Want to balance the budget?

Floyd Dominick /

Published Nov 6, 2012 at 04:00AM / Updated Nov 19, 2013 at 12:31AM

Balancing the budget is simple — stop ALL subsidies. Subsidies are constitutionally justified as “for the general welfare.” Saddling the unborn with this debt is for the general welfare? The foreseeable financial crisis is good for the general welfare? When the interest rates rise to the Jimmy Carter level, it will take all current taxes to just pay the interest — nothing left for anything else.

The most important thing for most politicians is re-election. They buy votes and contributions with these subsidies. The large contributor makes a good bet, investing thousands to get millions.

In recent years, we the people have pressured the politicians to reduce earmarks 90 percent. However, earmarks are usually one-time expenses; much larger expenses are in the continuing programs.

Congress finally did one of the few things it does well — nothing. It let the 30-plus-year subsidy for ethanol expire. Now it should repeal its mandate to put food in our gas tanks. Ethanol has increasingly been recognized as bad for nearly everything, including the environment. Farm subsidies have become an entrenched slush fund to buy votes and contributions. All agribusiness subsides should be phased out over the next two years.

Another slush fund is the federal gas tax. It was instituted to build the interstate highway system, and was to expire three years after completion, 20 years ago. The main argument against expiration was that the disparate state legislative schedules could not adjust their taxes for maintenance of the system. The solution is that all federal fuel taxes should be returned to the states from which they are collected for three years and then cease. It is estimated that removing the top layer of bureaucracy would double the effectiveness of the money and cut implementation time in half.

Recently Ronald Reagan and Tip O’Neill were lauded for their cooperation on tax simplification. Reagan is quoted as saying that the key was to be satisfied with 80 percent of what he wanted. It’s time for the last 20 percent. All politicians are calling for “tax simplification” of the mess they created. We the people should demand that it be simplified to the extent it is no longer subject to their continual manipulation for political benefit.

Income tax should be used solely for the operation of the government and paying down the debt, with no subsides for any group. ALL income should be taxed the SAME, only ONCE. Stock options and insurance subsidies should be considered income. Corporate dividends should be taxed only at the individual level, and there should be no death tax. There should be one standard deduction at two to three times the poverty level. Mortgage interest deductions for second homes should cease now. Primary home interest and charitable deductions should be phased out over five years. The only itemized deduction should be for catastrophic medical or other legitimate loss at a high threshold.

Business income tax should be as similar to personal tax as practical — it is a continuum from the self-employed up to public corporations. It should be based on yearly income minus expenses, with as few accounting gimmicks as possible.

I favor a 15 percent base tax rate for everyone with a progressive higher rate to a maximum of 30 percent until the debt is retired. Congress should be permitted (by us) to only two tasks: set next year’s tax rates by September 30 and complete tax simplification. This largest slush fund accounts for most of the deficit.

History shows that socialist governments fail in decades after they run out of other people’s money. Democratic governments fail in a few centuries when the people learn they can vote themselves free money. We have been the former for seven decades and the latter for two centuries. We are near a tipping point now with half the people paying taxes and half receiving government checks. There is little time left to change the government’s ways.