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sdholloway56
Senior Advisor

MFP FOR ALL

1. Every American adult receives an annual payment of $10K, children $5K, to parents. Costs around $3T (we're already blowing through that much just to try to save the old economy).

2. The payments are taxable, including FICA. Wealthy people would pay most of it back, the very poor very little.

3. Basic tax exemptions and exclusions continue at the same level. Then you raise each tax bracket by 20%. Plus raise the FICA cap by $15K to offset. That gains you around $2T in additional revenue. On average it would be approximately after tax income neutral to around $80K for an individual, $140K for a couple, more if they have dependents.

4. Capital gains taxed at the normal rate minus inflation indexing. The same for any untaxed capital gains in estates over $2M- otherwise abolish the Estate Tax. Brings in $500B/yr.

4. Keep income limits on existing programs such as SNAP, EITC, HUD. Saves you around $200B.

5. Small potatoes but end all farm and crop insurance subsidies- an example of smaller programs where saving can be gotten. Actually all in all a huge deal for Rural America since incomes are lower than average. And even the "average" farm payment recipient comes out ahead.

6. Those spoiled professional athletes, entertainers and The Hollywood Elite will have to put their money where their mouths are.

Comes out about a wash. Might be even better since a demand side boom is likely to produce a lot more revenue than the supply side fizzles have.

Of course the neutrality is before assuming the $1T structural deficit recently built in.

 

19 Replies
gurly3801539
Advisor

Re: MFP FOR ALL

Comes out about a wash. Might be even better since a demand side boom is likely to produce a lot more revenue than the supply side fizzles have.

     If by might be even better you mean better that supply side, I'll give you that might be. Comes out about a wash I'm pretty doubtful about.  Government money comes from taxes so any money they give that isn't taxed at 100% or more is a steep up hill battle to get back, especially when you expect the lower incomes to keep most of it. The lower incomes out number the high by too many and even the high get to keep some by your plan. I am not against helping people with lower incomes that need help(not for me to be the judge of who needs). Keep in mind though the tax burden will fall on the middle to high incomes, not the super rich.

     I hope no one takes this personal, but for example you have mentioned a move in the market that you missed 100,000 dollars but oh well. Jenn talks of having all the money she will need for retirement and I don't doubt either one of you. But keep in mind that is the class of rich that politicians will tax. Since the days of paying off the WWII debt modern politicians ( both Ds and Rs) will protect the super rich because that is where the donations come from to finance their Parties. (Literally.)

     

bruce MN
Advisor

Re: MFP FOR ALL

Or..... some variation thereof. 

With  no serious response to financialized feudalism it all comes apart at the seams. Hayek was sorta right. Marx sorta as well. Trotsky more so but then the SHTF.  

In the end got Ayn Rand, Milton Freidman and the DLC.  And somehow, yet,  the most affected somehow remain captured. 

sdholloway56
Senior Advisor

Re: MFP FOR ALL

If you assume that current total taxable personal income is around $17.5T and this would take it up to about 20, you could probably lay off the middle tax brackets a little, pushing the neutral income breakeven a fair bit higher, maybe $150/250K.

Which would man nearly 90% would benefit although a fair number will oppose people who don't deserve it getting anything.

rsbs
Veteran Advisor

Re: MFP FOR ALL

nutz, please forgive me, but I am a doubting thomas when it comes to you paying much in federal income taxes right now without any changes.

I suppose you do need a replacement for the CSP money, though.

sdholloway56
Senior Advisor

Re: MFP FOR ALL

And it just keeps getting better. You could probably save $200B/yr on Medicaid (savings for states too) and $300B on ACA subsidies.

This is just an example but in it, poor people would benefit some, net,  but would also give up a lot of existing programs. They would be able to attain some economic stability with low wage work.

The big winners- and it is a big group- would be working class/lower middle class. Including the "average" small business owner. 

sdholloway56
Senior Advisor

Re: MFP FOR ALL

Would also reduce, probably not eliminate, the need for countercyclical programs in downturns. Personal income would remain more stable and a fiscal push would be built in as revenues fell.

sdholloway56
Senior Advisor

Re: MFP FOR ALL

Would also tend to reduce the overall labor pool which should produce upward pressure on wages.

Two low incomes in a family with children is a trap- one would be incentivized to provide child care, which isn;t a bad thing. People approaching retirement would be more likely to leave the workforce.

Canuck_2
Senior Contributor

Re: MFP FOR ALL

What savings might come from policing if people had a little income instead of having to find/take stuff to survive ? and welfare programs would need less funding too.

sdholloway56
Senior Advisor

Re: MFP FOR ALL

Even though all the regulars here know everything there is to know about Those People living in low income black urban neighborhoods, I won't go there.

But in my personal knowledge of white rural poverty I believe that the majority would improve their lives some.