Simple Tax Plan

America is in Financial trouble for the same reason that anyone gets in trouble. We don’t take in as much as we spend. There isn’t anyone who disagrees with this.

Republicans say that the answer is to run the government like a business, but no business prospers or even survives by taking in the least money for the fewest possible services. It’s a business plan that has no chance of success, and the Republicans prove that every time we allow them into power.

The Democrats at least try to create services that are popular because that’s how they get into office, but the Democrats aren’t very good at coming up with a plan to make those services affordable. Perhaps the most accurate criticism that the GOP makes is that the Democrats aren’t even thinking about the government like a business.

The Government As a Business

When you start a business, you really need to know what is going to make people want to give you money. You can do all kinds of cool things, but until you have fostered the voluntary transfer of cash from customers to you, it’s a project rather than a business. Our government is still a project.

Political Stability

What have we got to sell? How about political stability? If you don’t think that’s a reason to do business in the US, try running your Subway shop in Uganda. What’s it worth to you as a business owner? More importantly, as the provider of this very valuable service, what will the marker bear? We don’t want to cripple business in any way, but we need to remember that they are the customers for the government of the people. They are not the people.

Every business should be very happy to pay 33% of their profits for political stability alone. If you are not making a profit, we’ll carry you until you do because new business is the lifeblood of capitalism while old businesses are frequently hardening arties. A robust economy is an economy with lots of new businesses. Big business is brittle.

This is the Political Stability tax. It’s not much different than the current corporate income tax, but it answers the main complaint of those idiots who say they don’t get anything for their taxes. This what you get. This is what costs you. We’ll negotiate because that’s the way business works, but negotiation means you need to sweeten the deal for us in some way for us to even consider some alteration. Otherwise, you can take you business to Uganda if you don’t think this is a good business opportunity. We only want happy customers, but we’re not going to ruin our business model by making every customer happy.

Infrastructure Taxes

Infrastructure is the difference between a First World country and a Third World country. It always has been. It always will be. Our infrastructure is still one of the best reasons to locate a business here instead of somewhere else. Businesses should pay direct usage fees (pre-tax income) for use of infrastructure, and a five percent infrastructure expansion tax out of their profits. We can only win in the world to come by having the best possible infrastructure.

We’ve been one of the rich countries in the world because we have always invested in infrastructure. Look at the infrastructure we’ve created. Note that the government was the driving force in all cases. Railroads, highways, the electric grid the Internet are all critical pieces of our infrastructure that only work because of the government’s direct participation. Just 75 years ago, most of the United States used outhouses and had no electricity. Infrastructure is civilization.

Our education system, schools, libraries, public water and sewage, and our health care system are all part of the vast and wonderful infrastructure that we provide. Companies will only keep starting here if we continue to be the best place to start them by providing the best infrastructure.

Again, this structure provides a bit of corporate welfare for new and struggling businesses by not charging an infrastructure tax until a business makes a profit.

Monopoly Taxes

Everybody talks about too big to fail when it is obvious that these morons are going to take the whole world down with them when they go, but once the crisis has passed, too big to fail becomes too big to screw with. This has to change or we will inevitably collapse.

‘Big’ is the key word in too big to fail. You avoid too big to fail by keeping companies from getting too big. The problem here is not the steepness of the intellectual challenge. The problem is having the guts to face up to the monster companies who have their tentacles in every aspect of our lives.

I propose a sliding scale monopoly tax where you pay more tax based on our market share. Is that fair? It’s our market. They can sell their widgets elsewhere if they don’t like this deal. I don’t think we’ll lack for customers who want a piece of the action.

Again, the monopoly tax will only be charged on profits. If a company is a monopoly and not making a profit, we’ve got a problem tha cannot be solved by tax policy.

How much is the monopoly tax? A profitable company is paying 38% of its profits for political stability and infrastructure. If we charge them a one percent monopoly tax for each two percent of the market they control, they will be able to keep twelve percent of their profits.

Is this a capitalist disincentive? Of course. That’s the whole point. We want to structure the tax code so that companies try to stay small and nimble so they don’t become a danger to the overall economy.

Individual Taxes

No individual taxes on the first million each year, and 38% on the remainder. After you make the first million, you are as dependent as a business on the government to protect your wealth. Furthermore, it is likely that your large income is due at least in part to our fabulous infrastructure. Please send us the money with a thank you recognizing that we the people made all of this possible.

There will be investment incentives, but only for those who invest in small business. Anyone who invests in a true startup can exclude up to five times the amount of their initial investment if the project explodes in value. Capitalism is gambling so we need to encourage people to gamble.

Is it fair to charge higher taxes to the rich? Of course! No one’s coming to steal what we’ve got. If they are coming at all, they’re coming for the rich. They’ll probably want our help when this happens.

Summary

Individuals who make less than a million and business that don’t make a profit will pay absolutely no taxes.

We will do everything possible to make businesses successful because successful businesses will pay our bills, but we don’t want businesses to get so big that they become a threat to the system.

All successful business pay a flat 38% on profits. Any exceptions to this must have a one-year sunset clause.

Companies owning more than two percent of their designated market will pay the monopoly tax.

This plan should generate all of the tax revenue that America needs to get out of debt while removing the crippling burden that our current tax structure places on our economy. Inside of five years, this will pay off the national debt without having to sacrifice any investment in infrastructure. Beyond that, we will have the money we will need to deal with the certainly bigger problems of the future. Trouble is coming because it always does. Let’s be ready.

More opinions based on a lifetime of citizenship, whatever that means, can be found at my Twitter column at http://www.twitter.com/alanbcorwin

The Sex Election

We all know it’s going to come down to the economy, but you have to enjoy the Republican attempt to make this election about sex. Democrats simply don’t have the guts to make these guys look as silly as they make themselves look, and for some reason there is no pro-sex PAC out there. The only way these guys really get to look like fools is to do it themselves.

What if we did have an election about sex? Choice A would be that sex was not allowed except for the purpose of procreation. Choice B would allow sex for pleasure. It’s a very simple choice, but let’s complicate it a little by making it binding. We all know that all of those sex for procreation only people feel kind of dirty just having neighbors who do it for fun. Let’s all agree to move to an area dominated by those who share our choice.

I’m sure the same kind of split is going on up in Canada and probably in Mexico too. Let’s see if we can fix the problem for the whole continent. We could have three choices in a whole continent election: the two choices above and a third choice which allowed sex for pleasure only unless you get a procreation permit. I could be wrong, but I think most people will go with Choice B even though that is by far the most complex option.

There are definitely people in category three, but they should be the smallest group because they are not breeding. They only grow by siphoning members from the other groups.

If we did a county by county color map of the results, the As would be red, the Bs would be blue, and the Cs would be green. I would have to bet that most of the map would be blue. The reds and the greens might find few places that would take them in, although the greens are growing all of the time as more and more people recognize the impact of a planet with seven billion people on it.

I suspect the red areas of the map would be far smaller than the red area displayed after a presidential election. I could be wrong, but I suspect that even most Republicans like sex. They’re just disgusted that other people are having a good time at it.

Of course this is silly. We don’t need to make this kind of separation because no one is forced to have sex with anyone else. However, when you try to define the election the way that Rick Santorum is, you’re really betting that you think the above map will be red. I welcome that vote. The rest of the world may think we are prudes, but I’m pretty sure that America loves sex. I could be wrong, but a few hundred billion dollars worth of advertising is on my side. They don’t spend that kind of money to turn peole off.

More comments exposing my fractured stream of consciousness can be found in my Twitter stream @alanbcorwin

How To Foster the Starting of New Businesses

The only government program that I have seen that really ever seemed to do any good as far as creating new businesses and new jobs was the plan that allowed people to take their unemployment compensation and use it to start a new business. I am sure that most of those businesses failed because most new businesses fail, but some surely succeeded and employed people. Everything else I see coming out of the government really is not much help to the really small business person.

First, the government needs to stop doing things that get in the way. In particular, the government needs to stop getting in the way of new businesses trying to raise capital. For example, the changing of a “qualified investor” was made five times as stringent during the last year of the Bush administration. Maybe it was time to do this if you believe that the old law made sense because inflation has surely changed the notion of what is a comfortable nest egg, but the old law limits the right of ordinary Americans to be capitalists as much as any law on the books.

Making this law more stringent is a huge case of Nanny-state. You can’t foster new businesses, i.e. encourage people to take risks, by saying that they are unqualified to take them. The government does far more to prevent people from investing in legitimate new businesses that should have a beneficial effect for the whole society than it does to put people like Bernie Madoff out of business. Whether or not you believe that protecting people from themselves is a legitimate role of government, you have to conclude that the current rules and processes do not do everything they can to promote new business. Let’s take a look at what else they could do.

Create a Special Tax Break for Providers of Start-Up Capital

Should the guy who makes a hundred grand betting on Joe’s Widgets pay the same tax as the guy who made a hundred grand on Bank of America? Not if you want people to be eager to participate in new ventures. Is this fair to Bank of America, Microsoft, and IBM, to name a few? Not really, but they don’t need start-up capital. The cost to them is small and likely is a less than appropriate tax on their hugeness. Do you want create more small businesses or cater to the status quo? If you want a vibrant economy, you better not be catering to the status quo.

I’d like to see the first hundred percent return on such investments be tax free. That is, if you put up a million dollars to get Joe’s widgets started, you would not pay any tax on the first two million you took back out after Joe hits it big. That is, you don’t get taxed on getting your money back, and you don’t get taxed on the first matching win. I’d go even further and tax only fifty percent of the next hundred percent, and only seventy-five percent of the next hundred percent.

I don’t think that this is overly generous since most new businesses fail without ever making a profit for the investors, but it is a heck of a lot better than the deal angel investors get today. (They call them angels because they require so much faith.) The only way to get more money into these operations is to change the risk/reward profile. Most investors are not math-impaired.

Should investors pay a higher tax rate if they made their money from an organization that got bailed out by the government? They should, and actually they already are because the government is taking a big cut.

Problem/Opportunity Funding

Our country faces many problems and many opportunities. There is even occasionally some degree of consensus on what is a problem and what is an opportunity. I think the government and/or private agencies need to be able to support new businesses that can demonstrate that they are solving a problem for the community or opening an opportunity that will increase the prosperity of the community. The problem with such programs are that they disrupt the status quo, but a healthy capitalist economy is one that fosters change. Change is always going to come, and it will run you over if you are not ready for it on every level.

Foster Competition

It was a sad day when Packard went out of business, but it wasn’t devastating. Packard was just one of many auto companies, and they failed all the time. I’m not sure how much GM and Chrysler ended up with, but we could have started hundreds of new car companies at one hundred million dollars a shot. Wouldn’t that be a better use of our money than giving it to people who have proven they can’t manage a company? Wouldn’t that provide more jobs for auto workers? Wouldn’t that ensure that we would offer the world a broader choice in automobiles? Wouldn’t that mean that all cars would get better. The answer to all of these questions has to be yes if you believe in capitalism.

The auto bailout is exactly the wrong thing to do if you want to solve the problem. If it works, we end up with companies that should have failed and which are almost certain to face the same kind of problem in the future. If it doesn’t work, we are out billions and still have the same economic problems we were trying to prevent. A future with fifty car companies is a future far less prone to economic stresses than a future with three.

Redefine Small Business

A Company with $250 M in revenues is not a small business that needs help from the government. By the time a company is generating $10M a year in revenue, it should be able to stand on its own and raise capital on its own. A company needs the most help when it is just a business plan, or a business that is attracting attention and needs a little help to get to the next level. These are the companies that will increase employment, but they are also the companies that have the hardest time getting money from the banking industry. We need a government-guaranteed loan program that focuses on really small businesses that need to get to the point where they can inspire faith.

The most explosive growth of business in the micro-capitalism sphere, and there is a huge gap between that level and the level where the government will even recognize you. We either need to come up with a private solution to this, or the government ought to jump in.

Conclusion

I believe that we can make American business young again with just a few simple changes in our tax law. If we let everyone use their own judgment about these bets, it will help even more.

The government shouldn’t need to participate beyond that, but if it does stick its nose in, the focus needs to be on solving the problem, not in protecting the status quo – the path of least resistance that government always follow.

Breaking Up Healthcare

There are lots of problems with the current healthcare discussion, not the least of which is that it doesn’t seem to be a discussion, but my problem is the scope.

Healthcare, like many other problems,  is such a big topic that it really needs to be broken down to be discussed and understood.  The profession itself breaks it down several different ways, but I don’t think that fits our purposes either.  The healthcare debate today is about money

Different kinds of healthcare would seem to require different kinds of financing because each kind has its own economic structure.  Here is one way to do that breakdown that attempts to consider the possible financial structures.  It is by no means the only way, but this is one possibility.

Basic Common Problems

Each of the following could easily be taken out of the current health care debate.  We have excellent systems in place for both trauma and contagious disease, and the free market system seems to deliver the health care people are looking for.  Note that these are all problems with relatively small cost or at least costs which are spread over time

Preventive Care looks like the best place for the government to change things for the better.  Right now, you can’t deduct a gym membership and schools no longer offer Physical Education.  What about tax credits for getting fit and staying fit?  It’s not a cure-all, but even Republicans will like any health care reform that comes packaged as a tax break.

Medical Record Keeping is one place where the government is certainly going to have a part. Good-bye forever any real notion of medical privacy, but have we really had that since on-line medical databases became the norm?  A uniform medical database system will simplify lots of medical chores, but it also likely that it will be used for law enforcement chores at some point.  I don’t know if I like any of this, but there is no doubt that the possible cost savings from a uniform approach all but make it certain that this will happen.

It’s a nightmare to arrange an annual physical exam without applying for life insurance.  These need to be easy and cheap to get, and you might consider a tax credit for getting one.

Contagious Disease:is a common threat that we all face.  The government already deals with this to a large extent, and that seems appropriate even to most conservatives.  These days contagious disease and biological warfare generate many of the same concerns.  The costs of contagious disease are already born by the society as a whole.

Trauma is currently dealt with on a case by case basis.  If you break your leg or get in a car accident, our current medical system will fix you up and figure out how to pay for it later.  Some are covered by insurance, some pay for it themselves, and we all collectively pay for the rest of the repairs..  Note that the Defense Department already has to be very good at dealing with trauma.  It might be simpler to put them in charge of that as well.

Dental Care is a concern we all have, and it is very expensive.  However, my bad teeth don’t affect you in any way except aesthetically.  The government could solve it cheaply by removing everyone’s teeth and giving them dentures, but I don’t think anyone thinks that is a good idea.  It seems like there is an unexploited market for lost-cost dental care, but there will always be a market for those who want nothing but the best.  Dental care is not exactly optional medical care, but it is a portion of medical care with a lot of different choices and a lot of different costs.

Optional Medical Care

I would also remove these topics from the current discussion because they involve choice.  You get to choose when or if you make these decisions, and you should also be ready, willing, and able to take on the financial burden.

Cosmetic surgery and treatments are the best examples of something that is between you, your vanity, and your wallet.  This should never come up in the discussion.

Maternity and Childbirth are expensive, but they can be avoided, and some would argue, should be avoided, by those that cannot afford the costs.  Not being able to afford kids, however, is not a barrier to lots of people.  They just go ahead and have them anyway, and the society is expected to endure the costs of the maternity and childbirth.

This is a common problem because of the expense that is borne by all, but any attempt to include it in the general discussion on healthcare is going to be divisive and unlikely to be productive.  I don’t like solving a problem by pretending it doesn’t exist, but sometimes that has to be done so that you can concentrate on solving those that can.

Joint Replacement is also optional, though people who have had their joints replaced would argue otherwise.  Certainly, people got by without joint replacement until late in the last century, and it is not a problem that we share in common with one another.

The Most Controversial Segments

If all we were worried about was the issues above, this would be a simple and relatively inexpensive problem.  Chronic diseases and catastrophic events are both very expensive, and the medicines to deal with the diseases of aging are not cheap either.

Chronic Disease like diabetes, arthritis, Alzheimer’s, or anything else like AIDS that stretches on for decades are very expensive because the expense extends over the rest of the person’s life in most cases.  If you are an insurance company, you can’t picture a time when you are going to come out ahead with most of the victims of these conditions because their current expensive need for medicine is unlikely to lessen.

Catastrophic Disease like cancer, heart disease, or organ failure are also very expensive, and it seems, inevitable if we live long enough.  This also is tough to finance.  Medicare attempts to address this up to a point.

Setting that point is a matter of some contention, and there is no doubt that economics has to be a driving factor.  The real problem is that if you get a catastrophic medical event that you survive, you may be left in such bad economic shape that you will wish you hadn’t.

Action Plan

If you solve the easy problems and then focus on chronic and catastrophic diseases, a solution might be found.  I don’t have one in mind, but I am willing to bet that we have a better chance of finding one by taking this kind of a focus.

The Growth of Wealth

Just to be clear, I am not talking about the accumulation of wealth.  That is a fascinating but entirely different structure..  What I wish to speak about here is the growth of the collective wealth of the human species.

The first question is whether or not we are really growing richer.  We seem to have fished out the sea in large part, and we have beaten up the land quite a bit.  Since there are lots more of us, we are certainly poorer in the amount of space available per person.  That makes real estate more expensive, but apparently not quite as dear as we all thoughtr two years ago.

Simple math clearlysays that we are  growing poorer in the finite world, but that may no longer mean that we are really growing poorer.  We have learned how to extend the finite that are nothing short of amazing, and we have created our own world of the infinite.

We, the people of the planet, have developed an incredible capability to make all kinds of things. A Bhuddist would say that we carry the burden of our things.   We make so many things that we don’t even have space to throw them all away!

It’s not like all of these various things are all junk or destined to become junk.  Automobiles and planes extend our freedom and access to the world in ways that our fairly recent ancestors couldn’t even imagine.  Computers give us all access to music, science, art, and raw information that would be very hard to imagine years ago (as the science fiction of the early nineteen hundreds clearly shows).  All of these machines give us a common wealth: time.

Time is all we have.  When the world grows richer in its ability to extend our lives, we grow richer in the absolute sense of having more time.  When the world grows richer in its ability to provide for our needs and desires, we grow richer because we get a braoder choice of the way we spend that time.

If you have a life where you get to do what you want most of the time, you are leading the life of the wealthy.  If you have a life where you always do what someone else wants, you are leading the life of the slave.  For me and for many others, the critical measurement of wealth in my life is how much of it I get to spend doing what I want to do compared to how much time I have to spend doing stuff I have to do.

Remember that not long ago, the ways to use free time were a lot more limited.  Today, an unlimited world of knowledge and entertainment is availble to anyone who lives over a coffee shop.  This will change the world — the simple combination of time and access to information.

Reverence for Hard Work

One of the things that gives me hope for the future of this country is our reverence for hard work.  We like to believe that people have the skills and success that they have because they have worked harder than the rest of us.  It’s not like we think of ourselves or our neighbors as lazy, but we all would like to believe that if we had the focus, the support, the training, and the dedication, we could play golf like Tiger or ride a bike like Lance.

Like Shakespeare’s Cassius, we blame ourselves rather than our stars for falling short.  We respect Tiger Woods, Jerry Rice, Lance Allworth, Cal Ripken, and a host of others because they work so hard.  Certainly all of these people had undeniable talents, but most of us are pretty good at a lot of things.  Sometimes that even includes our work.

I like my work, and I am at least reasonably good at most of it.  However, I know I could be better at everything I do.  Part of the reason is that I want to do a lot of things, and being really good at something, good like Tiger is at golf or Lance is at bicycling,

You have to focus your life on that one thing, if that thing is physics, music, math, golf, or a whole list of other activities, you have to make that decision before you are out of your teens.  In most cases, you have had to already have done a considerable amount of work to be qualified to make that decision.  Almost without exception these days, the young superstars have shown a depth of dedication and commitment to focused work that shames most adults.

I don’t think Americans are alone in their reverence for hard work, but I do believe that we have more faith that hard work makes a difference.  We all know that you can work your butt off and fail, but that does not keep us from believing that our efforts can affect the outcome.

Hard work may not save us, but it is still our best bet.  That is our common faith.