No. of Recommendations: 3
PS, make me emperor of the US, and this is my proposal for balancing the budget:
Introduce a national value added tax (a type of sales tax). This will be hated, so the rate will be zero, initially, for three years. Who could argue?
Each subsequent year, the rate will set equal to the rate that would have resulted in no federal government deficit on average in the prior 3 years.
If lawmakers balance the budget, no sales tax. If they don't, then the year's deficit is made up by tax collections spread over the next few years. The legislators always get to decide, and they get to respond to emergencies without unwisely worrying about balancing the budget when one happens.
Truth be told, there is no need to balance the budget, as long as the average deficit is lower than the average nominal economic growth rate. So the VAT tax could be set to the rate that would have held the deficit to 2% of GDP in the prior 3 years. This has the advantage of producing a good supply of "risk free" assets which are very useful for greasing the economic wheels, while ensuring that the debt slowly slides as a fraction of GDP over time and remains supportable.
Complicated. And too many words for most people to follow. Mine is different for personal income:
Anything you receive as remuneration (money, free rent, interest, dividend, gifts, etc) is “income”. No deductions of any kind.
There are three tax rates: zero, 15%, 30%. If you make under (argue about the number) $30,000, your rate is zero. If you earn between $30,000 and $150,000 your tax rate is 15%. If you earn over $150,000 annually your tax rate is 30%.
People who authorize government spending in any capacity: if the tax receipts are sufficient, standard rates apply. If the government is in deficit, rates are doubled. (Declared (voted) wars or economic emergencies may provide a one year exemption.)
Eliminate, or at least severely cripple the “step up” basis for inheritance.
