Saturday, June 26, 2010

A Pathway to Fiscal Sanity

As the federal budget balloons out of control, I ponder what could be done to reign in spending. Moreover, what would the consequences be of cutting off funding here and there?

Let's take, for example, the Environmental Protection Agency.
The U.S. Environmental Protection Agency (EPA or sometimes USEPA) is an agency of the federal government of the United States charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress. The EPA was proposed by President Richard Nixon and began operation on December 2, 1970, after legislation establishing it was passed by Congress and signed into law by Nixon. The agency is led by its Administrator, who is appointed by the president and approved by Congress. The current administrator is Lisa P. Jackson. The EPA is not a Cabinet department, but the administrator is normally given cabinet rank. The agency has approximately 18,000 full-time employees. Proposed Budget for FY 2011: $10 Billion
Sounds like a drop in the bucket, right? Well, what exactly does the EPA produce? In a word, regulations. What do regulations produce? Increased cost to the American taxpayer. My proposal is both a 90% reduction in staff and budget.

How about the US Department of Education?
The United States Department of Education, also referred to as ED or the ED for (the) Education Department, is a Cabinet-level department of the United States government. Created by the Department of Education Organization Act (Public Law 96-88), it was signed into law by President Jimmy Carter on October 17, 1979 and began operating on May 16, 1980.

The Department of Education Organization Act divided the Department of Health, Education, and Welfare into the Department of Education and the Department of Health and Human Services. The Department of Education is administered by the United States Secretary of Education.

It is by far the smallest Cabinet-level department, with about 5,000 employees. The agency's official acronym is ED (and not DOE, which refers to the United States Department of Energy). It is also often abbreviated informally as DoED. FY 2011 Proposed budget for FY 2011: $222.7 Billion, which includes $173 Billion for loans and grants.
My proposed budget: $0. Defund this monstrosity. Give the task of educaton back to the States.

Next, the IRS.
In July 1862, during the Civil War, President Lincoln and Congress created the office of Commissioner of Internal Revenue and enacted an income tax to pay war expenses (see Revenue Act of 1862). The position of Commissioner exists today as the head of the Internal Revenue Service.

The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1861:

* The initial rate was 3% on income over $800, which exempted most wage-earners.
* In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
* In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000-$10,000; and 10% on income $10,000 and above.

In 1906, with the election of President Theodore Roosevelt, and later his successor William Howard Taft, the United States saw a populous movement for tax reform. This movement culminated in February 1913 with the ratification of the Sixteenth Amendment to the United States Constitution: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

This granted Congress the specific power to create a direct income tax. By February 1913, 36 states had ratified the change to the Constitution. It was further ratified by six more states by March. Of the 48 states at the time, 42 ratified. Connecticut, Rhode Island, and Utah rejected the amendment; Pennsylvania, Virginia, and Florida didn't take up the issue.

In the first year after ratification of the Sixteenth Amendment, no taxes were collected--instead, taxpayers simply completed the form and the IRS checked it for accuracy. The IRS's workload jumped by ten-fold, triggering a massive restructuring. Professional tax collectors began to replace a system of "patronage" appointments. The IRS doubled its staff, but was still processing 1917 returns in 1919.

After microfilm, the 1960s onward saw massive computerization efforts.

In 1990, the IRS began to use the public Internet for electronic filing. Since the introduction of e-filing, self-paced online tax services have flourished, augmenting and sometimes replacing tax accountants to prepare returns.

In 2003, the IRS stuck a deal with tax software vendors:

* The IRS would not develop online filing software.
* In return, software vendors would provide free e-filing to most Americans[10].

In 2009, 70% of filers qualified for free electronic filing of federal returns.[11]

In 2010, more than 66% (98 million) of tax returns are expected to be filed electronically.

Proposed budget for FY 2011: $13 Billion.
My proposal is a national sales tax. Forget about tax returns, forget about deductions. If you buy something, 15% goes to the US government and that's all they get. In other words, defund the IRS. Hire 100 people to administer the collection of the tax.

While we're at it, let's overturn Obamacare and get the US Government out of healthcare.

Mandate an annual audit of the Federal Reserve and put both Fannie Mae and Freddie Mac into receivership. Re-invent the Glass-Steagall Act, prohibiting the combination of Investment Banks and Commercial Banks. Dispense with the nonsense of "reforming" Wall Street. The US Government if too invested in its success to regulate it in any meaningful way.

Re-design the Commerce Department. I'm sick and tired of filing all those redundant and intrusive questionnaires every month on behalf of the company I work for. These reporting requirements create a huge toll on business. In addition, overturn Sarbanes-Oxley, another idiotic monstrosity that punishes business to atone for the abuses of Enron and Worldcom.

I could go on and on, but at least I've proposed a start.

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