First, freeze all spending this year. It’s nice to announce that you want to freeze spending starting next year on a small fraction of programs but not until you jack up the spending this year first. Freeze spending immediately and show that you are serious about cutting the deficit. All programs across the board. Allow for emergency spending bills that are only for the wars but don’t allow anything else to ride on those emergency spending bills. If a program is important enough to increase, it must be by decreasing or eliminating other programs. If Congress had to pick and choose what programs get what money, you’d see the most important ones stay and the unimportant ones go away. This freeze would stay in place until the deficit is gone and the national debt as well.

Second, cut all pork. No pork, nowhere. If it’s a continuation of an old pork project, cut the project. This sends the message that we’re in a new era of federal fiscal responsibility. It may mean that if Florida wants a high-speed train, they’ll just have to pay for it themselves, but then again, why am I paying for their train anyway?

Third, and this is the first key, promise and then follow through by vetoing any budget that doesn’t fulfill this. Of course, Obama is that superstar of the democratic party and they hold super majority in both houses of Congress. This really shouldn’t be necessary, right?

Fourth, it’s time for a new tax system. Repeal all tax laws and replace it with a simple and progressive national sales tax. Set the tax at 22% with a rebate for the tax on the first $20,000 for each American family. This is what makes it progressive. This would be revenue-neutral meaning that the amount of revenue should be about the same as with the current tax system.

Why? What would be the difference? It would put the American economy back on a foundation based on investment. When you get to keep your whole gross paycheck and are only taxed on what you spend, it encourages you to save and invest that money. What good is money in a savings account? It is used to lend to others so that they can increase their personal or business capital which then, in turn, increases their potential to expand and create more jobs. Another benefit is that it would make the United States the biggest tax haven country in the world. International companies would flock to locate their corporate headquarters here in the US creating millions of jobs instead of all of our jobs going to China and other third-world countries. The cost of operating here would be tiny compared to other countries and our trade deficit would reverse overnight.

But wouldn’t this take years for all of this to take place after the change? Yes. But we would feel the affects immediately. In anticipation, the stock markets would soar and the national savings rate would skyrocket which would unlock the lending freeze that the banks are still struggling with.

The other benefit would be that a tax increase would be extremely obvious to all Americans and it would make Congress think twice before enacting one.

This is my proposal. Will it happen? Nope. Not for at least another 3 years. Perhaps Republicans can pick these principles up and nationalize their campaigns based on this and get back into a place where this kind of real change can take place. Am I optimistic? No. Hopeful? Maybe. But I can always wish, can’t I?

I found the story in Yahoo! News’ cache and I reprint it here for posterity. Enjoy.

Backdoor taxes to hit middle class
Mon Feb 1, 4:09 PM
By Terri Cullen

NEW YORK (Reuters.com) –The Obama administration’s plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year — effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.

The targeted tax provisions were enacted under the Bush administration’s Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 — though there has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a “patch” that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year’s levels, the tax will hit American families that can hardly be considered wealthy — the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don’t itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

The supposed “loophole” that Obama is trying to close is a law that says that companies that make profits oversees are not taxed in America on those profits since they are already taxed in the country where the profits are made. This prevents them from being double-taxed. What some countries have done is made sure that profits are made in foreign countries where the tax rates are really low. This is the exact same reason so many companies here in the US incorporate in tax friendly states like Nevada.

We have to remember that every “loophole” in the tax code was put in for a reason and are part of the tax code. These laws are to encourage certain behaviors the same way many Americans take advantage of the mortgage interest deduction. There is nothing illegal in using these tax laws to minimize their tax burden just like there is nothing illegal in using the charitable contribution deduction on your personal taxes.

Yet Obama is characterizing these companies as being as bad as tax cheats in order to gain support for his tax hike. That’s exactly what this is. It’s a huge tax hikes on all of our largest and most competitive companies here in the US. The only thing this will do is increase the expenses of companies and make them less competitive with foreign companies. Is that what we really want to do in this economy? Are we trying to improve our economy or destroy it?

I have no doubt that we need to take a closer look at the tax code and simplify it immensely, but let’s wait until things stabilize and recover before we put more companies at a disadvantage.

GM – You can pay us now or you can pay us later!

What do you think? Catchy, isn’t it?