Here’s How to Balance the Budget


Some facts first, before I debunk any notions about balancing the budget with subtle changes to our current system.

 

The Federal budget is around 3.7 trillion dollars for next year, probably more.

There are 134 million people working in the United States that pay all the taxes. Yes, corporations pay taxes, but who pays the corporations? Individuals.

So, to pay for 3.7 trillion in spending, those 134 million people would each have to come up with around $27,600 dollars in taxes. The average job in the United States pays $48,300. Thats a lot of blood from not very many stones.

 

So, now imagine we do have to balance the budget, since someday we will have to do just that.

Firstly, the state budgets are mostly okay, so those won’t have to change much. However, the Feds have to change things up.

$7.7 trillion in wages were earned last year, minus the trillion or so dollars already paid in state income and property taxes. So, with the $6.6 trillion in remaining income, lets do the math.

Assume I did a lot of boring Excel calculations here, involving lots of data mining from IRS websites and census information.

 

So, it turns out that this simple tax scheme balances the budget.

The Balanced Budget Tax Code (no deductions, now!)

All income under $20k is taxed at 35%

all income between $20k and $39k is taxed at 40%

all income between $39k and $62k is taxed at 60%

all income between $62k and $100k is taxed at 70%

all income over 100k is taxed at 90%

Boom, the budget is balanced, and all we had to do was impose mind-numbing tax rates on everyone. Clearly, you can see this is a far cry from the current trench warfare in Congress going on about whether the top rate should be 35 or 39.5 percent. The average tax burden would have to be 57% for EVERYONE to balance the budget.

Some might recommend sticking it to the rich and leaving the poor alone, but that would require 100 percent tax rates on all income over 100k, 90 percent on $62000 and above, and 85 percent tax rates on income over $39k. That’s not going to work either.

Ultimately, we will either have to cut the government we have, or pay for the government we have. Personally, I don’t want to pay those rates for what I’m getting, and I don’t think anyone else does, either.

So, the concept of balancing the budget by fiddling with a few percent here, and closing a loophole there and cutting a little bit of waste isn’t going to cut it. Any kind of discussion that doesn’t involve ruinous increases in taxes, or dramatic, disruptive decreases in spending won’t do the job. Congress painted themselves into a corner, and its time for everyone to admit it.

 

Published in: on December 14, 2012 at 3:54 am  Leave a Comment  

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