On Social Security - the system is not "broke" and can be funded as far as is necessary by raising the ceiling on the salaries from which FICA taxes are deducted. In fact, there is no reason not to raise it to whatever the ordinary members of the House and Senate are paid in lockstep with when they raise their own pay. It is more than ridiculous that they do not pay Social Security taxes on all their tax-payer salaries while the vast majority of Americans do.
If in fact we did raise the ceiling to that level, rather than RAISING the age for Social Security, we could consider LOWERING the age for full social security. Too many of those who bloviate about these issues are people who do intellectual work. I was eligible for full Social Security at 66. I could have drawn it and kept teaching, and may return to teaching next school year. But imagine a coal miner, a laborer, a construction worker, anyone who does PHYSICAL labor - why are we denying them full benefits when they are no longer able to continue to do the kind of work in which they have been employed?
And were we to lower the age for basic benefits, that might open up more opportunities for younger people to be employed.
I have some more thoughts below the squiggle.
I admit I am not an economist. As a teacher of government I have had to guide my students through economic issues. That certainly includes our perverted tax structure, which has gotten that way in part because the voices of ordinary folks are rarely included when deciding about tax policy.
So here are a few thoughts I have to offer.
1, A different tax rate on capital gains should only be for original investments, not for trading for example pre-existant stock. That is not investing in building a business. I will grant that there may need be some kind of sliding scale for when a corporation issues additional stock - which has the effect of diluting the ownership of extant shares. I also think a flat 15% rate is far too low - here a sliding scale might also apply to encourage investment rather than speculation: 30% for 1 year, 25% for 2 years, and a bottom rate of 20% for 3 years or longer.
2. There should be caps on the amount of home interest deductions to which someone should be entitled. If someone want to spend 100 million dollars on a house, there is no reason the rest of us should be financing that by allowing them to deduct mortgage interest or 90 million or more. If that cuts back on the building of luxury houses, perhaps the resources could be redirected to something more productive to society as a whole. The ceiling should be adjusted with inflation, and it can be phased out over a scale, as we already phase out the ability to deduct interest on educational loans.
3. We need to reexamine those portions of the tax codes addressing non-profit organizations. Religious organizations should be entitled to use tax exempt funds only for clearly educational or charitable purposes, and that should NOT include involvement in the political process, nor should it include investment in for-profit entities. The abuse of 501(c)4's in the recent election cycles is something that clearly needs to be addressed.
4. As an individual I am not allowed to deduct political contributions from my income subject to federal taxes. I am allowed to deduct a nominal amount from the income subject to Virginia taxes. We really need to ensure that corporations are subject to strict limitations on political expenditures: that is, lobbying activities should be limited to a certain percentage of revenue, and direct contributions to political actions committees or on political advertising should not be considered a deductible business expense. I know that the corporate world will fight this, but allowing such expenditures constitutes a subsidization of such expenditures by the rest of us who cannot take such deductions.
My last point for today is one I have made before, in the past with detailed charts.
The minimum wage is far too low.
I want to tie Congressional pay to the minimum wage on some fixed multiplier, so that if Congress wants to raise their pay, it automatically results in an increase in the minimum wage. Since those at the lower income level pay payroll taxes on all of their wages, this would increase the revenue coming in to both Medicare and Social Security, relieving the financial pressures on both systems. I would suggest that were we to look at the historic relationship between minimum wage and Congressional pay, any hourly wage of less than $10 is very much insufficient. Remember, working 2000 hours would still only provide $20,000 of wages, which is still insufficient to get one out of poverty, but which certainly is a significant increase for those only making the current $7.25/hour. People at low wages spend all they make, so this would result in an injection of money into the economy of consumer spending, which would help both the private and public sectors.
I am willing to explore some process of phasing this in for employers of less than some minimal number of employees, say 20 or 25. Large corporations are already making humongous profits. Those who have minimum wage employees can well afford to pay them decent wages - and in many place $10/hour is not a livable wage.
There is much more one can address. The entire approach to corporate taxation needs to be rethought. So does the matter of executive and director compensation, and how that is addressed through the tax code.
There is no fiscal cliff. There is more than enough revenue available. Our problems come from the inequities of our current system, which greatly favor some economic activity over other economic activity. When corporations are sitting on trillions of dollars and making hundreds of billions in profits while paying little if anything to the federal, state and local treasuries, we do not have a spending problem, we have a revenue problem because they are not paying for the services we the people provide them through our government.
Our government. Not theirs.