom 80%. 

If the debt were to be defaulted on, a great deal of the damage would be to the top 10% of households. Managed fund and bond holders in the top 1% would take the biggest hit. The debt itself is owed by income tax payers. For every dollar of income tax paid, nineteen are owed. Those who pay and those who owe are the same people: capitalists. Without the national debt, leveraging private banking, debt and investment - especially  the intrinsically worthless assets in secondary markets - is impossible. This is far above historical averages and is unsustainable. The answer to this is increased revenue. 

Inflation is the other big economic issue of the day. As Dodd-Frank rules are being restored, the NYMEX oil trading floor is again an honest market. Prices will go down and stay down to reflect the real availability of oil and gas. This is not to say that higher interest rates were not needed, but this is only so that families, especially retirees, earn a fair return on their savings.

How the pain of inflation is borne is more important. Households making under the 90th percentile have been losing ground for almost half a century,while incomes above that amount have increased on a regular basis.

The source of inequality, aside from abandoning the 91% top marginal tax rate, is granting raises at an equal percentage rather than by an equal amount. When the 91% rate was repealed, incomes were fairly equal, so it was not an issue. 

The federal government plays an outsized role in how salaries are determined through percentage based cost of living adjustments to government workers, beneficiaries, government contractors. The government can change this with the stroke of a pen.  The private sector will follow suit with a higher minimum wage, adequate child tax credits (as described below) and paying individuals in training from ESL to community college the minimum wage to purse their studies.

From here on in, adjust for cost of living on a per dollar an hour rather than on a percentage basis (or dollars per month or week for federal beneficiaries). Calculate the dollar amount based on inflation at the median income level. No one gets more dollars an hour raise, no one gets less dollars per hour in increases. Increase the minimum wage as above and consider decreasing high end salaries paid to government employees and contractors. Even without decreases, simply equalizing raises will soon reduce inequality. Why is this necessary?

Prices chaise the median dollar. The median dollar of income is actually at the 90th percentile, rather than the 77th percentile (which is about where the median is). This strategy will reduce inflation in both the long and short terms as prices adjust to decreases in higher salaried income.. 

Let me repeat this - prices chase income dollars, not income earners.

On the tax side, limit bracket indexing in the same manner - by dollars per bracket, not percentages.

Staying in economics, ast year we projected another depression, which we define as a drop in asset values below what is borrowed against them. We no longer have to project, given the falling price of valueless crypto-currency and the realization that mortgage backed securities holding single family rental  properties are nowhere near what they are rated - and that they have been hidden in exchange traded funds. The recent bank failures are only the beginning. 

Aside from raising income taxes to end the production of junk assets, the answer to the coming depression is enactment of the proposed increase in the child tax credit proposed by the President, although we would make it $1,000 per month and phase it out from the median income to the 90th percentile. 

Some of the bipartisan opposition in the Senate came from those who consider direct subsidies from the IRS to have the “stink of welfare.” I advise such Senators in both parties to raise the minimum wage so that no one is having to work just to receive this credit and that the best way to distribute the credit is with wages.

For middle income taxpayers whose increased credits are less than their annual tax obligation, a simple change in withholding tables is adequate. Procedures are already in place to deliver refundable credits to larger families. 

Employers can work with their bankers to increase funds for payroll throughout the year while requiring less money for their quarterly tax payments (or estimated taxes) to the IRS. The main issue is working out those situations where employers owe less than they pay out. This is especially true for labor intensive industries and even more so for low wage employers. A higher minimum wage would make negative quarterly tax bills less likely. Again, no one should have to subsist mainly on their child tax payments.

Please see the second attachment for the latest version of our tax reform proposals, beginning with how the proposed rates are synergistic. Note that we propose ending corporate income taxes and reporting of business income on personal income taxes. We replace these with consumer paid goods and services and employer paid subtraction value added taxes. 

The income tax for individuals with wage, dividend and salary income under $75,000 would be eliminated. A surtax on employer paid subtraction value added taxes would be paid by employers, but filing of individual income tax would not occur until $450,000 of salary, interest paid and dividend income. Spousal income would not be included in this levy.

We propose ending the capital gains tax on short and long term income and full repeal of the inheritance (death) tax with an asset value added tax. There are two debates in tax policy: how we tax salaries and how we tax assets (returns, gains and inheritances). Shoving too much into the Personal Income Tax mainly benefits the wealthy because it subsidizes losses by allowing investors to not pay tax on higher salaries with malice aforethought. TAX TRANSACTIONS, NOT PEOPLE!

Ending the machinery of self-reporting of asset returns  also puts an end to the Quixotic campaign to enact a wealth tax. To replace revenue loss due to the ending of the personal income tax (for all but the wealthiest workers and celebrities), enact a Goods and Services Tax. A GST is inescapable. Those escapees who are of most concern are not waiters or those who receive refundable tax subsidies. It is those who use tax loopholes and borrowing against their paper wealth to avoid paying taxes. 

For example, if an unnamed billionaire or billionaires borrow against their wealth to go into space, creating such assets would be taxable under a GST or an asset VAT. When the Masters of the Universe on Wall Street borrow against their assets to avoid taxation, having to pay a consumption tax on their spending ends the tax advantage of gaming the system. 

This also applies to inheritors.  No “Death Tax” is necessary beyond marking the sale of inherited assets to market value (with sales to qualified ESOPs tax free). Those who inherit large cash fortunes will pay the GST when they spend the money or Asset VAT when they invest it. No special estate tax is required and no life insurance policy or retirement account inheritance rules will be of any use in tax avoidance.

Tax avoidance is a myth sold by insurance and investment brokers. In reality, explicit and implicit value added taxes are already in force. Individuals and firms that collect retail sales taxes receive a rebate for taxes paid in their federal income taxes.  This is an intergovernmental VAT. Tax withheld by employers for the income and payroll taxes of their labor force is an implicit VAT. A goods and services tax simply makes these taxes visible.

Should the tax reform proposed here pass, there is no need for an IRS to exist, save to do data matching integrity. States and the Customs Service would collect credit invoice taxes, states would collect subtraction VAT, the SEC would collect the asset VAT and the Bureau of the Public Debt would collect income taxes or sell tax-prepayment bonds. See the last attachment for details on this.

Until tax reform occurs, IRS Statistics on Income tax tables  should be adjusted for inflation to get a better idea of the distribution of income. Between $50,000 and $100,000, there should be five groups. Between $100,000 and $200,000, there should at least be four so that the border between the fourth and fifth quintiles can be more adequately expressed. Every tax wonk in the nation will appreciate this.

Attachment: Debt Limit as Class Warfare Video

Attachment: Tax Reform Videos included

Attachment: Tax Administration Video

Attachment Tax Reform 2023

Synergy: The President’s Budget for 2024 proposes a 25% minimum tax on high incomes. Because most high income households make their money on capital gains, rather than salaries, an asset value added tax replacing capital gains taxes (both long and short term) would be set to that rate. The top rate for a subtraction VAT surtax on high incomes (wages, dividends and interest paid) would be set to 25%, as would the top rate for income surtaxes paid by very high income earners.  Surtaxes collected by businesses would begin for any individual payee receiving $75,000 from any source at a 6.25% rate and top out at 25% at all such income over $375,000. At $450,000, individuals would pay an additional 6.25% on the next $75,000 with brackets increasing until a top rate of 25% on income over $750,000. This structure assures that no one games the system by changing how income is earned to lower their tax burden.

Individual payroll taxes. A floor of $20,000 would be instituted for paying these taxes, with a ceiling of $75,000. This lower ceiling reduces the amount of benefits received in retirement for higher income individuals. The logic of the $20,000 floor reflects full time work at a $10 per hour minimum wage offered by the Republican caucus in response to proposals for a $15 wage. The majority needs to take the deal. Doing so in relation to a floor on contributions makes adopting the minimum wage germane in the Senate for purposes of Reconciliation. The rate would be set at 6.25%.

Employer payroll taxes. Unless taxes are diverted to a personal retirement account holding voting and preferred stock in the employer, the employer levy would be replaced by a goods and receipts tax of 6.25%. Every worker who meets a minimum hour threshold would be credited for having paid into the system, regardless of wage level. All employees would be credited on an equal dollar basis, rather than as a match to their individual payroll tax. The tax rate would be adjusted to assure adequacy of benefits for all program beneficiaries.

High income Surtaxes. As above, taxes would be collected on all individual income taxes from salaries, income and dividends, which exclude business taxes filed separately, starting at $400,00 per year.  This tax will fund net interest on the debt (which will no longer be rolled over into new borrowing), redemption of the Social Security Trust Fund, strategic, sea and non-continental U.S. military deployments, veterans’ health benefits as the result of battlefield injuries, including mental health and addiction and eventual debt reduction. 

Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes and the estate tax. It will apply to asset sales, exercised options, inherited and gifted assets and the profits from short sales. Tax payments for option exercises, IPOs, inherited, gifted and donated assets will be marked to market, with prior tax payments for that asset eliminated so that the seller gets no benefit from them. In this perspective, it is the owner’s increase in value that is taxed.  As with any sale of liquid or real assets, sales to a qualified broad-based Employee Stock Ownership Plan will be tax free. These taxes will fund the same spending items as high income and subtraction VAT surtaxes. There will be no requirement to hold assets for a year to use this rate. This also implies that this tax will be levied on all eligible transactions. 

The 3.8% ACA-SM tax will be repealed as a separate tax, with health care funding coming through a subtraction value added tax levied on all employment and other gross profit. The 25% rate is meant to be a permanent compromise, as above. Any changes to this rate would be used to adjust subtraction VAT surtax and high income surtax rates accordingly. This rate would be negotiated on a world-wide basis to prevent venue seeking for stock trading.

Subtraction Value-Added Tax (S-VAT). Corporate income taxes and collection of business and farm income taxes will be replaced by this tax, which is an employer paid Net Business Receipts Tax. S-VAT is a vehicle for tax benefits, including

Health insurance or direct care, including veterans' health care for non-battlefield injuries and long term care. 

Employer paid educational costs in lieu of taxes are provided as either employee-directed contributions to the public or private unionized school of their choice or direct tuition payments for employee children or for workers (including ESL and remedial skills). Wages will be paid to students to meet opportunity costs.  

Most importantly, a refundable child tax credit at median income levels (with inflation adjustments)  distributed with pay. 

Subsistence level benefits force the poor into servile labor. Wages and benefits must be high enough to provide justice and human dignity. This allows the ending of state administered subsidy programs and discourages abortions, and as such enactment must be scored as a must pass in voting rankings by pro-life organizations (and feminist organizations as well). To assure child subsidies are distributed, S-VAT will not be border adjustable.

As above, S-VAT surtaxes are collected on all income distributed over $75,000, with a beginning rate of 6.25%. replace income tax levies collected on the first surtaxes in the same range. Some will use corporations to avoid these taxes, but that corporation would then pay all invoice and subtraction VAT payments (which would distribute tax benefits). Distributions from such corporations will be considered salary, not dividends.

Invoice Value-Added Tax (I-VAT). Border adjustable taxes will appear on purchase invoices. The rate varies according to what is being financed. If Medicare for All does not contain offsets for employers who fund their own medical personnel or for personal retirement accounts, both of which would otherwise be funded by an S-VAT, then they would be funded by the I-VAT to take advantage of border adjustability. 

I-VAT forces everyone, from the working poor to the beneficiaries of inherited wealth, to pay taxes and share in the cost of government. As part of enactment, gross wages will be reduced to take into account the shift to S-VAT and I-VAT, however net income will be increased by the same percentage as the I-VAT. Inherited assets will be taxed under A-VAT when sold. Any inherited cash, or funds borrowed against the value of shares, will face the I-VAT when sold or the A-VAT if invested.

I-VAT will fund domestic discretionary spending, equal dollar employer OASI contributions, and non-nuclear, non-deployed military spending, possibly on a regional basis. Regional I-VAT would both require a constitutional amendment to change the requirement that all excises be national and to discourage unnecessary spending, especially when allocated for electoral reasons rather than program needs. The latter could also be funded by the asset VAT (decreasing the rate by from 19.25% to 13%).

Carbon Added Tax (C-AT). A Carbon tax with receipt visibility, which allows comparison shopping based on carbon content, even if it means a more expensive item with lower carbon is purchased. C-AT would also replace fuel taxes. It will fund transportation costs, including mass transit, and research into alternative fuels. This tax would not be border adjustable unless it is in other nations, however in this case the imposition of this tax at the border will be noted, with the U.S. tax applied to the overseas base.

Videos

Update regarding dividend and interest taxes 

Update pursuant to Build Back Better

Video One: Individual payroll taxes and high wage/salary surtaxes 

Video Two:  Asset value added taxes

Video Three: Subtraction value added taxes (net business receipts)

Video Four: (Credit) Invoice value added (Goods and Services) taxes and carbon added taxes 

Video Five: Summary

Video Six: Winners and losers