Sunday, May 22, 2011

Letter to WSJ on how Federal spending sent berserk...

Chicago PM Sunday 22 May 2011

Editors, The Wall Street Journal


The Wall Street Journal OpEd “The Medicare Test for President” of Friday 20 May does a fine job of explaining the dire financial straights of our federal government, and why the by far best solution has
been presented by US Representatives Paul Ryan of Wisconsin.

Sometimes when in a bad situation, a worth while exercise at solving things is looking upstream
to see why and how we got here.

So what were the 90% of voters who were wage earners back in 1966 thinking when they made out and remitted those monthly checks to cover their income tax obligations when the Democrats proposed taking over the national health care industry wth Medicare?

Of course, that's a trick question, since with the minor exception of a possible April settling-up (and the feds were doing all they could at reducing) no voter/wage-earner was writing any checks to the feds to cover income tax. The 1943 Current Tax payment act broke that link, such that employers were doing all the check writing. If the checks did not reach the feds, the employer went to jail, never the wage-earner.

The employers did have an out: since all employers were forced to send in this money, there was no competitive reason to do anything other than pass the cost on to customers in higher product prices. Thus 90% of personal income taxes were converted to an all but invisible national sales tax.

To see how significant this is needs only a look at the 2011 Statistical Abstract of the United States table 478 showing 37% of the total 2009 [latest data available] federal income of $2.345 trillion coming from employer bank accounts, not voter's. (And since no wage earner has ever sent in one cent to the Social Security system, adding that program's employer withheld taxes brings that total to 73% of 2009 federal income.)

If this isn't bad enough, we have millions of 65+ senior citizens with fistfuls of pay stubs saying: “You earned, and your employer paid....” But is there a single one of them who actually remembers one week when their take home pay was slightly reduced to go for income taxes? Not if they've taken another job in the meantime. Wage earners get a pay stub with a big number at the top, and a smaller number below. That is the amount that goes in their personal bank account, and the only figure that counts.

Fixing this scam needs only a majority of the House of reps, 60 Senators, and a President with backbone enough to change the US Tax code from "every employer making payment of wages shall deduct and withhold upon such wages a tax..." to "every employer making payment of wages shall pay all of those wages to the employee...." The employer would still calculate the tax, including a note: "Here is how much the feds are expecting you personally to send in within 30 days"

This could not be done overnite, but randomly choosing a single letter every quarter, and requiring all voters with names beginning with that letter to submit to the new pay as you go tax system, would get the whole thing done in 9 years. This period would include two Presidential elections, 4 house
elections, and a complete rebuild of the Senate.

A problem is what to do with those seniors already depending on Medicare benefits. This problem
will solve itself: keep paying them - the expense will go down 2.5% every year until in 40 years
the there will be no one left to take it.

What must be done immediately is eliminating the myth of the “benefits” of federal health care.
Requiring voters to send in a check for 20% of their take home pay every month should convince

Arnold H Nelson
5056 North Marine Drive Chicago 60640

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