How can Democrats win every single election many years to come? Here is how:
A~ Run on the platform to cut or eliminate taxes for the bottom 40% of the Americans. Increase the tax rate by 3.2% to the top 1% earners and 1.2% to the following 19%. This will add about $250 billion a year to the economy and help the economy grow at the same time.
B~ Bring the corporate tax rates even further down to 15% but collect that 15%, simplify and eliminate all other deductions. Eliminate taxes on any corporate money that is brought into the USA. This would bring in about $250 billion in new revenues, contributing to the economy.
(The actual numbers, study, and the opinions are below. Please let me know if you think any number is off and I will explain it further.)
There are two important issues needs to be properly identified by the party and addressed. Once those are addressed, it will become easier to win almost every election at all levels. 1) Change the image on Taxes, 2) don’t take your base for granted, and you will be guaranteed to win. The BASE that the Democrats should have learned by now that when you stray away from your base, you will have greater chance to lose an election. If they learned something from the last election, it should be the one that Trump stuck with his base at any cost and won. Hillary left the base in favor of reaching out to the independents and lost. It was assumed that the base would stick around regardless, but when it did not, the election was lost.
If the Democrats keep the base in mind and adopt a nationwide tax platform that it will not only guaranty winning elections but also will move tons of Republicans to the Democratic side.
One of the first and most important issue to most voters are taxes. Most people have the impression that the Republicans cut their taxes and the Democrats raise it. The “Tax and Spend Image” that has stuck with Democrats has to change. Democratic Party should also let the people know better that they are the fiscally responsible party and when they were in control, the economy grew faster and almost twice as many jobs created. When the word about the elimination of the taxes gets out, the rest of the people will be more receptive to your message of economic accomplishments.
One way to change this image is to eliminate all income taxes for the qualified income groups, the bottom 40%. Democrats need to run on the platform of not only cutting but also eliminating taxes for people earning less than the median income of the state they live in. 40% of the all US Income earners earn far less than the US median household income that stands at $59,039 or $31,128 per capita as of 2016.
But, we have to and let the people understand how eliminating all income taxes to qualified groups can actually help the economy to grow. First, we need to recognize that the only money coming into our domestic markets actually contribute economy to grow. Anyone spending each dollar that they earn is already fully contributing to the economy. Any increased spending will further help the economy to grow by increased demand that will be met with increased manufacturing in terms of supply meeting the demand. Eliminating the taxes to this group allows them to have more disposable income, spend more and plan for future. The money that does not come back into the economy slows the economy down. So, eliminating taxes to the people who do not have a major net worth or savings do not need to be taxed for a better economic growth. Because they already put all of their money back into the economy.
The criteria for who qualifies not pay any income taxes could also be categorized based on the average living income of the state that they live in. When this segment of the demographics don’t pay taxes, they actually contribute to the economy at a much greater level due to, 1) Increased spending, 2) the dollar entering into the economy on the base levels, therefore have a greater circulation and velocity, in return each dollar creating more new dollars/wealth due to its’ circulation life on the market.
Then the question, who will pay for the all the military, medical, social or infrastructure programs? The answer to this question is also easy. Make the dead money come back to the life, or into the markets. The money comes back into the markets by the way of spending, and the newly created wealth comes back to the market in the way of, a) wages and fees, b) via taxes. The income taxes should be based on the incomes or the wealth that is not coming back into the economy. If the new profits or newly created wealth is going to the certain groups, those are the ones should be paying taxes in relation to their income proportional to the country’s spending needs. This will ensure the newly created wealth/dollars coming back to the economy to ensure its growth continuously.
IT IS NOT FAIR! The rich are already carrying a bigger burden of the taxes! It really is not. Anything manufactured, produced, serviced or generated profit will need resources and labor. If a group is taking 99% of the profits or the newly created wealth should also pay the 99% of the country’s financial needs. The 99% of the newly created wealth going to the top 1% means, neither the resources nor the labor is getting a fair share from the process. The 99% of the newly created wealth going to the 1% can only be brought back into the economy by paying more for labor, more for natural resources and via more taxes.
The top 1% already have all the wealth, all of their needs are met, and are getting the 99% of the new wealth means that they cannot spend that newly accumulated wealth. And, the money becomes dead, going into the offshore accounts to further avoid taxes. (Link to the study: http://eml.berkeley.edu/~saez/saez-UStopincomes-2013.pdf) Top one (or 20%) percent already have more than they can spend. The excess money or the newly created wealth only comes back into the economy by the way of higher wages or taxes for securing the country’s budget needs.
Based on FED’s reports, we had 1.4 trillion dollars that are in domestic circulation as of June 1st of 2016, churning the whole US economy for 320 million people. On the other hand, forget the top 1%, according to 2015 Bloomberg article, 8 out of 304 multinational largest US corporations holding 2.1 trillion dollars in offshore accounts not to pay any taxes. If we were to include all of those 304 US Companies’ overseas holdings, those numbers would be staggering. Digest those numbers for a second! Almost 50% more cash has been held outside of the US economy than what is circulating in US economy! By 8 companies! http://www.bloomberg.com/news/articles/2015-03-04/u-s-companies-are-stashing-2-1-trillion-overseas-to-avoid-taxes
A chart of annual currency in circulation. Money in circulation has grown from about 170 billion dollars in 1984 to about 1.5 trillion dollars in 2016.
We also hear quite a bit about the US having the highest corporate taxes. Now, that is cut down to 21% but that is still not the whole picture.
Below are my own study and charts for corporation incomes and taxes paid. The information was obtained from Federal Reserve Bank of St. Louis website with links below.
Corporate Profits After Tax (without IVA and CCAdj)
1626.9 Billions of $ (2016-04-01)
https://search.stlouisfed.org/search?&client=Research-new&proxystylesheet=Research&site=Research&output=xml_no_dtd&num=30&getfields=*&q=corporate%20profits
Here is the chart for the taxes paid by the corporations;
Federal income and excess profits taxes, IRS: Taxes paid by domestic corporations to foreign governments on income earned abroad
34.2 Bil. of $ (2013-01-01)
https://search.stlouisfed.org/search?&client=Research-new&proxystylesheet=Research&site=Research&output=xml_no_dtd&num=30&getfields=*&q=corporation%20taxes%20paid
Well, when you look at the amount of the corporation earnings, it is showing over 1.6 trillion in total profits that is after taxes. AND, when you look at the amount of taxes paid, it is a little over 34 Billion Dollars. When you compare the taxes to the profits, you can realize that the actual corporate tax rate of 39.1 % was a joke when the total amount of taxes collected just add up to a bit more than 2% in the year 2010.
If Democrats would like to win elections, winning will come easier on running with the platform of eliminating all income taxes for qualified income groups to grow the economy. This would guaranty election success for many years to come. Also, bringing corporate taxes down to even 15% but collecting 15% will also bring additional $250 billion dollars, helping the economy. And, eliminating or cutting the taxes would also change the stigma of “Tax and Spend Democrats” that is attached to the Democrats.
Elimination of taxes from bottom 40%, about 42 million taxpayers would not have to file for income tax returns. This would also take out about $125 billion out of $1.5 trillion income taxes collected. This roughly represents about 8% of all income taxes collected and can easily be offset just by an increase of the taxes on the top 20% of the earners by 2% (or 3.2% to top 1% and 1.2% to remaining 19% top earners). In return, 42 million tax filers will no longer have to worry about filing taxes until they move into higher income earner groups. And, the Democrats will not only cut taxes but eliminate them 42 million taxpayers.
There can still be many social and economic issues added to the Democratic platform, but these two items added to the platform would ensure winning elections many years to come. Also, the Democrats should never take its base for granted and lose the base in favor of reaching the other side.
Here are some actual numbers to show that this is a reasonable idea and should be taken seriously by the Democrats. Only if they want to make habit of winning elections.
Average Household Income, Transfers, and Taxes, by Before-Tax Income Group, 2013
Lowest 20% 2nd 20% 3rd20% 4th 20% Top 20%
Market Income 15,800 31,300 53,000 88,700 253,000 Government Transfers 9,600 16,200 16,700 15,000 12,000 Before-Tax Income 25,400 47,400 69,700 103,700 26 5,000
Federal Taxes 800 4,000 8,900 17,600 69,700
After-Tax Income 24,500 43,400 60,800 86,100 195,300
(Data by Congressional Budget Office - https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51361-householdincomefedtaxes.pdf)
The total taxes that the bottom 40% of the earners each pays, adds up to $4,800. A 2% increase of income taxes to the top 20% earners will relief 40 % of tax filers (about 42 million taxpayers) to be set free, not to pay any taxes or file returns at all. (Or, the tax increase could be changed to 3.2% to the top 1% earners and 1.2% increase to the following 19%). However, what the top 20% will have in tax increases will be more than offset off by 1.5 to 3% annual income increase to the top 20% earners on the average.
The same CBO study finds, “After-Tax Income. From 1979 to 2013, average after-tax income grew at significantly different rates for households at different points on the income scale. For households in the top 1 percent of the income distribution, inflation adjusted after-tax income grew at an average rate of about 3 percent per year, making that income 192 percent higher in 2013 than it was in 1979 for those households. In contrast, households in the bottom quintile experienced an average growth of about 1 percent per year in their inflation-adjusted after-tax income over the same period, making that income 46 percent higher in 2013 than it was in 1979, CBO estimates.” So, a 2% tax increase to the top 20 % income earners will be much less than the income increase that they will get each year. Also, a growing economy will help top 20% earners to earn even more. Even with the increased tax, the income increase will still be higher in percentages and dollar amounts to the top 20% in comparison to the bottom 40% of the people who did not pay any income taxes.
The important part to remember is that this small adjustment will add to the economy by $250 billion ($125 billion the taxpayers saved + another $125 billion the dead money to replace the tax revenues lost from the bottom 40%’s taxes). That additional purchasing power coming into the economy will add up to 1% additional GDP growth. The increased economic activity and the GDP growth will make up much more than the extra taxes that the top 20% would be paying. Since they are already receiving a larger share of the newly created wealth, the top 20% will make up with more income than what they will be contributing to the economy. Even if the bottom 40% didn’t pay any taxes will instead contribute to the economy with their spending.