Chapter 11: Federal Debt Capital and Interest Rate Flat Tax Sub Rates

Right now there is no plan to pay down the Federal Debt.  To the Author this is a scary comment.  The growing debt creates an economic bubble like every other economic bubble that has eventually burst.  Many economists, particularly so-called Keynesian Economists, argue that there “is no need for alarm.”  However if one thinks back before the recent “housing bubble crisis” or the “dot com bubble” or the “bubble of 1987” the economists at each time argued pre-bubble burst that there “is no need for alarm.”  Common Sense tells the author that these economists were wrong in the past and they are wrong now.

Regardless, the sub rate to pay down the Federal Debt (D%) is TBD.  This is one of the beauties of this economic Flat Tax.  All Citizens can clearly see the Federal Debt impact.

The Interest paid on US debt in 2013 is $246 Billion.  This works out to a rate 2.73%.  The new aggregate rate is 18.43% + 2.73% = 21.16%.

Chapter 12: Monthly Stipend to Citizens - Sub Rate S%

There are upwards of 350 million citizens in the USA.  There are too many people for all of us to live like Jeremiah Johnson.  We cannot all be “mountain people.”

It is also impossible for a government bureaucracy to efficiently track a “needs based” system for all citizens.  A “needs based” system is not only ripe for fraud but it sets up a government controlled game of pitting citizen versus citizen.  Ask yourself this question: What is it that really matters: who owns what…or…is what is relevant that individual people can exist in the modern world with the 3 basic needs met while retaining the ability to pursue “life, liberty and the pursuit of happiness”?

Assume a tax sub rate that is equally divided to each citizen in the database on a monthly basis.  No one cares how you choose to spend it; the choice is up to the citizen.  Every citizen just gets a monthly stipend.  This addresses the issue of the “People need money to live.” 

For example: 1 Trillion sent to 300,000,000 people = $3,333.33 annually or $278\month.  That is $65\week to live off of if no other income.  That doesn’t seem like a lot but if housing and medical are taken care of then how much more do people need to live?  If any one individual wants more each individual must find a way to earn more.

The idea of government support is not “wealth or income equalization.”  The idea of government support is to insure that the basic needs of 100% of individuals are met AND that Citizens are TREATED EQUALLY. 

This also eliminates many government programs.  For example Unemployment Insurance goes away: there is no need.  All the arguing about the extension of unemployment benefits disappears.  Every citizen gets a monthly amount to assist in living; it is the right of the citizen.  With Congress pre-budgeted and many of the programs that Congress currently argues about fundamentally altered suddenly Congress has a lot more free time!

“Too Big to Fail” also goes away.  There is no need for actions that should be properly labeled as “trickle down socialism.”  “Too Big to Fail” is a socialist economic concept that the socialist impact of propping up corrupt, failed corporations is better than letting the corporation die and be replaced with new blood.  The over-riding premise of “Too Big to Fail” is that everyone is better off by having all of society pay to prop up a few.  However, if everyone has some money coming in and some people lose out then…”so what?”  Who cares if there are less jobs?  The Citizenry is taken care of for basic needs so the losers need to move on without government programs.

This also means that the huge government mechanism of employment processing and chasing “needs based systems” vanishes.  Government, as a whole is less costly while achieving 100% coverage of the population.

Something we all need to realize is that…with technological improvements…there will always be less jobs for an increasing population size.  This is the concept of “Utopia.”  People don’t need to plow fields or work in factories to peacefully coexist.  “Utopia” is when people can coexist without everyone having a “direct job.”  We all need to do something with our time and some need to earn more in a capitalistic sense but for the billions of people on earth a simpler, more refined system that meets their basic needs in life is in place.

Some will argue that wealthy people have no need to get the same amount as a poor person but the issue is not a matter of “wealth equalization” but a matter of “needs being provided for.”  This ties back to eliminating the need for government bailouts of industries or individuals for bad investments.  The asset base of the citizen may change but this is irrelevant. 

Some will argue that the Megalopolis residents require a greater monthly stipend due to the economics of higher cost living in a Megalopolis.  This is a false argument.  The Megalopolis can institute a similar tax sub rate to redistribute within the Megalopolis.  There is higher income within the Megalopolis and the higher income within the Megalopolis can make up the difference with the Megalopolis income.

So…for example…if the Northeast corridor wants to define itself by State Boundaries or by community boundaries for the supplemental sub rate…that is a State and Local issue…not a Federal issue.  The definition is taken out of DC...or… any other governing Capital City.  The concept extends beyond just the USA.

Using Common Sense the Megalopolis in question should be already predefined.  If a specific Megalopolis can state that the economic cost of living in a specific area is higher than in surrounding areas then this logically means that the Megalopolis boundaries are already known.  The Megalopolis can then pay for the increase via a local Monthly Stipend because all citizens within the Megalopolis are known to be making that much more money.

Now…what happens?  Everybody gets a little to start and the money goes to every Citizen who can once a year certify existence in the Citizen database.  Parents can either spend their children’s monthly stipend on goods for the child or they can save it for the child for later to pay for things like an education; it is the family choice.  For example, if a family is able to save the child’s annual $3,300 until the age of 18 then there is $60,000 saved for the child to use at the age of 18.  This is plus any interest earned and excludes any increases in the annual stipend.

Or…for criminal recidivism being high…if a criminal has bankrolled a couple years of cash while in prison and has a monthly income coming in…then why does one continue in criminal behavior?  If one gets out and continues to commit robberies then one simply desires more than one is worth and is engaging in behavior that makes it easier to throw the book at someone.

Of course, from an abortion argument, the argument now changes.  The child is born and is a citizen and one can afford the child.  Whether legal or illegal abortions will still occur; it is human nature.  Eliminating the reasons for abortions…and the primary reason is money…eliminates the need for abortions.

As a whole…over time…society becomes less stressed out.  Who cares what the monthly jobs report is because there is 100% certainty that everyone has some money to live.  Who cares what the stock market does from day to day?  Who cares if someone wants to just live a life that doesn’t match the life of someone else?  If one wants to have more out of life then one can earn it otherwise the basic needs of a person’s existence are known to be taken care of.  If someone is out panhandling or seeking more donations they can turn to private charity for assistance.

So…annual “wealth redistribution” is a “sub-rate” collected and redistributed.  It starts out as an economic unknown that rapidly transitions to an economic known.  For the purposes of this example the $1 Trillion value is used.  Sub rate S% is 11.11%.  This brings the aggregate Flat tax Rate to 32.27%

Chapter 13: Shelter Stipend - Sub Rate L%

With respect to housing: the “liberal argument” is that all citizens need a decent shelter.  OK, create “paid for Government housing zones” where anyone can go live and have an address.  The utilities and the maintenance are paid for out of tax dollars so that there is not an exchange with the Citizen or a series of subgroups (like Section 8) getting propped up in a phony shell game.

It doesn’t matter what income level the citizen has or what their asset base is.  If the citizen chooses to live in the “paid for” zone then that is the right of the citizen.  One gets an address and a basic residence that is consistent among the residents of the “free zone.”  If one wants out then one can try and earn their way out or perhaps pool monthly resources with others to rent or buy something better.

Some will argue that this groups the “have nots” in one spot and that this is “bad” or “stigmatizing.”  That is a fallacy.  “Have-nots” are already grouped together in society anyway.  Plus, if a Not-For-Profit system wants to target a class of citizenry for additional aid programs then the “free zone” is a great place to start.

Again, if people don’t have to worry about monthly stipend coming in then the need for crime in the “free zone” is minimized.  One is receiving money to buy food and one has a place to live: why are you stealing?

Also, how often is the story of the battered\child\spouse heard and that the person has “no place to go.”  Everyone has a place to go! 

Did a citizen lose a house to bankruptcy?  Too bad; you have a monthly stipend coming in and you can move to the “free zone.”  This means that there is no need for Fannie and Freddie propping up a housing industry.

Again, there is a federal rate applied to pay for the “free zone” that can be supplemented by a Megalopolis rate.  So, a basic Federal Standard of what living spaces designed will be (and certainly architectural models already exist for different family sizes) is defined with the basic utilities to be provided.  The concept is to provide the basics; if a Citizen wants more then can find a way to earn a better life or else just be happy where they live for free.

The issue is not…in Year 1 of any year…that all potential people are moved into a free zone.  The issue is building a cost efficient and transparent system that treats all citizens equally.  So, the issue for an annual Flat Tax Sub Rate is How much in terms of the % of PTD are dedicated to construction and also monthly maintenance?  Obviously the rate will change over time as experience is gained and the population of homeless decreases as the homeless move into the Government Zone.  The issue is a logical, methodical solution that provides 100% Quality Control.

The 2013 budget for Housing and Urban Development (HUD) is $46.3 Billion.  Obviously money is required for construction and utilities and monthly utilities and maintenance charges for the zone.  For the sake of argument a value of $500 billion is used.  This works out to Sub Rate L of 5.55%.  The new Aggregate Flat tax rate is 37.82%

Chapter 14: Health Care Stipend - Sub Rate H%

The third “liberal argument” is that all Citizens have the right to “health care.”  But…what have the Liberals done?  They have a built a system of mandated “health insurance.”  The problem is that “health insurance” is not “health care.”

Another problem is that the system structured is a stigmatizing system of dividing citizens.  Citizens are stigmatized as “cigarette smokers” or “obese” or “genetically predisposed” or etc.  But…why should a system of “health care” actually care?  If the issue is that the Citizen has a right to “health care” then all the stigmatizing factors should be irrelevant to the providing of “health care.”  An individual is supposed to have the freedom to choose to live the life they want to live no matter how self destructive that life is….or is perceived by others to be self destructive.

The simplest way to provide health care is to just pay for the services by the state.  There is no need for insurance or insurance policies or all the various complex rebillings and codings that exist that make the medical insurance a byzantine system.  If a citizen needs a medical procedure then the procedure is paid for by the State.

There is also no need to convert the whole medical system in existence immediately.  The system can be built slowly over time to control costs and to avoid the mistakes that the mass conversion of ObamaCare has created.

Start with dental.  It appears that the medical community is in agreement that many health care issues that many Citizens experience start with poor dental health. 

Define what a citizen annually has the “right to” in conjunction with how “additional services” are defined and just have the government pay for this out of the medical sub rate.  Sure, there will be a spike in dental costs initially but 5 years down the road the system reaches more stasis where the annual cost has stabilized and more procedures such as cancer treatment or etc. are built in using the dental system model.

So, for example, in the Citizen profile one is allowed an annual teeth cleaning.  Cavities and root canals are paid for.  Definitions of more extreme services need defining.  The Crystal Meth user who destroyed their mouth is due…as per the right of the system…to have “health care”…but certainly not entitled to “diamond studded denture fixtures.”

With respect to governmental and corporate budgeting the world becomes a simpler place.  Existing plans are grandfathered out and a system of “health care” is implemented over time.  The sub rate will vary over time but this means that a balancing factor is required to be reviewed annually.

The 2013 Health and Human Services Budget shows a budget value of $940 Billion.  In theory nothing is really changing.  Health care is being provided and evolving to a newer, simpler system.  Costs should not increase.  $940B\$9T is a Flat tax Sub Rate H budget value of 10.44%

Chapter 15: Total Flat Tax Rate

This brings the aggregate total to 48.26% for the Flat Tax Rate.  Remember, this does not include ANY paying down the US debt but this is constructed to keep the US Debt from increasing.  Of course, if the total PTD is greater than $9 Billion the total tax rate would also be smaller.

The other thing to remember is this: The Problem is not the formulation presented here.  The problem is the excess government spending without getting a decent return on the dollar coupled with the staggering debt that has already been incurred by the Republican and Democrat “Bi-archy” that has been in existence in the United Stated. 

To quote the phrase well worn: Don’t shoot the messenger!

Flat Tax Rate% = (S% ) + (SS% ) + (H% ) + (L% ) + (D%) + (I% ) + (M% ) + (E% ) + (VA% ) + (ST% ) + (DHS% ) + (EY% ) + (J% ) + (A% ) + (N% ) + (NIP% ) + (T% ) + (TRE% ) + (INTER% ) + (LBR% ) + (CE% ) + (ACE% )+ (EPA% )+ (NSF% )+ (SB% )+ (CNS% ) + (IS% )

Flat Tax Rate% = (11.11% ) + (0% ) + (10.44% ) + (5.55% )  + (TBD) + (2.73% ) + (7.3% ) + (.80% ) + (1.55% ) + (0.66% ) + (0.62% ) + (0.62% ) + (0.41% ) + (1.71% ) + (.2% ) + (.58% ) + (1.08% ) + (1.22% ) + (0.15% ) + (1.13% ) + (0.10% ) + (0.09% )+ (0.10% )+ (0.09% )+ (.01% )+ (.01% ) + (TBD% ) =

48.26%

Chapter 16: Inherent Implications of the Flat Tax Proposal

A 48.26% Tax rate seems like a lot.  The author thinks that this is a fair statement.  However, the tax rate would probably not be that high in actuality and there are also other mitigating factors to consider.

1)      18.43% of the total rate assumes that all Government Departments are funded at their current level.  Yet these departments would have future pension expense minimized and eliminated over time.  Also, the expense of health benefits is moved out of the departments as more and more medical services are moved out of the departments and into the medical coverage.  Not only is the expense of coverage gone the expense of staffing to track these specific issues is gone.

2)      There is…over time…more corporate income available.  Why?  Large swaths of both accounting and human resource activity are eliminated as a simpler system is in place.  As more and more medical services are worked into the public medical cost the Human Resource and accounting departments have less work to do thereby both eliminating jobs while making existing staff more productive in other areas.

3)      Corporations and humans have more Profit.  Payroll taxes disappear as programs are grandfathered out of existence.  If an employee does not have to pay FICA and FUTA expenses and the corporation does not have to pay matching taxes then everyone who works has that much more income coming in.  So the PTD actually is higher causing the Flat Tax % can be lower to achieve the same end goal.

4)      Over time there is more profit in this scenario because the user fees such as gasoline taxes are eliminated.  Consumer energy costs go down making the citizens more profitable.

5)      In theory government should become simpler and more cost effective thereby reducing the overall cost of government.  For example, the activity of government regarding propping up the housing industry collapses and goes away.  The expense of these activities goes away.  In fact, the majority of government programs that overlap should go away because there is simply no need for the programs.

6)      The influence of lobbyists and Wall Street on Federal Government activity should be lessened.  The pre-budgeting of the Government and the need to balance the budget means that there is less ability to influence Congress to spend more money.  The only way to spend more money is to get the public to agree to a larger tax rate.

7)      Political “horse trading” dies.  The ability to “buy votes” with Pell Grants for ACA votes or to have a “Louisiana purchase” or “Nebraska kickback” is gone because the government is pre-budgeted.

8)      If one looks at how politicians in Washington DC spend their time and what they are arguing about one will rapidly see that much of what they argue about is gone.  The arguments about “feeding the hungry” or “feeding needy school children” are gone.  The arguments about how much to spend on what departments is gone as the Federal Government is pre-budgeted and provides 100% coverage to Citizens.

9)      In theory government departments should become more cost efficient because the goal of a department head changes from one of “I must spend all of my budget so that I get that much budget plus more the next year” now changes to “This department needs to build a bank of cash for future years to pay for capital projects or for that time of emergency.”  If a Department runs out of capital 2 months before the fiscal year ends well then that means someone should be fired because there is no more funding for that department until the next fiscal year.

10)   The inevitable delay in medical services paid for by the government will occur.  There is nothing that precludes wealthier individuals for paying for medical services to receive faster or perceived better care.  There can still be a capitalistic mix with the socialist mix.

11)   The angst over homosexual marriage will either vanish completely or be greatly minimized.  Why?  Most of the angst is actually about qualifying for tax breaks and health insurance coverage.  Since there is no difference in taxation between married and unmarried couples and since medical procedures are covered more and more by the Government System then there is no angst about homosexual marriage because the reasons for the angst are gone.

Basically, though, under the System Design that has been described there should be a general lessening of stress and potentially better health on the part of the Citizenry as time marches forward and the System Design matures.  Why?  Because no matter what every citizen has capital to exist every month and a place to live and medical conditions get the health care required.  Citizens may become stressed because they want a better life and they want the “good things in life” that capital buys but that is all internal stress that favors a Capitalistic spirit.  This is a different stress than wondering if one has money for food and shelter and whether the government provided benefits will either run out or be cancelled or significantly altered by the next political regime to come into power.

With a reduction in the basic needs stress and knowing that the Citizen has the very basic need seen to the Citizen can start to learn to plan their life from an earlier age.  If people receive a deposit of cash every 30 days and they spend it all on drugs right away the rest of the populace is not going to have much sympathy because a person engaged in foolish, wasteful behavior.  Personal responsibility is now a societal construct and part of personal responsibility is taking care of one’s own health.  Certainly there will be those who engage in unhealthy or risky behavior because basic statistics tells us that out of a population size over a small amount a natural bell curve exists and the extremes will exist at both ends.  The center of reasonable behavior patterns towards health should occur over time.

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This concludes the Author's Den posting....Sorry about the formatting issues...not sure why the "copy and paste" did that.