The Ernie Tax Reform Plan

Hey Everybody, with Rep. Ryan's plan and the President announcing his plan. I thought I would propose my own plan to fiscal sanity.  The Ernie plan couples liberal ideas with conservative ideas and none of these things will pass without the other attached to it, the goodies for both parties are only enforced if the others become law. Again, as fake president I veto any bill that only has one side of the equation.

- Conservative idea - Cut taxes for current tax brackets by 5% with the current top rate for those making over $379,000 at 30%. (Currently at 35%)

- Liberal idea - In order to get those tax cuts for the new American (upper) middle class add 3 more brackets to compensate for the new economic reality of those who have multi-million dollar salaries.

- 40% tax bracket for taxable income over $750,000
- 45% tax bracket for taxable income over $1,500,000
- 48.5% tax bracket for taxable income over $3,000,000

Now remember, a person who makes $3M pays the same amount taxes on their first $16,000 as the person who makes $16,000. So if a person made $3,000,001 a year, under the Ernie plan they would only pay a 48.5% rate on the $1 that they earned above the bracket.

Conservative idea - Strongly cut corporate taxes. I would cut the corporate rate from 35% to 15%.

Liberal idea - close all of the BS corporate loopholes and get rid of any tax subsidies and credits to those firms who are extremely healthy and making massive profits.

Crazy Ernie idea - tie a reduction in corporate taxes to either direct domestic hiring statistics (tailored to company size of course) or the percentage of domestic research & development investment by said corporation. "The more you invest in America, the more America will invest in you." Companies that show strong investment in domestic production and hiring could receive a corporate rate as low as 5%.

Primer for next idea, there are those who only make money off of stocks and bonds and such - these are called capital gains. Capital gains were taxed between 20 and 28% under Bill Clinton, with the Bush tax cuts they are now at 15%. Warren Buffett famously said "I pay less in taxes as a share of my income (15%) than my secretary (mix of 10-30%)."

Crazy Ernie idea - Capital gains tax for those with incomes under $100K will be 0%. After 100K, capital gains tax will be taxed at the person's marginal tax rate. For example, for 2011 Ernie was taxed at 10%, 15%, and 25%, but my marginal rate was something like 17.2% when all was said and done. So if I made more than 100K this year my capital gains tax would be 21.1% (It is currently 15%)

Lemme know what you think!

Full of it....

The Republican Party on spending.  Just watch how congressman Pete Sessions of Texas can't identify one program that he'd cut in order to balance the budget and reduce the national debt.  I mean the answer's pretty clear right?  Just stop funding poor kids' breakfasts and foreign aid and you're half way there! Oh wait, these programs are only like 0.08% of the annual budget, not to mention an even smaller chunk of our long-term deficit.  But hey, it sounds good to "live within our means" doesn't it?

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We all know the big ticket items that need to be reformed / reduced in order to make a significant dent in our long term debt.

Social Security - slow but steady increase in the retirement age as well as getting rid of the salary cap around $125K?
Medicare - means justified benefits and a raise in salary cap
Medicaid - hospital payment reform and increased primary care access for low income communities
Department of Defense - phasing out and canceling outdated weapons systems and ending $3 Trillion wars

Try and reduce the federal debt!

The Committee for a Responsible Federal Budget has an interactive "game" if I dare call it that, which allows you to check boxes next to government policies which will either increase or decrease the Federal Debt.  The goal of the game is to get the U.S. Federal debt to 60% of GDP by 2018.  I slightly failed, after all of my choices I got to 65% of GDP by 2018.  I'll give a VERY brief summary of the choices I made to try and balance our budget.  Click here and try it out!

Liberal things:

Kept Bush tax cuts only for those making less than $250K/200K - Cost - $2,095B
I reduced our troop presence in Iraq and Afghanistan to 60,000 by 2015 - Cost Savings - $350B
I enacted weapon systems cuts and canceled our missile defense program - Cost Savings - $90B
I increased food stamps funding by $140B - Cost - $140B
Enacted Carbon Tax or Cap-and-Trade system - Cost Savings - $330B

Moderate things:

With regard to most other aid for low income familes and foreign aid,
I did not increase or decrease funding for these programs. - No additional cost or savings.

Conservative things:

Lowered the Federal corporate tax rate from 35% to 30% - Cost - $390B
Raised the retirement age to 68 - Cost Savings - $110B
Reduced Social Security benefits over time - Cost Savings - $80B
Adjusted Federal COLA to a more accurate index of inflation - Cost Savings - $100B
Enacted Tort Reform - Cost Savings - $50B

Libertarian things:

Instituted a 5% VAT (includes reductions in other types of income tax) - Cost Savings - $630B