The simplest principle in accounting is Revenue minus Expense equals Income or deficit (loss). Right now we are in a deficit or losing situation. What is required to turn this back into an income situation that can reduce our debt?

If an assumption is spending is currently out of the control the solution must then be related to generating additional revenue. So what are our revenue opportunities.  We want to keep a good blend of capitalism and socialism so having the government take on business opportunities isn’t where we should be looking.   We want to keep entrepreneurship on the side of capitalism and free enterprise.  That pretty much leaves revenue opportunities for government to taxes.

What are the various types of taxes? Keeping this simple, there are: Income Taxes, Property Taxes, and Consumption Taxes.  If you go to the web page https://en.wikipedia.org/wiki/List_of_taxes the list goes on and on, but it basically boils down to these three.

We are familiar with all three of these.  Annually we file our federal (and possibly state) income tax returns.  What a person makes in income  (wages, investments, etc.,) determines what a person pays or receives in tax payments.  With our tax code a huge portion of our population actually receives income tax distributions instead of paying in taxes.  These are refundable tax credits (earned income and child care are two examples) above what people may have contributed in tax estimates (withholdings from paychecks).

Property taxes are taxes due generally to local government based on the value of assets owned by taxpayers.  Fairly simple, you own an asset, the asset gets assigned a value, and government assesses a tax based on that value.

Lastly are consumption taxes.  We are all familiar with these too, but many of these are hidden in the price of items we buy.  The familiar one, sales tax.  Less seen as they are incorporated into purchase price of what we buy are taxes on gas, alcohol, luxury, etc. 

Where within these three are the opportunities to increase our revenues?  Consumption taxes in general affect everyone fairly evenly based on what they use.  The issue here is percentage wise it takes a large percentage from those with limited means and very little from those with wealth. Probably not the best option for increasing revenues.

With income taxes we have a progressive system with our current tax code that does charge higher amounts to those with higher incomes using a progressive rate structure.  Logic is this is good, yet our government has spent the last 50 years in an experiment that continues to reduce marginal rates, especially those for high incomes.  Goal of this has been to induce economic growth, effect however has been to increase the divide of wealth with more and more going to the top 1% of wealth holders.  There is opportunity here that bringing back additional margin brackets similar to those from the 1950’s would increase revenue.

Property taxes are based on the value of assets.  Seems fairly simple; if a taxpayer owns an asset, value is assigned the asset and tax is the due based on that value.  We do have in our tax code just such a tax.  Incorrectly listed as an income tax in the wikipedia list mentioned above, inheritance tax is not an income tax, it is in fact a property tax.  The assets of a decedent are valued and a tax is due from those assets prior to distribution to heirs.

What does our current administration want to do?  Eliminate this form of property tax.  The opposite of what needs to happen.     If we are looking for the real opportunity for increased revenue to solve the issue, taxes need to be expanded on the asset holdings of those who have reaped the rewards of the failed Trickle Down Theory.  Start with Elizabeth Warren’s “Wealth Tax” on assets over $50 Million. The mechanism already exists in our tax code, it just needs to be modified and expanded. 

Real revenue growth versus the promised Trickle down growth is the only way to eliminate deficits and reduce debt.

Fiscal Responsibility - Eliminate the Deficit, Reduce the Debt.