The One-Penny Solution

When I started this little experiment in communications, the very first idea that I wanted to promulgate was perhaps the most important. As is customary, I do no want it lost in the day-to-day political clap trap that has devolved into the usual intellectual wasteland of political hucksterism. All I wanted was to express one easily implemented solution that could literally save America from itself and show the whole world that AMERICA IS STILL THE LEADER IN INNOVATION AND INGENUITY, or some similar crap; that would provide the spark that would light the fire to bring us all together, solve the biggest problem of our time…that problem? Male pattern baldness..wait, no, what? Sorry, that’s MY biggest problem, that’s not it.
Oh yeah, I remember now. That dark, seemingly insurmountable, problem that has stumped the world’s most prominent economists, befuddled the most proficient thinkers of our time, and has been the albatross around the neck of America’s road to recovery from the Great Recession.

 

The Federal Debt.

 

I have a simple, elegant solution that has been utilized effectively, albeit in much smaller problems, ever since the invention of the household budget.
In order to attack a problem the size of our federal deficit, it has to be separated from all other problems and addressed and therefore resolved separately. Simple so far? Good. Now stay with me.
Let’s assume that the debt, as of the end of the government’s 2011 fiscal year was $15 trillion dollars.
Let’s also assume that the supercommittee is feverishly working to find an equitable way to achieve a means of reducing the deficit by $1.5 trillion over 10 years. Here’s how you do it without recreating the wheel:

 

1. Place a one-penny-per-dollar , “War on Deficit” tax,(catchy?) on all goods and services (including Wall Street trades) for the sole purpose of reducing the deficit. There. Simple. Direct. Effective.
2. In order to be bullet-proof, it would have to be written into the law that the funds collected under this one-penny-per-dollar assessment can be used only, and irrevocably for debt reduction, unless 80% of the Congress and the President agree to change it in any way.
3. Even at today’s extremely low GDP of $15 trillion, the deficit reduction tax would reduce the deficit at $150 billion per year….the exact mandate for the super committee. As GDP increases, so too would the rate of deficit reduction increase. If GDP = $18 trillion, then $180 billion would go towards reducing the deficit.
4. No exceptions, no exemptions. No caps, no bottoms. Every citizen, every non-resident, every purchase of goods or services. This is war. In World War II EVERYONE was rationed on sugar, rubber products, etc. This penny plan would be a small price to pay for not only financial freedom, but a path back to fiscal responsibility and world leadership by showing the world that WE CAN STILL SOLVE BIG PROBLEMS IN THE U.S.
5. For good measure, it’s also easily implementable, as most states are already set up for collecting and remitting sales taxes; this would merely go to Uncle Sam. This would also mute any “tax and spend” argument because the sole purpose of this one-penny per-dollar, would be deficit reduction; not ever to be used on new spending.
6. By expanding the tax base to encompass all goods and services, everyone in the country would be contributing to the mess. Noone could claim “tax and spend”…..”the poor pay nothing”….”the rich should pitch-in too”, etc. Instead, the wealthy could not employ armies of accountants to avoid the taxes; poor people receiving government assistance would still be contributing to the deficit; criminals, non-citizens, even prisoners who currently purchase items from correctional commissaries would be contributing to this deficit reduction.. It would virtually assure that every person in the country is contributing to the debt without placing an impossible burden on any one group.

 

Is it perfect? Hells to the no. Is it better than anything the President, the Senate, The House of Representatives, the Presidential candidates have come up with? Hells to the yes.
hg

  3 comments for “The One-Penny Solution

  1. Harvey Gold
    November 2, 2011 at 4:17 am

    Exactly and completely correct. The pupose of my suggestion was to remove the aacumulated debt for the last 40 years from “muddying the waters” in addressing or finding solutions for going forward. The 1% surcharge would be all-inclusive as to payees and would eventually, albeit a lenghty projected time period, to address only the debt irresponsibly accumulated as of a static date; it is never to be used as a means of incusion in ongoing debt acquisition or the reduction thereof. It bears NO similarities to any REPLACEMENT stream of rvenue, can never be increased and can never be used for any other purpose than stated in the original proposition.

  2. November 2, 2011 at 12:23 am

    It doesn’t sound like 999 to me.

    The difference between this 1% “war on deficit” tax and Cain’s 9% sales tax is that Cain’s tax is intended to raise general revenue and fund the govt. while the 1% transaction tax is exclusively targeted at paying off the debt.

    Cain proposes to ditch the entire tax code and replace it with 999, which won’t come close to covering govt obligations. Hg’s plan is disconnected from the rest of the tax code. It just adds one revenue stream to address the national debt. Govt spending obligations are still covered by the existing tax code.

    A penny on the dollar isn’t a lot if it’s used EXCLUSIVELY to pay down the national debt.

    But I think it should be called something like the “Debt reduction surcharge” to make it clear that it’s for paying down the debt – not addressing the annual spending deficit which is a different thing.

    We can balance the annual deficit by letting Bush tax cuts expire, getting rid of the social security cap, and eliminating wasteful spending such as corporate welfare.

  3. Jack
    November 1, 2011 at 1:51 pm

    Harvey – that 1% tax on goods and services sounds like Herman Cain’s 9% tax. he is using that tax to help fund government and along with the other two 9’s balance the budget.

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