The Future of Social Security

Finance SS: The Future of Social Security, June 24, 2026

This organization was The Generation X Committee on Tax, Social Security and Healthcare Reform, which was formed in 1998 to advise the White House and the Ways and Means Committee on tax simplification using a net business receipts tax and personal accounts for Social Security - but through employee ownership rather than gambling in the Wall Street Casino. In 2003, we submitted similar proposals to the President’s Commission to Save Social Security, published them in Labor and Corporate Governance (which caused the AFL-CIO to kill the publication, and to the Chairman as The Iowa Center for Fiscal Equity. When Chairman Grassley showed no interest in our proposals, we took Iowa out of our name and moved our address to the Washington area.

Since that time, we have modified our proposals. For a great many beneficiaries, wages were too low for adequate saving. To increase benefits for many seniors and the disabled, a much higher minimum wage is required for current workers, with an adjustment by the same percentage for all past work.

The increase in the minimum wage should be at least $12 per hour (if not more to account for pandemic inflation), with a $14.50 wage for a shorter 28 hour work week.  This distributes the burden of higher wages for less work with employees and employers.

Increase the Child Tax Credit to levels passed by the House in the last Congress, with increases to at least twice that in fairly short order. The CTC and the dependent child and survivors benefit should be set to at least $800 per month, with full refundability.

Replace the current menu of social programs with long term unemployment insurance at below minimum wage levels, which would be supplemented with additional funding for participation in basic education (especially for ex-offenders), employment training, psychiatric or addiction rehabilitation programs. 

Old Age, Survivors and Disability Insurance would start with this amount as a minimum, with higher benefit levels based on employment history. Dependent payments would be made through the child tax credit once it has been increased to current survivor benefit levels. 

Long term unemployment insurance would be awarded on a no fault basis, ending the need for eligibility investigations beyond verification of identity and for punitive disciplinary systems by employers designed to avoid paying benefits. SSI and preliminary SSDI benefits should begin at filing under this program. After the application process is complete, the amount can be adjusted based on income history  

This payment, which would be indexed for inflation, would be $13.25 per hour for a 28 hour week, would be tax free and funded by a national goods and services tax. States could enact higher benefit levels funded by a local GST.

The national foods and services tax would also fund replace revenue paid by employers for OASI. Employee taxes would still be collected on amounts above the minimum wage and capped at the wage earned at the 80th percentile. The proceeds from the GST will be credited equally rather than tied to employee contributions. The GST rate would be set high enough to increase the base benefit, which is currently inadequate. The minimum benefit for OASI should be at least the current average benefit ($1800) with those currently paid at this level receiving $2200 a month.

The calculation of cost of living adjustments should be set to an equal dollar amount rather than a percentage increase on individual benefits. The current methodology is inadequate for lower income retirees and excessive for higher income retirees who likely have additional investments that many others do not have.

It is beyond absurd to give ever higher benefits to those who only require Social Security as a supplement while those of us with little or no savings and lower lifetime wages receive a smaller COLA, making them eligible for food and energy assistance.

Please see at attachment for more information on consumption taxes.

Adding a consumption tax (rather than having be implicit when buried in income taxes) will provide adequate funding to lower the early retirement age to 60 and reduce full retirement age (with the implicit encouragement to keep working without penalty) while removing the penalty for working after early retirement.  Shift full retirement age to 64 as a start, as many who retire early do so at this point anyway, and adjust until there is no bump in when people retire between early and full retirement ages.

Attachment: Consumption Taxes

Paycheck Returned - Open Items

WM Tax:  Your Paycheck, Returned: How the Working Families Tax Cuts Delivered for Americans, May 20, 2026

Most working families have not noticed much change from the new law. Rather, it prevented harm from occurring because certain benefits would have ceased. Additional benefits enacted as part of the law will have only been visible to the extent that IRS withholding schedules changed - and even then, the change was not large. Many families will only notice the current tax cuts when they file their taxes almost one year from now.

What families are noticing is the degree to which price increases occurred due to the attacks on Iran by the U.S. and Israel, as well as sanctions on Russia as a result of their aggression against Ukraine. Largely due to our own energy independence, these events have little impact on energy availability in this country, but are an artifact of the global price structure of energy markets. 

Due to climate change, what we are seeing now is nothing compared to what must occur to transition from gasoline powered and individually powered electric vehicles to tethered electric vehicles with centralized computer control and the option of system owned vehicles for individual usage - all powered by small nuclear reactors. We are not there yet, but we have to get there, either before or after the dislocation in the South and Southwest that climate change will cause.

Actual inflation is not caused by either price cuts, the increase in lower wage workers to meet higher prices or the very necessary increase in both the federal minimum wage and any additional permanent (and refundable) child tax credit. These proposals are being floated - but they need to be agreed to - as well as increasing funding for supplemental nutrition assistance (SNAP).  

Systemic inflation is also not an effect of monetary policies by the Federal Reserve Open Market Committee - although the Fed’s market interventions have largely prevented large financial disruption caused by the pandemic and upcoming market shocks due to speculation on energy futures, in cryptocurrency and in the housing, commercial real estate and consumer credit securitization markets.

Real inflation comes from how both the federal government, its contractors and private sector employers adjust wages due to the cost of living. Because this has occurred at a fixed PERCENTAGE rather than as FIXED DOLLAR basis, people receiving only the federal minimum wage, SNAP and TANF benefits  are plunged into poverty.  

Working and retired households essentially keep up with inflation - but do not benefit from productivity growth (although they have benefited from technology improvement). The top 10% of households have largely absorbed these gains - both in terms of productivity and automatic adjustments. Prices chase the median dollar, not the median income. That dollar is at the 90th percentile - and this level is growing at leaps and bounds. It is reflected in the prices of housing and automobiles, vacations and sports tickets and any luxury item - from yachts to wedding rings. Please see the first attachment, which discusses how FEDERAL SPENDING drives this form of inflation - and how the federal government can begin to reverse it - largely due not to the fact of government spending but in how it drives the distribution of wages.

Tariffs may have some small effect, but in absence of a consumption tax regime - especially a federal credit invoice value added tax on ALL commercial transactions, they provide a necessary rebalancing of the price effects of most of the developed world relying on these taxes while refunding them at the border - while our consumer based economy neither levies such a tax nor refunds it for exporters.

The Ways and Means Committee can help fix this by setting tariffs for each nation based on what they refund to their exporters AND giving a rebate to our exporters for payroll taxes that employers pay to Social Security on behalf of their employees. While enacting a VAT to replace employer paid retirement and disability insurance payments - and crediting beneficiaries equally rather than as a function of their wage level is the desired endgame, providing these two forms of TAX RELIEF to American employers should be the next step in tax reform.

Most families should not have to file taxes at all. A broad based consumption tax will take up the slack from ending income tax payments for all but the top 10% of households - especially if the child tax credit is increased and transferred from individual income taxes to a subtraction value added (net business receipts) tax paid by employers. Employers do most of the work in collecting income taxation of wages.

Shifting from personal income tax collection to a value added tax will solve the very real equity problem of having separate tax rates on wages, interest and dividends (as financial institutions would pay any taxes on interest paid, rather than having their depositors and investors do so). If surtaxes were levied at the employer/investment level for high income payouts, no family (save sole proprietors) need ever file a tax form again - with the only reason for individual filing being to pay capital gains taxes (or using the federal tax system to subsidize losses).

Regularizing the taxation of tariffs to balance them with value added tax policies by our trading partners is the work of the Trade Subcommittee. There is still work to be done by the Tax Subcommittee. While the Center for Fiscal Equity has a list of long-term reforms that will take more bipartisanship to make than is present at this time, there are two URGENT ACTION ITEMS which should be enacted as soon as possible. (Our long term solutions are detailed in the attachments.)

FIRST, extend the tax exemption for the sale of privately owned stock to broad based Employee Stock Ownership Programs or cooperatives on the sale of all financial and real property assets to such firms. If an ESOP retiree sells his private dwelling or business property into an ESOP trust, either directly or through his or her estate, tax policy should support that - as well as the sell back of any voting or preferred shares by such employees.

More importantly, investors in publicly traded shares should also be able to take advantage of such sales. They are currently at a DISADVANTAGE, merely due to their form of ownership. This also hurts employees who would benefit from more direct employee ownership of their workplaces - and begin to bring back the concept of the career rather than current practice of job hopping to increase wage levels (while current employees are stuck in the same positions). This is an easy fix to a long-term inequity in how we tax capital gains. Additionally, this exclusion will also be carried over to a shift to ASSET VALUE ADDED TAXES as part of comprehensive tax reform.

SECOND, firms who collect state retail sales taxes can only deduct this income from their federal income tax filings. For federal excise taxes and any newly created FAIR TAX, this deduction should be a CREDIT paid in full. Any state sales tax paid - either for business income or through itemizing local taxes - should also be converted to a 100% CREDIT for any tuition payments or contributions for education (and wages paid for pursuing education) for undergraduate, secondary, remedial, vocational or English as a Second Language provided by both PUBLIC and PRIVATE schools. 

Creditable tuition and contributions would be either provided to student families or to employee/taxpayer contributions through such programs as the United Way or Combined Federal Campaign. At the University level, this benefit would be offset by making sales of any contributed liquid or real asset taxable at market value for any sale from the endowment to the private market (unless the sale is made to a qualifying ESOP or COOP).

President Bush called for the development of an ownership economy. These changes make good on those promises.

Attachment - Lower Costs for the American People

Attachment - Consumption Taxes

Attachment - Asset Value Added Tax

Attachment - Lower Costs for the American People

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. 

Increasing stock market values in the speculative sector are 100% inflationary, according to how inflation is defined in economics: higher prices for the same goods. When such speculation is extreme, bad things can happen. Adopting an ASSET VALUE ADDED TAX (see the attachment) will control such nonsense. 

In the case of labor pull inflation, lower tax rates on executives were effective in 1982. These cuts, and their setting in stone in the 1986 tax reform, were an overcorrection. The 2013 tax bill by President Obama showed that increasing taxes on the wealthy is the most effective way to correct any economic slowdown. Then Vice President Biden should have let taxes increase in 2010, as doing so lengthened the slowdown caused by the Great Recession. 

The idea that tax increases should be limited to income over $400,000 is not supported by economics. The system should have everyone pay more, especially for broad based programs like healthcare.

Health Care Workforce

WM Health: Advancing the Next Generation of America’s Health Care Workforce, February 24, 2026

These comments reflect my experience staffing the H1-B technical skills training program, as proposal coordinator for Graduate School, USA and as the author of The Future is Calling: It Wants a Better Job, which dealt with medical education as one of its topics. As I commented in February 2025, the healthiest option is for employee-owned companies to train and hire their own doctors. This would assure good service to all communities, especially rural and underserved ones. In a cooperative setting, no one is underserved.

In meeting healthcare staffing needs, we must guard against forcing underskilled workers to participate, especially those receiving public assistance. In a 2002 GAO Report, High-Skill Training: Grants from H-1B Visa Fees Meet Specific Workforce Needs, but at Varying Skill Levels, GAO-02-881, Sep 20, 2002, from Bruce Mehlman, the Assistant Secretary for Technology Policy at the Department of Commerce,  noted that legislation mandated information technology, as well as other high skill training, yet the Department of Labor channeled a significant portion of training resources into training nursing assistants.  

In 2011, Graduate School USA applied for and received major grant funding to teach nursing assistants and phlebotomists to TANF recipients.  My alma mater, Loras College, recently established a similar program for non-degree individuals. Using low-skill medical job training as the “go to” program for welfare reform is cynical.  Some of us in “the Movement” see directing poor people into service occupations as more of the same class and income segregation we hoped we would have grown out of by now.

Any person who has been underserved in their youth, or who has entered the nation in pursuit of a new life, must be provided remedial education to the level promised by our national social contract. At a minimum, all are entitled to literacy at the tenth grade level and to be paid to attend this training to compensate them for the opportunity cost incurred because attending such training makes other employment impossible.

Only after this level of training is completed can they make an informed decision on advanced technical or academic education. One such path could very well be in health care, but it must not be the only path. If such jobs are required by society, then payment must be high enough to make such a career attractive to them.

When I was assisting DOL in administering training programs, many health programs offered a career ladder to LPN - although the grant started with low level nursing assistant and phlebotomy training. The career ladder must go higher. For qualified candidates who have attained literacy first, the path can be extended upward to a four year degree, with optional pre-med courses such as organic chemistry (although many doctors say that this course is simply a hurdle to weed out students rather than a career requirement), leading at first to registered nursing and physician’s assistants degrees. The next step can be nurse practitioner. 

To get more people into nursing, their tuition and living expenses could be paid for with funds raised by state and federal level subtraction value added taxes (which would also fund remedial training as well as both public and private schools from pre-K to 10th grade). Another measure to encourage nursing as part of a career path is requiring medical students to first be nurses, with work hours and class loads which allow for a life outside the hospital and end the need to take out student loans.

For the sake of fairness, nurses and doctors (indeed all college graduates) student loans must be written down to the original loan amount, forgiving capitalized interest in the future and refunding what has been paid over that amount - which would eliminate debt entirely for many.

These incentives will allow doctors to serve rural and underserved areas, as they would not have to seek higher urban salaries to pay back crushing debt.

These incentives will require more nursing and medical educators. As an incentive, those who take on such roles should be rewarded with refunds for all student loans paid in the past, which is essential for fairness to those who graduated years ago and whose experience should be tapped in the training of new professionals.

Attachment: Consumption Taxes

Health Insurance CEOs

 WM: Health Insurance CEOs, January 22, 2026

Please allow me to share an option that the CEOs who testified do not want you to consider.

The research and development costs of orphan drugs lead to higher prices for drugs provided to patients and through healthcare providers - including those cases where they are included on an unpayable bill which will eventually be discharged in bankruptcy - or even worse actually paid by the uninsured - and which raises premiums paid by employers and employees to counter absorb a portion of these costs.

The Biden Administration’s Budget cites PhARMA profits as a rationale for increasing business income tax rates.  He proposes raising Tax Rates for Large Corporations. PhARMA’s excuse for high prices is for developing orphan drugs. We have a proposal to solve that problem.

PhARMA justifies its profits because it is burdened with high development costs for new and orphan drugs. We renew our call for a more “corporate approach” for government research and testing of new drugs.

Part of ARPA-H is the funding for research on orphan drugs and the lingering problem of their cost once research leads to product development. In comments to Senate Finance on March 16th of this year, we repeated our proposal in this area for NIH to retain ownership in any such drug and contract out its further development and manufacture. Keeping ownership in public hands ends the need for drug companies to charge extreme prices or increase prices for its existing formulary to fund development. 

PhARMA would still make reasonable profit, but the government would eat the risk and sometimes reap the rewards. NIH/FDA might even break even in the long term, especially if large volume drugs which were developed with government grants must pay back a share of basic research costs and the attached profits, as well as regulatory cost.

Child Support Enforement

WM Work Welfare: Strengthening the Child Support Enforcement Program: Status, Challenges, and Opportunities for Modernization, January 21, 2026

The only thing worse than ineffective child support enforcement is when the system works. When an associate of mine was going through the process, there was every incentive to hold back on salary increases to avoid a higher payment, as the amount left to him under current guidelines provides a meager existence to the donor parent.

In my case, no child support was necessary or possible, as I was not working. Rather I was receiving Social Security Disability Insurance, which provided my daughter with a monthly payment, alleviating my need to provide income. Of course, this was also a disincentive to return to the workforce, had I been able to.

These cases show what, in economics, is called Government Failure and Market Failure. Government failure is a system that provides incentives to game it while also providing an inadequate benefit to those in need. Government failure is a circumstance where the free market also provides an inadequate solution to the needs of society. In this case, the needs of children to have an adequate income.

I have described the government failure in the current system. It can be remedied with a vastly different system, one which asks nothing from divorced fathers, which I will describe below.

When the demand for a family  income is impossible to meet in the economy, the market has failed. Employers who would do the right thing are put at a disadvantage because they have higher labor costs while those who would discharge or simply refuse to hire fathers and mothers with children - or simply provide an inadequate wage to them. The former is often the reason for middle aged workers to be replaced by lower wage, especially H-1B, workers in many industries, while the latter explains why lower wage workers live in precarity and require government assistance - which is scant at current levels (more government failure) and disincentivizes work.

The answer reflects what was provided to my daughter when she was a minor child, but in a way that does not discourage work or face the gaze of public or private social service bureaucrats.

We have provided this solution previously - a fully refundable child tax credit of a wage equal to what Social Security provides to dependents - be they survivors or the disabled - but doing so with wages rather than only through transfer payments. This also ends the need for child support for all but those who are wealthy. The mechanism for this is to impose a subtraction value added (net business receipts) tax on employers with a credit for providing the same level of assistance to families that Social Security provides now - assistance which is higher than the pandemic era child tax credit provided through the Internal Revenue Service.

The increased Child Credit caused Senator Manchin to oppose making the credit permanent because it carried the stink of welfare. Adding the credit to wages and having employers distribute it removes that implication.  This payment also encourages work, as it does not go away when a parent returns to work. It also ends the need for most payments to file taxes at all (allowing for the repeal of the Earned Income Tax Credit). 

Attachment: Consumption Taxes

Trade: Innovation and Technology Leadership

WM Trade: Maintaining American Innovation and Technology Leadership, January 13, 2026

Innovation and technology leadership are buzz words, not the core problems with our trade policies. They only apply to the extent that current issues with the taxation of intellectual property and immigration policies. The question of intellectual property can be quickly overcome by either tying corporate tax filing to the actual geographic location of the corporate headquarters or the repeal of corporate income taxes, replacing them with consumption taxes - which are addressed below.

Tariff implementation is a very real threat to our competitiveness unless tariffs are zero rated for products which are to be re-exported as part of global supply chain management. This is an easy fix that can be accomplished by domestic law - or possibly by international convention or ad hoc implementation.

The other problem is human capital based, which is entirely the result of the Administration’s policies on the funding of higher education and the ability of foreign students to come here freely - especially when combined with the possibility that education is actually a step toward permanent immigration (with a nod and a wink). 

American graduate education, especially at the doctoral level, relies heavily on foreign student participation - most often paying full-time tuition which provides a valuable subsidy for funding American students. Next fall’s income class will be decimated - although in the long-term, this may have the effect of ending the over-supplying the pool of doctoral degree holders who cannot find tenure-track positions. Most graduates end up doing research. 

Administration policy, largely because it does not account for the fact that most DEI initiatives favor veterans (especially regarding federal employment), has damaged the ability of academic institutions to perform basic - and sometimes advanced - research that directly affects American innovation and competitiveness.

Foreign graduates should receive automatic approval for H-1B visas without being tied to a particular employer or paying a fee or the fiction that such employment is temporary. Not requiring these students to repatriate at graduation prevents the intellectual property they would generate from automatically becoming an asset for their home countries. Current policies have also damaged American competitiveness to the extent that they keep all high-skill workers from relocating the United States.

Administration actions, which are part of their nationalistic “America First” movement, are a feature, not a flaw of Mr. Trump’s economic and social policies. Many of his supporters, who have been damaged by the former bipartisan neo-liberal consensus, specifically voted to end any form of internationalism. Capitalism very rarely provides adequate retraining - while meeting the opportunity costs of those who have lost their jobs to trade. Government actions to counter the related externalities - including the lack of opportunity inherited by the next generations - have multiplied the market failure inherent with globalization. Many Trump voters knew exactly what they were getting when they voted against the status, even though what actually resulted made them worse off on a short and long term basis. This is especially true with trade policy.

Sadly, our trade problems are self-inflicted - not only because the President is shooting from the hip, but because he is doing so with an empty gun. The President’s unilateral actions are before the courts and are likely to be revoked. This may or may not bring us back to the status quo before January 20th of last year, however when the Supreme Court finally hears the case, the question of tariff rates will likely go before Congress - where it should be. 

There are two approaches to dealing with this issue. One is to replace tariffs entirely and enact a national goods and services tax. The rationale for doing so, with further explanation on the elements of our proposals can be found in the first and second attachments. 

Part of comprehensive tax reform is the conversion of capital gains taxes to an asset value added tax of between 23.8% and 37% - with no distinction between short and long term holding. This rate should be internationally negotiated so as to avoid stock market tax arbitrage - which would  become a race to the bottom. Although some of this could be avoided by technology (with the “exchange” in the Cayman Islands, Luxembourg or Ireland) - this would increase the possibility that hacking could upset the entire system. At worst, the price of real estate in Manhattan and Long Island would crash if traders were forced to actually move to where the exchange is. 

The other option for trade reform is for Congress to enact specific tariffs based on the value added taxes of our trading partners - plus certain other applicable factors regarding our long term trade policy. Both options are under the jurisdiction of the Ways and Means Committee, with the latter under this subcommittee.

The President and the  Office of the Special Representative for Trade Negotiations should retain the authority to make trade deals using permanent law - rather than unconstitutional authority - based on either value added tax or congressionally enacted tariffs as a baseline, however to do so the Office needs to be restaffed. The President has the Office out by firing long term personnel. If possible, these individuals should be rehired. If not, then both Majority and Minority staffs should recommend personnel to the Administration to replace them. This may not be hard to do come November, given the likely results of the midterm elections.

Attachment: Trade Policy Video

Attachment: Tax Reform Videos included

Attachment: Tariff Rates

Why 2026 Will Be Worse Than 2008 (THE GREAT RESET 2.0)

Net interest on the debt is rolled over into new debt - where it becomes the leverage for capitalism to occur. Of course, if the asset markets this debt backs collapse some of the investors may leave the field - selling their bonds as they go.

The cure for the nation on the debt - and to raise GDP - is to decrease the savings sector by raising tax rates on corporations, high income individuals, dividends, pass through income and capital gains and increase tax benefits for lower income individuals - those who make under $130,000 - with phase out beginning at $80,000.

Rising Cost of Healthcare

Finance: The Rising Cost of Health Care: Considering Meaningful Solutions for all Americans, November 19, 2025

We disagree with the Chairman on protecting the tax credit for Obamacare. The current controversy on the funding of subsidies is a holdover from the original debate in 2009. The fraudulently named Susan B. Anthony Fund did not have enough votes at that time to overextend the Hyde Amendment to the tax credits going to Obamacare participants. Where is Grover Norquist and Americans for Tax Reform when we need them - as the GOPO position can only be described as a tax increase. 

The Fund is being too cute by half, as it is only attacking abortion coverage for poor beneficiaries - ignoring tax subsidies given for employer-provided insurance. Adding the Hyde Amendment to the health insurance exclusions would be a bridge too far for the pro-life movement to propose. If they had any integrity, they would go after everyone’s coverage. This says all you need to know about the movement. 

For cases of late term abortion, coverage is essential as abortion may be necessary when life-saving care - such as chemo-therapy or a heart defect - can be complicated by pregnancy - with treatment fatal to the fetus or pregnancy to the mother. Doctors who see the poor need the same latitude to act in these situations must be equal to those who are covered by employer-provided insurance.

I urge members in both parties and both Chambers to ignore their empty threats - as no Republican will stay home next October at their behest - most GOP vote losses will come because of Trump. In the long term, replacing subsidies with a public option that also ends Medicaid would end the scaffolding on which the Hyde Amendment sits. 

In general, we agree with Douglas Holz-Eakin. Government healthcare finance is a mess, combining employee payment, subsidized individual insurance, retirement insurance - with multiple funding streams, insurance for the poor, bankruptcy and long-term care for indigent seniors. Too many pieces and too many holes where people can get lost and remain untreated. However, we agree with Mr. Levits that this is not the time for ending Obamacare/COVID tax credits.  This should have been litigated in Spring, not when the credits are about to expire.

Obamacare financing by the wealthy needs to be eliminated. It should be replaced with a free public option for people with pre-existing conditions who are denied coverage under other plans and care for the indigent (with senior Medicaid covered by a separate federal program funded by a goods and services (value added) tax. 

The public option would be funded by an employer-paid net business receipts (subtraction value added) tax - with offsets for employer-paid coverage of marginal employees who are not covered or who cannot afford copayments as part of full-time employee coverage. The public option for the unemployed would be funded through the goods and services tax. Please see the first attachment for more detail on healthcare reform options previously submitted to the Committee.

Our tax proposal ends the filing of personal and business income (corporate) profits taxes. Small business and corporate tax benefits provided under these programs (the health insurance exclusion) would be excluded - but not credited - on employer paid subtraction VAT.

Poverty is the biggest cause of bad health. As we have stated before, the best avenue out of poverty for families is a higher child tax credit. The current credit, which is temporary, should be doubled or tripled as part of the next round of tax reform. With a higher minimum wage (which should be paid for those underserved by the education system to meet their opportunity costs for engaging in remedial education instead of low wage work, welfare or illegal activity), people will be able to afford better food choices.

Adding family sick leave assures that people can get care for their children during normal work hours. This saves society money in the short and long terms. Because marginal firms may not be able to afford this benefit, it should be provided as a subsidy to them as part of the enactment of an employer paid subtraction VAT, which is described in the second attachment on consumption taxes.

The testimony of Brian Blase should be wholly disregarded. Taken to its natural conclusion, all health insurance - including funds provided by employers under the health insurance exclusion - must be replaced with catastrophic insurance and healthcare lines of credit or savings accounts to cover immediate expenses. The Republican Party could have presented this approach in 2009 as an alternative to the Healthcare Reform Act. It did not because this approach does not pass the smell test.

The testimony of Bartley Armitage is enough evidence to support the need for both immediate subsidies and of the approach taken by Blase. It also supports the extension of the Public Option to anyone with either preexisting conditions and/or the inability to pay for comprehensive insurance - or even Obamacare without the current subsidy.

Attachment: Single Payer

Attachment: Consumption Taxes

Here's Why Your 2026 COLA Adjustment "Feels Wrong"

COLAs need to go up by an equal dollar amount - the same average amount that goes to Urban Workers. The minimum wage also needs to increase (which will raise the wages and spending of the latter). This needs to be back dated to the last time the minimum wage went up. The 25,000 tax cap also needs to go up - but on a percentage basis - since it was enacted. Social Security benefits should be financed by a 6.5% VAT to replace to Employer Contribution and with an employee contribution equal to 30 hours a week at the minimum wage and capped at the median wage.

Removing barriers for work on SSDI

WM WW SS: Untapped Talent in America: Removing Barriers to Work and Supporting Opportunity for Individuals with Disabilities, September 9, 2025

We urge caution in dealing with this subject, as what is of academic interest for social commentators is a matter of life and death for those who live it. People are on disability for two reasons. The first is that work has become a struggle for either physical or mental health reasons. The second is that dealing with disabled workers has become a burden to employers and their supervisors.  This is even the case where workers are extremely talented, especially for those with mental illness, who may be more intelligent than their supervisors but unable to effectively deal with the social situations faced in the workplace.

Start by ending the penalty on working for those who receive retirement or disability benefits prior to full retirement age.

There are two main reasons to encourage the disabled (and the aged) to work. The first is to increase their incomes, primarily because current benefits are too low and there is little appetite for increasing them and the second is to increase the number of low wages into the economy for the benefit of such employers. Neither reason has merit. Workers with untapped talent should be given the opportunity to contribute, but this should not put their current situations at risk. It is much too hard to get onto disability for the risk calculus to make sense.

One way to deal with this is to make getting assistance easier for both having a disability or to simply leave a bad job. In June of 2024, the Center provided comments to both subcommittees on how to do this by creating a program of long-term unemployment insurance, which I will repeat here.

Please see the attachments for more information on how to fund this spending through a system of consumption taxes on both consumers and employers (while decreasing other taxes on the latter).

Taken together, these reforms will remove the punitive features from anti-poverty programs, especially those which require an excess of red tape to participate - especially the earned income tax credit and supplemental security income. By basing benefits on long term unemployment insurance, the period of precarity applicants face while applying for benefits is ended. This experience colors both the desire to return to work and the need to justify continued benefits

Returning to work from disability also has a psychic cost. Participation in psychiatric rehabilitation programs on a longer-term basis than Medicaid Eligibility, as well as educational benefits, will mitigate these fears and, in the post-pandemic world, get people used to leaving home again on a regular basis. Medicare solvency must be discussed within the larger context of health care reform.

If work paid better, going back into it would be easier - even for a shorter period of time. Like the current ticket to work program, benefits should remain in place for a period of months but after that period, should be very easy to restart. Talented individuals could respond to short term opportunities - or even seek them - without having them lead to a long-term obligation for employers.

Supplemental Security Income should be entirely replaced with LTUI as described above. This will end onerous requirements on both recipients and on the government. Individuals with a more substantial work history who have had higher contributions could apply for higher benefit levels or save such advantages for when they reach retirement age.

Individuals on long-term disability or recipients of old age and survivors insurance need more money. Many are in poverty - primarily because they never had a job that was adequate to make the necessary investments that would, in theory, allow Social Security to be a supplement to income rather than its sole source - which is the case for the vast majority of cases.

Under no circumstances should precarity be increased in order to encourage more work. That this is no idle concern, as the recently passed reform did just that regarding both Food Stamp and Medicaid benefits. This is exactly the wrong approach. It also will not work out as planned.

For forced work to be feasible will require forcing employers to hire individuals whose productivity may not justify their efforts and to retain employees who may have challenges. Anti-discrimination laws (including those regarding age) will not only need to be strengthened, doing so may even require criminal enforcement. The other alternative is to provide vastly increased subsidies for employers.

Taking the necessary actions to require that employers actually disabled workers would be the logical outcome of encouraging more work for talented (and less talented) disabled individuals. These committees, especially members of the majority, need to be clear about this fact. So far, efforts to increase requirements on SNAP and Medicaid has included actions to assure that jobs are available - especially those that pay well.

A related subject are disincentives on retirement prior to the full retirement age.

Economists who study the future of work are currently dealing with the question of the decreasing need for workers as artificial intelligence expands.  We believe this concern is overblown. More workers are required to double check the results of generative AI, which can turn out to be questionable. 

Improvements to productivity in general are making the eight hour day unnecessary. More people could have good jobs, rather than marginal ones, if pay rates were increased while hours were cut. Working class, and even factory wages have not kept up with those of management - a product of percentage wage adjustments for inflation being done on a percentage basis rather than distributed in equal dollar amount increments. Because prices follow the 90th percentile of income, most of the nation barely keeps up, with low wage workers, often those with some disability or lack of education, actually losing ground.

Some, if not most, white collar jobs exist to serve the advancement interests of their management, as their pay is increased by having more people to supervise while they look busy. Especially in high skill industries, having people on call to face periods of work - such as the time between the actual enactment of the federal budget and the end of the fiscal year - lead to the kind of bloated payrolls Elon Musk feared but did not understand. The problem is not employees, it is Congress not being able to pass a budget. Shorter work days, with the understanding that extra time may be required at certain times of the year, is a better alternative than having people babysit their computers.

Age discrimination is often a factor in being encouraged to retire early or at all. It is, in fact, implicit. As productivity in the economy advances, discouraging earlier retirement may be counter-productive. Creation of long-term unemployment insurance and making sure it provides adequate income while reforming how both it and Social Security as a whole is funded allows a reconsideration of both the ages for retiring at 62 and for having the full retirement age occur at 67 for those who are now retiring. 

Shifting the funding of what has been the employer contribution to one funded by a goods and services (value added) tax, with equal dollar crediting, ends the question of whether the program includes a subsidy. It does now and certainly will if the program provides adequate income for retirees. Providing higher wages will, as history demonstrates, will result in higher consumption. 

Adding a consumption tax (rather than having be implicit when buried in income taxes) will provide adequate funding to lower the early retirement age to 60 and reduce full retirement age (with the implicit encouragement to keep working without penalty) while removing the penalty for working after early retirement.  Shift full retirement age to 64 as a start, as many who retire early do so at this point anyway, and adjust until there is no bump in when people retire between early and full retirement ages.

Attachment: Consumption Taxes

Keynes vs MMT: which economic theory fits our world?

This gets MMT close to where it needs to be. Taxation, especially of high incomes, must be seen as a way to regulate the excesses of capitalist speculation - which often leads to dangerous investment products that the originators pump and dump, while the top 25% of households is left holding the bag - while the liquidity of the bottom 75% is severely damaged in the dislocations.

An Asset Value Added Tax, as a replacement for capital gains taxes, with marking to market at Option Exercise, IPO and first sale after inheritance, gift or donation - and with an expansion of the ESOP sales exclusion to all stock purchases - not just privately held firms - (a tax cut) - will unwind capitalism so that a more cooperative economy can develop - including worker control over consumption, finance, social services and housing - as well as retirement savings and CEO recruitment (open auction).

Until taxes are adequate - that is - until we take the money we would otherwise borrow - running deficits is actually essential for capitalism to be liquid. Since the 2018 Trump cuts - there has been too much liquidity leading to asset bubbles in crypto, housing, commercial property, consumer debt ownership, etc. 

When the crash happens, the best cure would be a doubling or tripling of the child tax credit, shifting  COLA bonuses to an equal dollar pay bump (not a percentage based on) and a higher minimum wage. Then, the pay bump will be enough for the median to keep up, low enough to end the salary pull on price levels - especially for housing and durable goods - that all goes toward the top 10%. The minimum wage needs to double, as well as an increase to the poorest retirees. A VAT scheme would then eat some of the excess price inflation that will happen when the working class gets lots more money.

2026 Healthcare Agenda

Finance: The President’s 2026 Health Care Agenda, September 4, 2025

I. Vaccines

There are two aspects to vaccination policy that must be considered: those which represent the best scientific knowledge and those that represent values held by American citizens. The election of President Trump came with the promise, which was kept, to appoint the Secretary - in part to implement certain values regarding individual autonomy. 

The Secretary’s personal views on the relationship between vaccines and any complications are not his call as the political leader of the Department. The extent to which the statute creating and authorizing the Department vests decision authority in the Secretary is not the fault of Mr. Kennedy - it is the fault of the Congress. To those who believe in a unitary executive, the status quo is a feature, rather than a flaw. Recent experience, as well as the views of members of the Committee on both sides of the aisle show that this belief is misplaced. 

At some point in the future, possibly as early as 2027, a firewall preventing partisan interference with scientific decision making must be put in place - either by enacting professional requirements for departmental leadership or for certain components within it. While partisan political leadership is essential to our system of governance, like the First Amendment, it should not be a suicide pact.

As important is the fact that the presidency is not the only method by which the American people put their values into the law. It was not designed for that purpose. Rather, it is the Congress of the United States who has the obligation to bring our nation’s values into public policy. Like any American, the President can certainly share his views with Congress, but such views cannot be allowed to override them, lest single party tyranny put the views of some Americans over the views of the rest. 

Note that in our correspondence with the Committee regarding the Secretary’s confirmation, we registered our support. This was not an endorsement of his views on vaccinations, but to further his agenda into the health effects of the American diet, especially with regard to ending the marketing of high fructose corn syrup as a healthy substitute for natural fats. While food additives that may be carcinogenic have gotten Secretary Kennedy’s attention recently, the affect the diet food industry has had in creating our crisis of obesity, diabetes, heart attack, stroke and dementia is more important - regardless of the interests of farmers in producing it.

II. Health care reform

We have included modified comments on lowering health care costs first submitted in September of last year, as well as our option paper on health insurance reform delivered with our comments on the FY22 HHS budget testimony to this committee - both of which highlight the use of a Public Option for those who cannot afford the plans offered by health insurance exchanges. We now offer the following new observations on health care reform. Please share these Secretary Kennedy, as your contact list is better than mine.

The concept of a Public Option came from the health care reform enacted by then Massachusetts Governor, now Utah Senator, Mitt Romney.  

The Romney public option provisions are superior to the combination of catastrophic insurance and health savings accounts (possibly including tax free flexible spending accounts) associated with Senator Dole in opposition to President Clinton’s reforms. The Dole proposals were so unpopular that they were not offered by Republican members as an alternative to the Affordable Care and Patient Protection Act, even though they would have been the most effective means of lowering health care costs.

This approach was supported by the Center for Fiscal Equity - provided that flexible spending accounts could also be used as a line of credit that would not expire from year to year - and with credit v. saving account percentages tailored to meet the economic demands of each family - in other words, that they be means tested - with very poor households receiving a much higher HSA and no requirement to purchase a flexible spending plan to offset catastrophic expenses.

We now support the Romney version of the public option. His version of the proposal should be studied by the Department and brought forward as soon as possible by the Administration for enactment before the 2028 election.

We must note that the Affordable Care Act could only be passed by baseline manipulation adding all student borrowing to the Department of Education, taking it from the private sector. As a consequence, student loan borrower difficulties were magnified - which led the Biden Administration to repair the damage to student borrowers by forgiving packets of student loans held by the government.

The Act must be repealed, in parts, to

1. Lower premiums and eliminate co-pays for the individual plan.
2. Replace Medicaid for non-retirees with a subsidized Public Option.
3. Abandon funding through a tax on investment income over $400,000, replacing it with either a subtraction value added tax paid by employers - with partial offsets for any coverage provided to employees and retirees - or by enactment of a national goods and services (value added) tax (GST) or a stable general tariff adequate to replace the current subsidy for health insurance coverage; full funding of Medicare - including that portion of Medicaid paid to the disabled and retirees so that the states can be relieved of this obligation; and to fully fund the public option.
4. Replace employer-paid contributions to Social Security with the GST or tariff and credit  each worker the same dollar amount rather than an amount matching their contribution, which makes the eventual establishment of personal retirement accounts possible without damaging the redistributional aspects of the program.
5. Replace pre-existing condition reforms with universal enrollment of those denied coverage due to such conditions with automatic enrollment in the Public Option.

Attachment: Lower Healthcare Costs for Americans

Attachment: HHS Budget, FY22

Why do We Still Need to Work?

A better option is 6.5*4 days or a 26 hour week (one third less), with a one-sixth decline in salary levels - but with a doubling of the minimum wage from 7.25 to 14.50 and a long-term unemployment insurance rate of 13.25 - with recipients required to be in school, caring for a child, or participating in a drug, psychiatric or physical disability rehabilitation program. This would result in a 82.5-65-100 deal, rather than 100-80-100. 

Manufacturing and service industries would have a two (or four) shift system - with a 43% bonus for second shift labor (working 52 hours in a week) or 200-130-200.  LTUI would pay 1481 per month.  Full time minimum wage would pay 1621 per month. Average Social Security would be 2494 (pegged to FT Min wage 40 hour work week).

Current min wage work is often for 29 hours a week, so real min wage job pays 904 per month.

COLAs are currently a fixed percentage of last year's wage, which causes inequality because prices chase wages at the 90th percentile. If they are granted on an equal dollar basis, management will give themselves the number of dollars that they need, with the understanding that everyone under them gets the same raise in dollar terms.  Managers and professionals will have to settle for less - and executives much less - but the economy would grow with less inflation (because it is ex-comp and professional salaries that drive up prices - especially for housing).

Trump's Tax Cuts Were Worse than We Thought

The Trump cuts to corporations without matching loophole closures were ill-advised, leading to job losses as I also predicted in 2017. In 2019, the year after the Trump cuts made it through the economy, GDP growth went down a full percentage point. Then we had COVID, which the Fed used to hold all the bad investments from the TCJA harmless. When the economy started toward normality, the Trump cuts - as well as pandemic transfers to the fourth quintile - boosted the stock market as more investment income chased the same assets (or created junk assets - like ETFs with Crypto and Mortgage Securities baked in).

Keeping most of the Trump cuts were necessary for most people, even if the highest income households, who pay most of the taxes, got bigger dollar cuts. A huge number of the tax cuts changed the system - and should have been permanent in the first place. They were not so as to require a tax bill this year. Had they not expired, there would have been no vehicle to work with. Because the changes are now permanent, letting anything temporary die will have no impact.

Biden should have dealt with this issue, but did not find the votes - and the WH was as occupied with hiding is problems as the Trump 45 WH was in hiding Trump's. Now, they are letting Trump be Trump.

Taxes on capitalism (corporate, individual, partnership, Part S) did not change - and they need to because that is where the money is.

Crypto

WM Oversight:  Making America the Crypto Capital  of the World: Ensuring Digital Asset Policy Built for the 21st Century, July 16, 2025

Finance: Examining the Taxation of Digital Assets, October 1, 2025

The GENIUS Act has passed both Chambers and has been sent to President Trump. The House has passed the CLARITY Act and sent it to the Senate, both on a bipartisan basis. An additional bill barring the Federal Reserve from establishing its own digital currency has also passed the House. The reality is that Federal Reserve Notes are already traded on many platforms as online banking and purchases - so the dream of electronic commerce has already been realized.

Stablecoins, which are pegged to a real asset, is a form of cryptocurrency that has the potential to be real money - which can be defined as a form of exchange that can be used to satisfy debts to the public - both in the form of taxation and the ability to be seized as the result of civil and criminal judgments - including seizures to claw back transactions subsequent to criminal activity.

Frankly, no other form of digital currency should be allowed. It should certainly not be encouraged by the United States Congress. 

Experts, such as Warren Buffett, see no value in such currency investments because they are not tied to any form of productive activity. In essence, those who trade in these currencies seek to be the second to last person owning them before the market corrects itself. It is the kind of Ponzi scheme from which economic collapses result.

This Committee has shown concern in the past on overpayments surrounding Pandemic relief. These are less worrisome than the fact that many households invested such payments in cryptocurrency - a junk asset - because families who had high enough incomes to not need the aid used it to gamble instead of meeting basic needs in an uncertain economy. These events demand oversight much more than misuse of Unemployment Insurance.

Historically, money exists in order to pay taxes, as mentioned above. For this asset, taxes should be remitted, not at the end of the year as a capital gain (or loss), but with each transaction, in the form of an asset value added tax. Would this destroy crypto? If only it could. Imposition of this tax would make such transactions accountable, especially if imposition were coordinated across borders so as to prevent “market shopping” for a lower tax rate.

Attachment: Asset VAT

Big Beautiful Bill Gets a B

This bill is largely ministerial and optics. Biden could have gotten a tax increase, plus extension of the good parts of the bill (which preserve tax rule changes that were bipartisan and should not have been time limited for ten years) but he did not. Had he been successful, the upcoming depression due to housing prices would not have already started. I say depression because prices will be lower than the debt backing the assets - not merely a slowdown in consumer spending.

The debt is mostly sucked up by retirement funds, money and mutual funds, as well as by the rich, and it makes capitalism possible. Unless there is a major push for employee-ownership, there is no other alternative (TINA). Not now does not mean never.

The Medicaid and SNAP cuts are back loaded and will be abolished by the next Democratic Congress after the 2026 election. AARP will do its job - either loudly or quietly - depending on how Trump or Vance feels. Vance will let it happen quietly.

The immigration pieces that are unconstitutional will not take effect, those that are show that elections matter.  Oddly, Trump is going after human trafficking in Big Agriculture and Food, Inc., which his capitalist friends do not like. Immigration reform may one day happen if enough pressure is applied. Big Food stopped it by funding the whole birthright citizenship issue - they liked having a pliant trafficked workforce. Trump is ruining this for them, so maybe they will have to back reform.

Progress cannot be stopped forever.

What you own or owe of the national debt, within class averages

We do not owe the national debt or own debt assets on a per capita basis. What you owe is based on income tax paid (not social security, that is an asset you buy). What you own is based on your money, retirement, pension or social security program's debt assets (you don't own them, they provide you with income later) and high yield assets (savings bonds, T-Bills, mutual funds - but not stocks as they are not backed by debt). 

This video explains what you owe (gross and net) or own by income class.

If you are in the bottom 80% (making under $117K), your family owes $61 K and nets 16.3K - for a family of 4, that's $15K owed, but once assets are added, you own 4K. That is most people, just by being born, the government owes you, on average $4,000.

On the other end, if you are in the top 0.1$, making $3.3 Mil per year, your family owes $39M and you owe 9.8M - but adding back assets, your family nets $19M if all debts were paid and debt assets distributed. That's $4.75M per rich person, when born.

The upper middle, from 0.1% to 2% make over $439K, owe $2.8M ($701K/person) and, even when assets are settled, still owe $1M ($271/person).

The middle ($117K to $439K, from 2% to 20%) owe $370K ($92/person) and have a net debt of $31K ($7,9K/person).

The top 0.1%, 153,000 families, don't get most of their money from wages or even profits from businesses they own - although it is not a small amount. The vast majority of that money is capital gains (long and short term) for the sale of either direct or mutual fund asset sales - net of losses (if you lose big, you move down in class for that year - so you owe and pay less).

This gives us the answer on how to give the very reach less of a share of the net debt - so that all of the upper and middle classes "break even." Raise the capital gains tax rate - particularly the long-term rate - which is 20% now on (and 37% for short term). Each year, your share of the capital gains for your fund is a taxable event - and they disclose that amount to you and the IRS if you are in a fund (and not cheating - and some do). There is a 3.8% Obamacare surtax as well - and that revenue should be broad-based, not a tax on the wealthy. Biden wanted to raise the tax (including Obamacare) to 28.8%. 

Under Reagan, it was 28%, Papa Bush raised it to 31% , with Clinton making it 39.6% before he cut it back to 28%. W made it 20% and Obama added the surtax of 3.8%, with Trump and Biden leaving it there with no talk of changing it in the Big Beautiful Bill. Letting the Trump 45 tax cuts expire does not change it at all. B3 largely keeps tax policy on capital income and gains where Obama left them and extends the tax fixes that made things simpler. Trump's cuts to corporate income taxes were allowed to become permanent in 2017 - meaning Dems did not stop them - even in private - and the whole thing was negotiated in private - as is the BBB).

IT WILL TAKE REAL REFORM TO FIX THIS.

On the whole, government spending on entitlements, the military, domestic non-military and net interest cannot be changed much - or at all in any meaningful way. Most tax rates, including the 37% rate at the top, are not going anywhere - (the 37% rate is fairly bipartisan, falling between the rates set by Clinton/Obama and Bush).

That leaves business taxes - all of which should move at the same rate.

It's where the money is. The current level is between 22% and 24%. Biden proposed 29%.

So, lets VAT or tariff fund Obamacare or have employers pay for it as a subtraction VAT item. Kill the income tax and establish subtraction VAT surtaxes for high incomes and dividends, paid for by companies based on wages and dividends paid to individuals and mutual/retirement funds - but let them prepay these taxes and trade them as bond assets. Pay for other spending the same way EXCEPT

Create an asset value added tax - 26% is the sweet spot between where the Democrats and Republicans would put it. Repeal corporate profits taxes on a worldwide basis and have the world sign onto the AVAT at about the same rate.

Use the funds for overseas military expenses, net interest and - when the budget goes into balance - debt reduction.

THERE IS NO ALTERNATIVE

If you zero rate public stock sales to an qualified employee stock ownership program - so that heirs who sell the company shares pay no tax if you mark taxes to market after death, gift, or donation, plus IPO and Option exercise) - and repeal the death tax (while enacting VAT and/or decent tariffs), then the size of the capitalist sector goes down while the employee-owned share goes up - as does the demand for government. Again, TINA. They used to use TINA to say capitalism will never go away. Now, TINA if we want to keep the dollar solvent.

Letter on tariffs to Ways & Means and Finance Trade Subcommittees

We strongly recommend that a baseline tariff amount be enacted as proposed here, giving the Administration limited ability to negotiate on specific products based on these amounts and removing blanket authorization to declare an emergency to work around the enactment of detailed tariff policies.

These proposed tariff rates are based on the value added taxes of our trading partners. We have also provided information on national gross domestic product in purchasing power parity terms (based on data originally calculated by the International Monetary Fund for 2022, the most recent year available in the vast majority of countries). These percentages were used to adjust the balance of trade figures currently available from the World Population Review. 

As we explained in April,  until the United States adopts its own Value Added Tax System, as we have proposed for the past ten years, it could fund domestic military and civilian discretionary spending - with the higher rate including what is now collected by employers for Old Age and Survivors Insurance. Without such a tax, the enactment of tariffs is necessary to compensate for the lack of one, while those nations who use this levy zero rate it at the border, which damages U.S. competitiveness.  

Dealing with this issue is a main driver behind the President’s efforts to impose a tariff policy. Sadly, the Administration’s imposed tariffs were initially based on total trade amounts by a logic that I cannot understand. The proper metric, if dealing with the national economies of our trading partners, is to adjust trade margins as explained above, but this calculation would mainly be to use tariffs to increase their economies for the benefit of their citizens, while holding American firms harmless from trade relationships that exploit overseas workers, while robbing American workers their jobs. 

Correcting this circumstance was one of President Trump’s main promises, although most of his base did not realize that this would be inflationary unless other taxes were reduced through tax reform. Imposing tariffs before tax reform is enacted has put the cart before the horse. This is why tariff policy should move back to Congress, which should also engage in bipartisan reforms along the lines that we first proposed in 1998.

Sadly, the horse has already left the barn, so tariffs need to be rationalized as soon as possible. They should be based on the exporter's value added tax rate that was zero rated at the border. Let us offer some examples. Canada has a Goods and Services VAT at the Dominion and Provincial levels. The tariff for each trading partner needs to be at least that much. Most Canadian provinces have a 5% rate, while Ontario’s rate is 13%. I offer these in case we wish to enact rates for each province.

The proposed rates in the attachment largely mirror VAT rates for each nation, although different rates were proposed for some nations. If our trade surplus, adjusted as described above, is less than the VAT, the proposed rate is decreased by that amount. If we run a larger surplus, the VAT rate is used as our trading relationship will not be damaged by enacting the higher amount.  

Tariffs for most developing nations were based solely on their VAT rates, as increasing tariff rates to purchasing power parity/trade deficits would effectively stop trade with these economies. The exception to this is for major importers, such as China, Taiwan or Bangladesh, where armies of exploited low wage workers dump products on the American economy.

GDP, adjusted for purchasing power parity and the size of the American economy as expressed as an inverse relationship are provided. Thus, if an economy is only 10% of the American economy, the percentage difference in the table is 90%. This is most of Africa and much of the world. Tariffs on these nations should not include this adjustment in raw form, as this would result in trade embargos without helping overseas workers at all. 

These percentages were used as an adjustment to trade deficit percentages with the U.S., with positive numbers showing a U.S. surplus and negative indicating a trade deficit. Even these amounts would severely damage trade, but because they fit, in general, with the President’s apparent rationale as first proposed, they are provided for information.

Attachment - Long-Term Unemployment Insurance

Social services, especially Unemployment Insurance, need a major overhaul.  The categorical grant approach reinforced a provincial view of federalism; one which created regional economies, especially in the South, with a barely hidden racist intent. The result of these policies has been to keep the region in a state of sustained poverty. Alabama Wealthy is not wealthy in the larger economy. This wound was self-inflicted.

Family incomes must be guaranteed, although not with a one size fits all subsidy. Our proposal has three components; two of which should be familiar to the Committee: 

1. An increase in the minimum wage to at least $11 per hour (if not more to account for pandemic inflation), with a $12 wage for a shorter work week.  This distributes the burden of higher wages for less work with employees and employers.
2. Increase the Child Tax Credit to levels passed by the House, with increases to at least twice that in fairly short order.
3. Replace the current menu of social programs with long term unemployment insurance at below minimum wage levels, which would be supplemented with additional funding for participation in basic education (especially for ex-offenders), employment training, psychiatric or addiction rehabilitation programs. Old Age, Survivors and Disability Insurance would start with this amount as a minimum, with higher benefit levels based on employment history. Dependent payments would be made through the child tax credit once it has been increased to current survivor benefit levels. 
4. Long term unemployment insurance would be awarded on a no fault basis, ending the need for eligibility investigations beyond verification of identity and for punitive disciplinary systems by employers designed to avoid paying benefits. This payment, which would be indexed for inflation, would be $10 per hour for a 28 hour week, would be tax free and funded by a national goods and services tax. States could enact higher benefit levels funded by a local GST.
5. Most, if not all, anti-poverty programs would be discontinued, although programs to increase rental housing supplies would be expanded.

Attachment: Consumption Taxes

Background on Consumption Taxes

Eventually, the United States needs to join the rest of the developed world and enact consumption taxes on consumer goods and services, net business receipts and an innovative tax on asset sales - which would replace capital gains taxation and would require negotiation of an international rate to prevent rate arbitrage. 

The first two would make it easier to pay taxes in general because the simplicity of the first and the fact that the second would replace the business income tax while becoming a conduit for employee health and family support benefits - and would entirely replace the need for most families to pay personal income taxes (if not all) - which would greatly cut down on paperwork requirements businesses currently face. 

The reality is that business collects the revenue and submits it to the Treasury, along with a mountain of information to subsidize the tax preparation industry - who are consistent donors to both Chambers - especially the revenue committees. 

Credit Invoice Value-Added Tax (CI-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. 

CI-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 CI-VAT, however net income will be increased by the same percentage as the CI-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 CI-VAT when sold or the A-VAT if invested.

The proposed Fair Tax’s use of a retail sales tax, rather than use of a value added tax at each purchase (but note - the tax is only paid on the base markup  - not the taxes owed because of the markup) will lead to fraud as retail purchase are credited as wholesale - which under the FT is not taxed. This is a huge potential loss. This schema is proposed by Fair Tax sponsors because they misunderstand how a CI-VAT works. For the Fair Tax to ever pass, rather than being a talking point for fundraising, it must work the same way..

When CI-VAT is paid by a merchant or manufacturer, the CI-VAT that they paid for that good or service supplied is refunded to them.

These taxes will replace the web of tariffs currently in place, ending what amounts to domestic industrial policy.

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.

Under the current income tax regime, 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.

Higher tiers of the subtraction VAT would collect taxes on salaries with a 6.5% rate on income over $85,000, with increments of that amount to a top rate of 26% starting at $340,000 in salaried income. Salary surtaxes, with an option to purchase tax prepayment bonds, would start at $425,000 at 6.5% to a top rate of 26% starting at $680,000. Employers could also be given the option to buy tax prepayment bonds - which could be marketable.

Taxation of dividends will be included in surtaxes to the Subtraction VAT for payments over $85,000 in taxes plus dividends in a given year, however individual filing for wage. dividend and interest income under $425,000 will not be required. Again, the capital gains tax will be abolished.

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.

Debt Ownership - TY2022 Debt June 2025

Visibility into how the national debt, held by both the public and the government at the household level, sheds light on why Social Security, rather than payments for interest on the debt, are a concern of so many sponsored advocacy institutions across the political spectrum.

Direct household attribution can be made by calculating  direct bond holdings, income provided by Social Security payments and secondary financial instruments backed with debt assets for each income quintile.

Responsibility to repay the debt is attributed based on personal income tax collection. Payroll taxes create an asset for the payer, so they are not included in the calculation of who owes the debt.  In 2019, just after the President’s tax cuts were passed, the ratio was 19 dollars of debt for every dollar of income tax collected. The 2022 ratio was 13 - so our financial position is actually improving - largely because post-pandemic inflation grew the economy.

The bottom 80% of taxpaying units hold few, if any, public debt assets in the form of Treasury Bonds or Securities or in accounts holding such assets and only take home one-third of adjusted gross income. Their main national debt assets are held on their behalf by the Government. They are owed more debt than they owe through taxes. The next 10% (the middle class), hold more in terms of long term investments and mutual fund and bond assets. They hold a bit under a fifth of social insurance assets.

The top 10% pay more than half of income taxes (the dividing line is about 97.5% - and has been for a while). Asset shares within the top 10% are estimated using the same breakdown as the entire population, that is, the top 1% hold 54% of Federal Reserve and Long Term Investment Assets and 77% of mutual funds and bonds as held by the top 10%. A similar fraction is used to estimate holdings by the top 0.01% - which is consistent with how much income they receive (note that I did not say earn. 

This illustration shows who benefits the most from having a national debt, therefore who has the most to lose through default. The relative shares of debt ownership, however, are current as reflected in the 2022 Federal Reserve Survey.

Additional charts on debt ownership.