As our nation rests on the perilous brink of insolvency, the Government of the United States needs to raise taxes, somehow, on individuals and companies, until the economy has achieved a strong growth rate for two consecutive years.
The governmental debt of this great nation has ballooned to around 70% of our Gross Domestic Product, far above what is considered healthy for the economy. We need a way to lower it. Doing so would enable us to ensure the financial flexibility typical to a period of strong growth. Keynesian Deficit spending is an option, but with an economy slowly rebounding, with unemployment now at 7.7%, we feel that it is time to address the debt problem.
In order to do this effectively and responsibly, we must employ a balanced approach. According to the Congressional Budget Office, the well-regarded nonpartisan organization that provides economic data to congress, only raising taxes or only cutting spending could have drastic effects on the nation’s growth, crippling the economy here in the United States and sending ripple effects across the world. While cutting spending and increasing taxes would have some short term detrimental effects, it pales in comparison to the alternative proposals.
Therefore, there is a need for increased revenue. The question remains: how do we get it? Here, we must also look for a balanced approach. The government, when seeking out ways to increase the amount of dollars going into the treasury, must look for ways to spread the load of tax increases, making sure those earning very little will not suffer any undue burden.
There are two ways to increase revenue-we can either raise the base rate that people pay or we can eliminate tax deductions. A deduction is money that the government gives back to taxpayers for reasons varying from making a charitable donation to owning a private jet. Now obviously, some deductions are more important than others. By capping deductions, yet keeping the base rate the same, we can obtain revenue for the government. In addition, by changing the tax code by including revenue from stocks and dividends in this new tax, which are now taxed lightly, for higher income earners will generate much needed revenue for the government and will cut into the debt.
These tax increases, though levied on many Americans, would not affect all people equally. Moreover, since richer people tend to have more deductions and more income from the stock market, the tax increase would be progressive. This ensures equity and limits any economic damage that might occur. The money gained can be used for targeted stimulus, or as we have been saying, to pay down the debt, ensuring a stable future for the United States economy.
However, only capping deductions will not get us all the revenue we need. In order for this plan to be truly balanced, we also need the people who can afford it the most to pay slightly higher rates on income taxes. How much to change these is up in the air, but please ensure that tax increases are spread fairly on consumers and do not unduly burden the poor and the middle class.
We should maintain there tax increases until necessary growth has occurred sustain a tax decrease. When we have strong growth, the base will be large enough to finance a cut in taxes. We need to get this debt problem under control. Spending cuts, as well as tax increases, must be part of the plan to get this done.
Please communicate with the rest of your caucus that legitimate tax increases must be on the table. Deductions, as well as base rate increases may be necessary to cut the debt. Reforming the tax code, making it simpler and fairer can also help us in this problem. You can push the President on spending cuts all you want, but a stronger plan, on that includes revenue, is necessary to ensure our nation's economic stability for the future.
The Auxilia Party