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I don't write a lot of diaries, but I've had a lot of ideas running around my head the last couple weeks about how to help put the economy and job creation right overall for the country.  

I really have two main interests outside of politics.  I enjoy reading about and discussing economic issues and education issues.  I'll save the education ones for another day, but I wanted to kind of have an open discussion about some of the ideas I had and maybe fine tune them or throw them out completely.

So, as much as I appreciate pure opinion I would appreciate a more constructive approach to this diary.  If you don't think it's a good idea of course say so, but please say why and I'm hoping you would have some links to back it up.

If you do like the ideas, I would love to hear that as well and if you have some additional resources that would reinforce the idea I would love that too.

Some of the ideas aren't complete either so if you know how to connect the remaining dots I look forward to that too.

So, to get started I don't think you can talk about jobs and the economy without talking about tax policy.

Taxes

I think our current tax system is definitely broken as most of those here do.  Currently, we have the following tax brackets (I'm just going to list single):

Up to $8,500       -- 10%
$8,501-34,500     -- 15%
$34,501-83,600    -- 25%
$83,601-174,400  -- 28%
$174,401-379,150 -- 33%
Over $379,150      -- 35%

Standard Deduction is currently $3,700.  Then there is also the option to itemize with many, many different things that can be deducted or receive a tax credit.

I would change it in the following way:

Up to $15,000              - 0%
$15,001-45,000           - 15%
$45,001-85,000           - 25%
$85,001-200,000         - 28%
$200,001-400,000        - 33%
$400,001-1,000,000     - 35%
$1,000,001-4,000,000   - 37%
$4,000,001-10,000,000 - 40%
Over $10,000,000        - 45%

I would also increase the standard deduction to $8,000; and only have 3 itemized opportunities.  Everyone would get the standard deduction because there wouldn't be itemizing anymore, the ones below would be in addition to the standard deduction.

Housing Deduction (one per household): $8,000
Education Deduction (per person - for post secondary educational cost and/or non-reimbursed expenses for teachers):  Up to $7,000
Business Expenses (non-reimbursed expenses for work - such has union/professional dues or travel): Up to $4,000

All these numbers could use some tweaking based on tax receipts.

Corporate Taxes

Our current corporate tax rates are:

Taxable Income ($)           Tax Rate[21]
0 to 50,000                      15%
50,000 to 75,000             $7,500 + 25% Of the amount over 50,000
75,000 to 100,000           $13,750 + 34% Of the amount over 75,000
100,000 to 335,000          $22,250 + 39% Of the amount over 100,000
335,000 to 10,000,000     $113,900 + 34% Of the amount over 335,000
10,000,000 to 15,000,000 $3,400,000 + 35% Of  over 10,000,000
15,000,000 to 18,333,333  $5,150,000 + 38% Of  over 15,000,000
18,333,333 and up             35%

I would change it to a similar setup to what individual tax rates work to simpify it:

Taxable Income ($)                  Tax Rate[21]
0 to 50,000                                  15%
50,000 to 75,000                           25%
75,000 to 100,000                          29%
100,000 to 335,000                        30%
335,000 to 10,000,000                    32%
10,000,000 to 15,000,000                33%
15,000,000 to 18,333,333                34%
18,333,333 and up                          35%

The main difference I would say is that if a company's revenue (in total or any individual subsidiary) exceeds 50% from activities in the United States they would pay taxes on all reported profits.  All loses must be reconciled in the year that they occurred and cannot be carried over to future years.

Capital Gains Taxes

Current capital gains taxes are not fair to every day workers.  I would change it if your combined income (all sources) is under $250,000 your capital tax rate would be 15%.  Any above $250,00 combined income, capital gains would be taxed at ordinary income tax rates.

Now I want to get into some ideas that I have no idea if they would work or not.  

Income Inequality

Total CEO compensation as it relates to average worker compensation is currently about 500 to 1.

I would propose if a company's revenue (in total or any individual subsidiary) exceeds 50% from activities in the United States they would have to not exceed a 100 to 1 chief executive to average worker compensation ratio.

I would do this instead of pay caps because first of all I'm uncomfortable with the governemnt setting pay for private sector businesses and secondly I think this would be easier to manage at the federal level.

Off-shoring

This is the one thing I have the most concern about right now.  I know we have trade agreements that right now feel like they are hurting us, but I feel like there's got to be a way to make these trade agreements work in our favor.

There's a couple things about the jobs we've lost, not all of them have been to off-shoring.  I hear a lot that we don't make anything anymore, but we all know that's not true.  We make about the same amount of stuff here, we just do it with less workers.  Plus, during our heyday 1950s-1960s we were pretty much the only game in town for manufacturing after the fallout from WW2.

The only idea I've come up with is that if a company's revenue (in total or any individual subsidiary) exceed 50% from activities in the United States, then any worker that is employed overseas would have to pay a foreign worker fee of $75,000 per worker per year.

The main problem I have with this is that I think they'll just outsource instead of off-shore and buy what they need from foreign companies if that's an option for them.  I'm really looking either for a better idea here or a way to make this one work better.

So, where did this 50% of revenue thing come from?  Well, I was thinking that there needs to be something that triggers some of these things, especially when talking about multinational corporations and their ability right now to avoid.  First, I thought the easiest thing would be to say US based companies, but then I figured they would just move their corporation off shore.  Then, I thought what if it's just be based on where they sell the products and services and if you sell more than half of your stuff here then you should abide by our tax laws and be a US company.  So, that's where that came from, if someone has a better idea I would love to hear it.

Lastly, I had one last thought about Social Security.  I know the easiest solution is to eliminate the cap.  I've talked to some small business owners I know and they said it would really hurt them because they often have sales people who make over the cap.  They are usually are commission based so there is no real way to keep them under the cap, especially since sales people drive their revenue.  Since, businesses make Social Security contributions as well; I would propose that there would be no increase in contributions for the employee or businesses for wages between $106,800 and $300,000 then for every dollar over $300,000 normal contributions would begin.  I was told this would exempt everyone except C-level executives and owners, which is basically what we want.

Again, I'm not locked into these positions but I want to see what everyone thought and if I'm completely out of my mind.

Crossposted at the Motley Moose

Originally posted to IL JimP on Tue Apr 05, 2011 at 06:39 PM PDT.

Also republished by Moose On The Loose.

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Comment Preferences

  •  Tip Jar (2+ / 0-)
    Recommended by:
    Fogiv, spiffy

    Find out what progress is being made by following my group Progress is the Point

    by IL JimP on Tue Apr 05, 2011 at 06:39:18 PM PDT

  •  JimP - a couple of thoughts (1+ / 0-)
    Recommended by:
    IL JimP

    On what constitutional basis could the federal government pass a law limiting CEO (and I am assuming other executives) pay to 100 times the average worker compensation? Just to use the easiest example if I was a  100% sole owner of a company, and I wanted to pay a CEO 500 times the average worker compensation, what possible right does the government have to tell me I can't? Compensation issues should be decided by owners (and in some cases lenders). There is no legitimate role for government in setting executive compensation. There are two places where there is a legitimate public policy role for government in this area. The first is how much of an executive's pay may be taken as an expense for tax purposes. Currently that number is $1 million per year for base salary, benefits and any guaranteed bonus. The second is the top marginal income tax rate. A higher marginal rate would impact not just corporate executives but also sports stars, entertainers, physicians, lawyers, Wall St traders, and any other highly compensated individual.

    Regarding significantly raising, or eliminating, the cap on Social Security contributions, historically there has been a correlation between the amount you and your employer contribute and the benefit you earn. Are you proposing a higher benefit for people who pay more? If not, I think the fairer choice is to means test the benefit, rather than raising the cap.

    Your proposal to tax any company with more than 50% of its sales in the US on its world-wide income how do you treat taxes paid to other countries on the portion of the profits earned in other tax venues? Plus the $75,000 per employee penalty really does not take into account that any corporation of significance now has customers all over the world and it would create some unusual market responses.  

    "let's talk about that"

    by VClib on Tue Apr 05, 2011 at 07:53:01 PM PDT

    •  I appreciate your response. (0+ / 0-)

      I'm not saying you can't pay your CEO anything you want, I'm saying that you need to have your average worker's pay be in line too.  Constitutionally, I'm not sure but Congress can regulate business and has been given wide latitude by the Supreme Court over the years to do so.

      As to Social Security, there are only really 3 options that I see to make adjustments that don't dismantle Social Security altogether.  They are cut benefits to some or all people; raise the retirement age; or raise the cap.  I would only adjust benefit payments if there was room after adjusting the cap, this is how progressive tax policies always work; I don't see why we should treat Social Security any differently.

      Your last statement makes sense which is what I said in the diary, that's it's not a great idea but I'm not trying to reach every business but some of them can be reached. On the tax part, I guess that would be part of the discussion.  Do we want to deduct those taxes or not?

      Find out what progress is being made by following my group Progress is the Point

      by IL JimP on Wed Apr 06, 2011 at 09:50:15 AM PDT

      [ Parent ]

      •  JimP - Congress can't regulate pay (1+ / 0-)
        Recommended by:
        IL JimP

        If you think about the situation where someone is a sole owner of a company there is no possible way Congress can step in and regulate what that owner could pay his/her executives. It would be such an unconstitutional seizure of property rights. Fortunately there is no support in Congress for anything like compensation caps or fixed ratio limits. The way to deal with exess compensation is higher marginal tax rates.

        "let's talk about that"

        by VClib on Wed Apr 06, 2011 at 11:00:40 AM PDT

        [ Parent ]

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