Okay so it's 2:00am as I'm writing this and for some reason I can't sleep, but as I was laying in bed an idea hit me so bear with me as I'm going to try an articulate this idea and put it in writing before I fall asleep and forget it. It's going to sound a little crazy but I think it's just crazy enough to work and will solve or at least improve our current economic outlook, and it will garner bipartisan support even from those who have pledged to never raise taxes.
Allow me to preface my idea with a little background information. We never paid for the Bush tax cuts, for some reason we decided to lower everyone's taxes and not actually pay for them and never thought to roll them back even though we were involved in two wars. As far as I'm aware we've never lowered taxes during war in our nation's history, nor waged a war without paying for it. It was fiscally irresponsible for us to have lowered taxes when we did and nobody who voted for them can claim to be a "fiscal conservative." We've chosen to extend these tax cuts and still not provide a way to pay for them. Obviously we can't just roll back the tax cuts on everybody, rolling back cuts on the middle-class or "spending-class" would be disastrous and shrink our already slow-growing economy and increase unemployment. The only segment of our population that is doing well at this point are our wealthiest Americans and they are statistically doing better than before the recession, they are currently not sacrificing in this economy as the other 99% of us are and as we are being asked to further sacrifice through spending cuts. Nor have we been asked to sacrifice as a citizenry during these wars as we have in wars past. I cannot imagine what those who lived through WWII endured when everything was being rationed, how disappointed they must be in us today. Only 1% of our citizens are actually enlisted in military service, an all-volunteer force we can certainly be proud of. But what did the other 99% of the population contribute to the war effort? Obviously parents, spouses, and others sacrificed hours of worry as loved ones served overseas and many families paid the ultimate sacrifice when their heroes made the return trip in flag-draped caskets. But what was asked of us as a nation really? We got tax cuts and didn't have to ration a single thing.
It's now time for our nation to ask those who are doing well to sacrifice for the betterment of their country and their fellow Americans, and it's time for them to answer that call and that brings me to my plan.
The Policy Proposal
My proposal is to raise the tax rate on individuals making $1 million per year in income by 2% for a period of 10 years. The additional revenue generated from this tax increase must be used directly for investments that will lead to job creation and economic growth.
My intention is not to demonize millionaires or billionaires, there is certainly nothing wrong with making $1 million a year or more and the tax increase is not a form of "punishment." But our economy is in need of a boost, economists of all political stripes agree that we need to increase revenues even former Reagan and Bush advisers and as I mentioned earlier the wealthiest of Americans are the only group that can absorb a tax increase at the moment. I don't think of this as a punishment for being rich but as a request for them to serve their country in a time of need. For some this may be the first time they have been asked to serve and others may have already served on the battlefield or at home, but if our men and women in uniform can deploy 6 or 8 times to a war zone some of those who have served before can serve again for us financially.
The current top tax rate is 35%, let's say for argument's sake that somebody making $1 million dollars actually pays the full rate (nobody pays a the full tax rate and any income level) that leaves them with $650,000. Divide that over 12 months and that's a monthly after-tax income of $54,167. Someone at this income level is probably not living paycheck to paycheck and could easily absorb an additional 2% in taxes, under the temporary 10 year increase I'm proposing that changes our figures to $630,000 annually at $52,500 per month.
Now let's use some real numbers because as I stated before nobody pays the full tax rate. According to Tax.com in 2007 the average effective tax rate for somebody making $1 million was 22.1% (and that figure has been trending down over time). If we raise their tax rate from 35% to 37% as I propose they'll probably only have an effective tax increase of less than 1%, but for easy math let's say they get an effective increase of 1%. In more realistic numbers they will take home $769,000 annually which is $64,083 per month. One would think that this wouldn't be much of a burden.
Winning Bipartisan Support
Now you may be saying to yourself, "Chris you're delusional you'll never get the GOP to go for a tax increase." If you watched the GOP presidential debate Thursday night you'd be right in thinking that, even with a deal of 10:1 spending cuts to revenue increases none of the candidates would sign that deal. As we saw in the debt ceiling debate tax increases, or even eliminating some egregious tax loopholes, was a non-starter for conservatives. But I'm putting my faith into those whose taxes will be increased.
The next part of my plan is to start a petition that will be signed by millionaires and billionaires urging congress to pass a 2% tax increase on them in which the new revenues will be invested in jobs and economic growth. I don't feel that this will be a tough sell on those who will have their taxes increased, many prominent millionaires and billionaires have asked to have their taxes increased and have stated that they didn't ask for the Bush tax cuts in the first place. There's even a group called "Patriotic Millionaires for Fiscal Responsibility" who had petitioned the President in 2010 to allow the Bush tax cuts to expire for households making over $250,000 annually. But we don't need to convince President Obama, he's already on board with raising revenue, we have to target our petition at Congress.
Once we have gathered a few million signatures from our millionaires and billionaires we can send them to the desk of any member of Congress who has vowed to not raise taxes along with a copy of the proposed legislation. Once they know that those who the tax increase is aimed at see it as their patriotic duty to have their taxes temporarily raised and add in that any spending stemming from these tax revenues won't be "increased spending" as these revenues didn't previously exist I think they will have no argument against passing this temporary tax increase.
The First Step
So there's the plan, I think this is something that reasonable people can agree on moving forward with and voting for. Now is the time to take action, I will spend the next few weeks petitioning the White House and members of Congress to bring this proposal forward and start crunching the numbers. I will explore the process of getting a petition started and send it to every activist group and news outlet in every corner of the country and hope it catches on like wildfire. I don't know how something becomes "viral" but everyone whose ever had anything go viral says they never expected it to, I hope this is something we can get done so we can begin to tackle our unemployment crisis and get Americans who are struggling back on their feet again.
It's now 3:00am, I think I caught all my typos but if not it's early so give me a beak! That's my excuse anyway.
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