Pundits and liberal/progressive/socialist economists are having a field day bashing the Donald’s tax plan because they claim that it is a supply-side economy tax plan and supply-side economy doesn’t work. Bottom-line, I have no idea how these people even make a living spouting this insanity. How do these moron’s think we became the richest country in the world? Do they think that we did it by having progressive taxes, social programs and redistribution of wealth? Do these idiots actually think that we can create wealth and reduce poverty by stealing from the rich? How these numbnuts are still breathing is a puzzle.
The point is that supply-side economics works; history has shown it to work in countries like South Korea, China, and, believe it or not the USA. And, by the way, the Reagan-era economic policy was NOT SUPPLY-SIDE economics in action. That was a mutt pretending to be a pure breed. I have a post that details my thoughts on why supply-side economics is not only the saving grace to our country’s economic future, but the best means to reduce poverty (https://undertheconstitutionwithlibertyandjusticeforall.com/2014/01/24/trickle-down-a-k-a-supply-side-economics-is-the-only-economic-system-that-will-enrich-all-of-us/), so I’m not going to go into much detail here, but suffice it to say that innovation is the key to our future and having as much money devoted to that cause is the best long-term policy for our country and progressive taxes, social programs, and redistribution of wealth, i.e., stealing, isn’t going to get us there. This is one of the main reasons why the economic recovery since the mortgage debacle has been so tepid and nondescript. Regardless, on to the main point.
Progressive taxes are a yoke on the neck of innovation and the more money we, as a country, steal from the wealthy under the pretext of fairness, Justice, and helping the poor, the more we will find ourselves in economic dire straits in the long-term. If you doubt my words, all you have to do is to study the economies of South America, UK (pre-The-Iron-Lady), Spain, Portugal, Greece, India, Bangladesh (particularly vs. South Korea), western Europe and others, and you cannot help but draw the conclusion that we are headed for a mile-high cliff at a very fast rate while drunk on the thought that somehow we are helping the poor.
Therefore, if I had my way, I would turn all of the social programs into private charities, turn social security into an individual savings plan, cut taxes to the wealthy, increase taxes on the poor (currently they pay almost nothing, but they should pay at least something to be fair; for example, our military is there to protect not only the rich, but everyone), and eliminate corporate taxes altogether. When it’s all said and done, if we have a tax rate higher than 20% for anyone, I’d be shocked.
However, that is not what I’m here to discuss. I’m here to outline my thoughts on the Donald’s tax plan. While it is true that I think it’s the best of the plans out there, it can be made better. Particularly from the corporate viewpoint. Tax rates on corporations at the federal level should be lowered to 25% instead of 15%. However, corporations should be given a tax credit on a one-to-one basis for R&D or deployment of new technology that actually contributes to the growth of the economy or creates jobs. However, there should be a sunset rule, meaning, a maximum tax credit of 20 years for the same R&D that begins to phase out after the tenth year and goes to 5% in the 20th year and 0% starting in the 21st year. This is to ensure that corporations don’t throw money away on a problem that has no solutions jast to avoid paying taxes. Tax credit for the deployment (including manufacturing) of new technology should also have a sunset provision. If there is a patent on the new technology or product then the length of the patent should serve as a timeline for the sunset provision. If there is no patent then it should be limited to 20 years, but with a declining tax credit benefit starting in year 11. Also, the amount of tax credit should be limited to 60% of the corporation’s tax bill, meaning a corporation may lower its tax rate from 25% to 10%, but no further.
Next, anyone donating money directly to innovation, creation, and technology research should also get a one-to-one tax credit, but limited to no more than one-half of their income taxes. However, this too must be subject to sunset provisions in case someone thinks about cheating on their taxes. If a research project that an individual is contributing to doesn’t pay off with an end product, technology or innovation within 20 years then the tax credit should be phased out starting in year 11 going to zero in year 21. However, for the individual, the portion that does not qualify for tax credit should be allowed as a tax deduction akin to a normal charitable donation. Nevertheless, the individual’s tax burden should not be allowed to go below 10% of their income before charitable deductions and tax credits. As an example, let’s take someone with $10,000,000 in income after deductions, but before charitable donations and tax credits. This means that this individual must pay at least $1,000,000 in taxes or 10% of $10,000,000. So, if this individual makes a $1,000,000 charitable donation, this means that the person may also contribute up to $1,250,000 to research, which would then end up creating a tax burden of $1,000,000 for the individual: $10,000,000 (income after permitted deductions) – $1,000,000 (charitable donations) = $9,000,000 (net taxable income) * 25% (income tax rate) = $2,250,000 (gross income tax) – $1,250,000 (R&D donation) = $1,000,000 (net income tax). This means that this individual’s income would be reduced to $6,750,000 ($10,000,000 – $1,000,000 (charitable deduction) = $9,000,000 – $1,250,000 (R&D tax credit) – $1,000,000 (income taxes)).
If people are concerned that “no” money would go to “normal” charities then a limit could be placed on the R&D donation that stipulates that it cannot exceed that of the charitable donation. So, in our previous example, the charitable donation and the R&D donation would be both $1,200,000. Resulting in $6,600,000 in income to this individual, if they maximize both their charitable and R&D donations. The math is as follows: $10,000,000 (income after permitted deductions) – $1,200,000 (charitable donations) = $8,800,000 (net taxable income) * 25% (income tax rate) = $2,200,000 (gross income tax) – $1,200,000 (R&D donation) = $1,000,000 (net income tax). This individual’s income would be reduced to $6,600,000 ($10,000,000 – $1,200,000 (charitable deduction) = $8,800,000 – $1,200,000 (R&D tax credit) – $1,000,000 (income taxes)).
Charitable donations to the public school district in which the individual resides would also count towards the R&D deduction as well as charitable donations to public school districts in economically challenged, impoverished or underprivileged areas as designated by the state in which the person resides. However, the charitable donations to the individual’s own public school district will be limited by the amount of donations to public school districts in economically challenged, impoverished or underprivileged areas as designated by the state in which the person resides. Donations to state-run universities such as the University of California, the University of Texas or the State University of New York would also qualify for the R&D tax credit. There would be no sunset provisions or phase outs to the “education provision.” However, the “education provision” as it pertains to public school districts may not exceed half of all of the R&D credits, but the donations to state-run colleges and universities would be subject to the overall R&D credit limitations only.
In addition, I would advocate for suspension of all income taxes for new businesses until the income tax burden creeps above $1,000,000 for the company or 10-years, whichever comes first. If there is no corporate structure to tax then the tax burden limitation would apply to the highest paid investor in the new business counting only the monies from the new business.
I believe that this tax plan would not only spur more innovation that would spur super economic growth, but also spur super job growth, but it will take time to work. I believe that this tax plan would also help to reduce poverty in our country through job growth, better education and more opportunities for the poor.
I would also abolish separate tax accounting and corporate (or Generally Accepted Accounting Principals [GAAP]) accounting and unify everything under GAAP accounting, meaning the tax burden calculated under GAAP would be the tax burden for federal government tax purposes. This not only simplifies the accounting, but also the analyses of company financials and eliminates corporate expenses, which helps to make American business far more competitive.
For more, please read my books, “… Under the Constitution with Liberty and Justice for ALL,” available at http://www.CreateSpace.com/3978962 and also available on Kindle, and “The New Constitution for Modern America,” available athttp://www.CreateSpace.com/4281897 and also available on Kindle. Please don’t forget to rate this post. Any comments or questions are welcome and can be left for me on this blog, @Ahmedinejahd on Twitter, on Facebook or via email atAlexAhmedinejahd@Yahoo.com. Thank you in advance for buying my books, and rating this post. And, thanks for visiting my blog; I hope you get an opportunity to read my other posts. Have a great day!