Affordable Health Insurance - How to Fix the Deficit, Pay Off the Debt and Pay for Healthcare Without Destroying America
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How to Fix the Deficit, Pay Off the Debt and Pay for Healthcare Without Destroying America
The United States of America finds itself at a fiscal crossroads on a path that everyone can agree is unsustainable. That unfortunately is where everyone seems to stop agreeing. Looking at wage taxes for the wealthy it is fact that from 1936 until 1982 the top tax rate was 70% or more. In 1982 it went down to 50% until 1987 when it went down again to closer to current levels. Despite the drop in the top tax rate during this time, the top 20% have been paying a larger and larger share of the total wage tax paid in the Us, but this is only fair in my view because they have been earning a larger and larger share of total income. This conference is dealing with wage Tax, so arguing about other taxes paid does not address this topic. This is not about Capital Gains, Estate, or Use taxes; this description is about wage Tax.
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Affordable Health Insurance
When one looks at total revenues for the United States, the biggest wage is for Personal wage Tax. If you want to determine a fiscal accident the size of the one the United States currently finds itself in, you have to look at the biggest sources to make adjustments. Corporate wage taxes are so small as to be found irrelevant for this discussion. As a matter of fact I would encourage that Corporate wage Taxes be abolished in the United States, if and only if the proposal for funding healthcare in this description is implemented. Otherwise, I believe that a Corporate wage Tax of 8.55% that cannot be reduced in any way should be implemented.
After a serious look at the total Revenues for the United States, it is clear that taxes alone are not going to be able to close the debt that we have created. Outlays will most without fail have to be cut, along with tax increases.
First, I think all expenses have to be put into perspective with the rate of inflation. For this, I use the Cpi-U.
Cpi-U means the index of buyer prices advanced and updated by the Us division of Commerce. As referenced in section 1927(c) of the collective safety Act, it is the Cpi for all urban consumers (Us average)
The Cpi-U average from 1914 straight through 2010 is 3.37%. The Cpi-U from 1990 straight through 2010 is 2.75% and from 2000 straight through 2010 is 2.49%.
Using these numbers, it is not unrealistic to put the annual growth of outlays at an average of 3%, but the reality is far from that. For the conference that this is unrealistic, I submit the conference that the average American has to live with the real world factors of the Cpu-I and it is not asking too much that our government, which is funded by us, to live within those same numbers.
For the Us average wage, I am using the National average Wage Index calculated by the collective safety Administration. From 1951 to 2009, the Wage index has increased from ,799.16 to ,711.61. That is an average annual growth of 4.49%. For the years 1990 straight through 2009, it averaged 3.45% and from 2000 to 2009, the annual growth averaged 2.84%.
Discretionary Outlays.
Our total Discretionary Outlays have increased from 122.5 billion in 1971 to 1,349.2 billion in 2010, a total growth of 1101%. I want to break it down a bit to show when the huge increases occurred. From 1971 to1980, it increased 226%, from 1981 to 1990, we saw an growth of 163%, from 1991 straight through 2000, it increased 115%, and from 2001 to 2010, we saw an growth of 208%. Dollars were 122.5 billion to 276.3 billion for '71 to '80, 307.9 billion to 500.6 billion for '81 to '90, 533.3 billion to 614.6 billion for '91 to 2000, and 649.0 billion to 1,349.2 billion for 2001 to 2010.
To try to go back and adjust spending beyond a 10-year mark would be so devastating to the government and the cheaper that it is a non-starter. Because of this, I will us a 10-year model of adjusted spending.
Defense outlays have increased 225% from 2001 to 2011. It should growth by a maximum of 3% a year. In dollars, it went from 306.1 billion to 689.1 billion. With all the wars from 1971 to today, it has increased by 872%. In 1990 during the first gulf war, it was 300.1 billion. The cost of the current wars is about 2 billion a week or approximately 104 billion a year, so why the huge growth in Defense spending? It has increased by 483 billion a year since 2001. With the ongoing wars it should be reduced by allowing a 3% per year growth over the past 10 years and adding in the cost of the wars, (93.29 billion plus 104 billion), 197.3 billion over the 306.1 billion of 2001. That is 503.4 billion a year for defense, so let us be kind and round it up to 504 billion with a 3% per year growth cap. That would save 185.1 billion a year.
International outlays have increased 204% from 2001 to 2011. In dollars, it increased from 22.5 billion to 45.9 billion. While the American habitancy saw the average wage growth by only 1.27% from 2000 to 2009, we increased our international outlays by more than 202% above that. It should be capped by 3% annually, which in dollars is an growth from 22.5 billion to 29.3574 billion. If we round up to 30 billion a year it is a savings of 15.9 billion a year.
Domestic outlays have seen the same type of unreasonable increases, going from 320.4 billion in 2001 to 614.2 billion in 2010. That is an growth of 192%. Applying the same 3% annual growth cap from 2001 levels, it should go from 320.4 billion to 418 billion. Giving the kind round up I applied to the other outlays it would be 420 billion a year with a 3% annual growth cap. That would save 194.2 billion.
The total savings from Discretionary outlays is 395.2 billion a year.
Now we turn to Mandatory Outlays.
Mandatory Outlays have increased by 2620% from 1971 to 2010, or from 72.9 billion to 1,909.6 billion per year. I will break it down in 10-year chunks. From 1971 to 1980, it increased 414%, from 1981 to 1990, it increased 188%, from 1991 to 2000, we saw an growth of 160%, and from 2001 to 2010 it increased 190%. Dollar figures for those periods are 72.9 billion to 262.1 billion for '71 to '80, 301.5 billion to 568.1 billion for '81 to '90, 596.5 billion to 951.5 billion for '91 to 2000, and 1,007.6 billion to 1,909.6 billion for 2001 to 2010.
Social safety outlays have increased 163% from 2001 to 2010. In dollars, it went from 429.4 billion to 700.7 billion. Our debt at the end of 2010 was over 13 trillion dollars. Given the vital point to individuals on fixed income, changes to this outlay are very hard for me to justify, but I do not know if it is inherent to close the 2010-budget deficit of 1.3 trillion and pay off the debt without changes to this metric. If we were to apply the 3% per year cap, it would break down to going from 429.4 billion per year to 560.3 billion, giving an annual savings of 140.4 billion. I want to see if we can get that from other places and leave this alone.
Medicare outlays have increased from 2001 to 2010 by 219%. The dollar amount of that growth is from 237.9 billion in 2001 to 520.4 billion in 2010. Applying the acceptable 3% per year growth would take the outlay from 237.9 billion to 310.4 billion. If we apply the kind rounding to 311 billion per year, it would cut 209.4 billion from the budget.
Medicaid outlays saw an growth of 211% from 2001 to 2010. Total dollar amounts are increased from 129.4 billion in 2001 to 272.8 billion in 2010. 3% per year growth adjustment takes it from 129.4 billion to 168.8 billion, with a rounding up to 170 billion. That would give us a savings of 122.8 billion a year.
Income safety outlays have increased from 2001 to 2010 by 306%. The dollar value of this growth is from 143.1 billion to 437.7 billion. Since this class included unemployment payments, that can be pointed to as the original driver of the increase. Applying the 3% per year increase, it would make the growth from 143.1 billion in 2001 to 186.7 billion. This would supply 251 billion per year in savings.
Other relinquishment and Disability outlays have increased by 149% from 2001 to 2010. In dollars, it moved from 93 billion to 138.9 billion per year. This class includes relinquishment for soldiery and government workers, and like collective Security, my personal view is that it should not be touched. With that in mind, the 3% per year growth cap if applied would amount to going from 93 billion per year to 121.3 billion. Applying my rounding it would come to 122 billion per year and supply a inherent of 16.9 billion per year. I also want to see if we can safe this outlay by getting the savings from other areas.
Other schedule outlays have decreased from 64.5 billion in 2001 to 23.3 billion in 2010. Obviously, this outlay provides no occasion for rescue from the budget.
The total savings from Mandatory Outlays is 475.3 billion not counting the relinquishment outlays. If there is no other way to find the savings it could be increased to 632.6 billion a year in savings.
Closing the deficit and Paying off the Debt.
With changes to how we pay for healthcare.
Total ethical outlay savings is 870.5 billion a year. Of course if we were to implement my changes to healthcare we would cut a total of 793.2 billion from the Outlays budget, a new wage and Outlays allocation would need to be created for collective healthcare, but that should be operated independently from this budget. If the healthcare changes are implemented the total outlays savings in my plan would be 1,663.7 billion dollars per year. The current annual deficit for 2009 was 1,294 billion dollars; these cuts along with the healthcare changes would supply a surplus of 369.7 billion per year. To pay off the debt of 13,164 billion at the end of 2010 in a 10-year plan would want us to pay down 1,316.4 billion per year. Add the allocation cuts to that and we need to growth Revenues by 946.7 billion per year.
Without changes to how we pay for healthcare.
Considering that, economists have projected that unemployment will not recover for the next 5 years; we have to look at the tax revenues we have currently. The current deficit is 1,294 billion dollars and the savings described are 870.5 billion, leaving a deficit of 423.5 billion per year. Considering the debt of 13,164 billion at the end of 2010, we should set a 10-year reduction plan. To pay off the whole debt we would have to pay down 1,316.4 billion per year. If you added the 423.5 billion still needed to make the annual allocation balance, we would have to growth the revenues by 1,739.9 billion per year. The total revenues for 2010 were 2,161.7 billion and paying off the debt in 10 years would want an approximately doubling of the current tax revenues. I will form for 10, 15, and 20 years.
Flat tax increase.
With my healthcare plan.
For 10 years, the total wage per year would want 3,108.4 billion, which is an growth of 143.8%. So when you do your taxes you would take the total tax, (1040a line 37, 1040Ez line 11), and multiply by 1.438. The Us average household wage for 2009 was ,777, with the average adjusted gross wage of ,048. The acceptable deduction for a particular person is ,350 and for married filing jointly is ,700 giving a dutible wage of ,698 for particular filers and ,348 for married filing jointly. The total tax on those is ,133 for the particular example and ,433 for the married example. To cover the deficit and debt in 10 years it would growth to ,506 for the particular and ,061 for the married.
My personal finances would be 7,589 adjusted gross income, itemized deductions of ,349 and exemptions of ,600, development my total dutible wage ,640. My total tax is ,269, I have earnings of 99 development my total tax for 2010 ,170. My growth for the 10-year plan would go to ,625. For the class warfare that the politicians like to use, I compare my finances to the average figures. The average earner pays taxes of 2.9% of their wages for the married example and 6.3% for the particular example. I pay 8.7% for my married income, which is 5.8% more than the average example. For the 10 year plan those amount would turn to 4.1% for the married example, 9.1% for the particular example, and 12.4% for me.
For 15 years, the total wage per year would want 507.9 billion more than the 2010 revenues for 2,669.6 billion, which is an growth of 123.5%. Using the same three examples the new tax would be ,870 for the single, ,770 for the married, and ,560 for me. Percentage of wage would move to 7.8% for the single, 3.6% for the married, and 10.7% for me.
For 20 years, the total wage per year would want 288.5 billion more than the 2010 revenues for 2,450.2 billion, which is an growth of 113.3%. Using the same three examples the new tax would be ,550 for the single, ,624 for the married, and ,523 for me. Percentage of wage would move to 7.1% for the single, 3.3% for the married, and 9.8% for me.
Without my healthcare plan.
For 10 years, the total wage per year would want 3,901.6 billion, which is an growth of 180.5%. So when you do your taxes you would take the total tax, (1040a line 37, 1040Ez line 11), and multiply by 1.805. The Us average household wage for 2009 was ,777, with the average adjusted gross wage of ,048. The acceptable deduction for a particular person is ,350 and for married filing jointly is ,700 giving a dutible wage of ,698 for particular filers and ,348 for married filing jointly. The total tax on those is ,133 for the particular example and ,433 for the married example. To cover the deficit and debt in 10 years it would growth to ,655 for the particular and ,587 for the married.
My personal finances would be 7,589 adjusted gross income, itemized deductions of ,349 and exemptions of ,600, development my total dutible wage ,640. My total tax is ,269, I have earnings of 99 development my total tax for 2010 ,170. My growth for the 10-year plan would go to ,357. For the class warfare that the politicians like to use, I compare my finances to the average figures. The average earner pays taxes of 2.9% of their wages for the married example and 6.3% for the particular example. I pay 8.7% for my married income, which is 5.8% more than the average example. For the 10 year plan those amount would turn to 5.2% for the married example, 11.4% for the particular example, and 15.6% for me.
For 15 years, the total wage per year would want 1301.1 billion more than the 2010 revenues for 3,462.8 billion, which is an growth of 160.2%. Using the same three examples the new tax would be 19 for the single, 96 for the married, and ,292 for me. Percentage of wage would move to 10.1% for the single, 4.6% for the married, and 13.9% for me.
For 20 years, the total wage per year would want 658.2 billion more than the 2010 revenues for 2,819.9 billion, which is an growth of 130.4%. Using the same three examples the new tax would be 85 for the single, 69 for the married, and ,262 for me. Percentage of wage would move to 8.2% for the single, 3.8% for the married, and 11.3% for me.
Back to the political class warfare angle.
The increases for the 20-year model are much more palpable; however, in comparison this model shoulders the lower wage earner with more of the burden. Let me explain. In the current 2010 model single, married, and me pay 6.3%, 2.9%, and 8.7% of wage in federal taxes respectively. With my healthcare changes. For the 10-year model, it is 9.1%, 4.1%, and 12.4% respectively. For the 15-year model, it is 7.8%, 3.6%, and 10.7% respectively. For the 20-year model, it has 7.1%, 3.3%, and 9.8% respectively. Therefore, the discrepancy is the gap between them. 10 year plan I pay 8.3% more of my wage in taxes than the married average household example, while in the 15 year plan it goes down to a 7.1% difference, and in the 20 year plan it goes down to a 6.5% difference. Without my healthcare. For the 10-year model, it is 11.4%, 5.2%, and 15.6% respectively. For the 15-year model, it is 10.1%, 4.6%, and 13.9% respectively. For the 20-year model, it has 8.2%, 3.8%, and 11.3% respectively. Therefore, the discrepancy is the gap between them. 10 year plan I pay 10.4% more of my wage in taxes than the married average household example, while in the 15 year plan it goes down to a 9.3% difference, and in the 20 year plan it goes down to a 7.5% difference.
If you want to be fair it is still a 3% growth for all, but the Percentage of wage is drastically different. The numbers clearly show that the flat Percentage growth across the board increases the discrepancy between the Percentage of wage the average household pays and what I pay. Therefore, the flat tax application does make the higher wage earner shoulder more of the burden.
One thing we have to reconsider is how I got to Agi for these examples. A quick rundown on how my wage is broken down to Agi, compared to the average wage examples I used. First, we have to look at how net wage is reported for tax purposes. My wife is a trainer who is not eligible for collective safety earnings from her job; therefore, she does not pay collective safety wages. She does have a teacher's relinquishment pension, but she pays 14.82% of her pay for that pension. She gets curative assurance for herself paid for by the school. She was paid 54,187 for the year and was taxed for 1.45% Medicare on that amount. For wage taxes, the amount she paid into relinquishment is not counted as dutible income, so her dutible wages are only 46,157. For me I was paid 78,064, which I was taxed on for collective safety and Medicare. However, I put 6,645.72 (8.5% of salary) into a 401k, development my federal wage dutible wage just 71,418. Furthermore, my company matched 2,285.06 that also did not count as salary. My actual pay received was 88,867.57 for the year. So how did I get from 88,867.57 to 71,418? The 401k contribution is pre-tax, so is my contribution for curative for me and my 2 kids (my wife gets free healthcare, but my assurance plan is much best than hers so I cover our kids) which is 303.35 per paycheck or 7,887.10 per year. I also got reimbursements for health club dues, and some schooling cost reimbursement that does not count as wage as long as it is fewer than 3,000 per year. So my total compensation combined with my wife's is 143,054.57, of that 117,589 is dutible wage this year, 16,960.78 plus gains or losses from the stock shop will be dutible in the future, and 8504.79 will never be taxed. Of that 8504.79, 7887.10 was for health care costs (medical, dental, vision) and 617.69 was untaxed reimbursements.
My plan to turn how we pay for healthcare.
This year my wife and I paid ,917.64 for Medicare as did our employers, for a total of ,835.28. I also paid 87.10 (This includes my copay and out of pocket requirements) for assurance for me and my kids and my employer paid a reported ,994 for my children and me. I am not sure how much my wife's employer paid for her healthcare. However if I were to pay a flat 8.55% for healthcare, which was matched by my employer it would amount to ,674.47 my contribution plus ,674.47 for my employer totaling ,348.94 for me. The 2.9% currently paid for Medicare would go to the normal wage pail to keep current receipts the same, development the new tax a flat 10% total (10% for employee and 10% for employer). In addition, for my wife an employer only contribution would be ,632.99. The total for both of us would be ,981.93 for healthcare per year. This should be able to cover the cost of universal healthcare for all when extrapolated throughout the working population.
So let us compare those numbers.
10% (8.55% for healthcare and 1.45% Medicare to normal Revenue) for my employer and me is ,612.80 (,806.40 each), which is less than both currently pay now (,131.93 + ,887.10 = ,019.03 my share and ,131.93 + ,994 = ,125.93 my employer's share). For my wife's employer and her is ,204.41 (5.71 my wife's share and 5.71 + ,632.99 = ,418.70 her employer's share). Reducing the amount down to a 3.5% (2.05% healthcare + 1.45% Medicare) contribution for each for a total of 7% for lower wage workers should make it affordable for both workers and employers.
So to summarize my changes, all outlays except for the relinquishment programs will be brought down to levels from 10 years ago, with a 3% annual growth applied, and a kind rounding up to get to the new level. On top of this, until the total Us Debt is retired there will be a mandatory cap of 3% per year growth applied. There should also be a required constitutional amendment put to a vote to force an annual balanced budget. The Healthcare theory in the United States should be funded by a 2.05% tax on wage for all workers in the lowest 40% of earners and a 7.1% tax on all wage for the top 60% of earners. The employer will match this tax; in replacement for this new tax, Corporate wage Tax will be eliminated. (Most corporations find a way not to pay any corporate wage tax anyway, this new tax would be based off of wage paid in all forms. I.e. Income, bonuses, stock options, etc.) individual wage taxes will be increased by 143.8% for all. The new tax brackets would look like this:
Married Filing Jointly
Marginal Tax Brackets
Tax Rate Over But Not Over
14.30% ,000
21.45% ,000 ,000
35.75% ,000 9,350
40.04% 9,350 2,300
47.19% 2,300 9,150
50.05% 9,150 -
So how does this look in the real world?
I was paid ,064, which I am taxed on for collective safety and Healthcare. I put ,645.72 (8.5% of salary) into a 401k, development my federal wage dutible wage ,744.
78064 - 6645.72(401k) - 6674.47 (8.55% healthcare) = ,744.
For my wife, she was paid ,187, which she is not taxed on for collective safety or Healthcare. She has to put 14.82% towards her pension by law, development her federal dutible wage ,157.
This gives us a combined total of 0,901, our itemized deductions of ,349 and exemptions of ,600 stay the same, giving us a total dutible wage of ,952.
Apply the tax brackets:
14.3% x 17,000 = 2,431
21.45% x 52,000 = 11,154
35.75% x 7,952 = 2,842.84
For a total tax of ,427.84 minus a credit of ,099 = ,328.84. This year under the current tax law I paid ,269 minus a credit of ,099 = ,170. This is an growth of 131%.
So let us look at several wage levels to see how they are affected. I will go with dutible wages of ,000, ,000, ,000, 0,000, 0,000, 0,000, 0,000 and ,000,000, which should give a good reference. (Married filing jointly.)
2010 tax laws
10000 *.10 = 1000 percent of wage in taxes is 10%
40000 = 17000 *.10 = 1700
+ 23000 *.15 = 3450
1700 + 3450 = 5150 percent of wage in taxes is 12.88%
70000 = 17000 *.10 = 1700
+ 52000 *.15 = 7800
+ 1000 *.25 = 250
1700 + 7800 + 250 = 9750 percent of wage in taxes is 13.9%
110000 = 17000 *.10 = 1700
+ 52000 *.15 = 7800
+ 41000 *.25 = 10250
1700 + 7800 + 10250 = 19750 percent of wage in taxes is 17.95%
150000 = 17000 *.10 = 1700
+ 52000 *.15 = 7800
+ 70350 *.25 = 17587.50
+ 10650 *.28 = 2982
1700 + 7800 + 17587.50 + 2982 = 30069.50 percent of wage in taxes is 20.05%
250000 = 17000 *.10 = 1700
+ 52000 *.15 = 7800
+ 70350 *.25 = 17587.50
+ 72950 *.28 = 20426
+ 37700 *.33 = 12441
1700 + 7800 + 17587.50 + 20426 + 12441 = 59954.50 percent of wage in taxes is 23.98%
400000 = 17000 *.10 = 1700
+ 52000 *.15 = 7800
+ 70350 *.25 = 17587.50
+ 72950 *.28 = 20426
+ 166850 *.33 = 55060.50
+ 20850 *.35 = 7297.5
1700 + 7800 + 17587.50 + 20426 + 55060.50 + 7297.50 = 109871.50 percent of wage in taxes is 27.47%
1000000 = 17000 *.10 = 1700
+ 52000 *.15 = 7800
+ 70350 *.25 = 17587.50
+ 72950 *.28 = 20426
+ 166850 *.33 = 55060.50
+ 620850 *.35 = 217297.50
1700 + 7800 + 17587.50+ 20426+ 55060.50+ 217297.50= 319871.50 percent of wage in taxes is 31.99%
New Tax laws
10000 *.143 = 1430 percent of wage in taxes is 14.3%
40000 = 17000 *.143 = 1700
+ 23000 *.2145 = 4933.50
2431+ 4933.50 = 7364.50 percent of wage in taxes is 18.4%
70000 = 17000 *.143 = 2431
+ 52000 *.2145 = 11154
+ 1000 *.3575 = 357.5
2431+ 11154 + 357.50 = 13942.50 percent of wage in taxes is 19.92%
110000 = 17000 *.143 = 2431
+ 52000 *.2145 = 11154
+ 41000 *.3575 = 14657.50
2431+ 11154+ 14657.50 = 28242.50 percent of wage in taxes is 25.68%
150000 = 17000 *.143 = 2431
+ 52000 *.2145 = 11154
+ 70350 *.3575 = 25150.125
+ 10650 *.4004 = 4264.26
2431+ 11154 + 25150.125 + 4264.26 = 42999.39 percent of wage in taxes is 28.67%
250000 = 17000 *.143 = 2431
+ 52000 *.2145 = 11154
+ 70350 *.3575 = 25150.125
+ 72950 *.4004 = 29209.18
+ 37700 *.4719 = 17790.63
2431+ 11154+ 25150.125 + 29209.18 + 17790.63 = 85734.94 percent of wage in taxes is 34.29%
400000 = 17000 *.143 = 2431
+ 52000 *.2145 = 11154
+ 70350 *.3575 = 25150.125
+ 72950 *.4004 = 29209.18
+ 166850 *.4719 = 78367.515
+ 20850 *.5005 = 10435.425
2431+ 11154+ 25150.125 + 29209.18 + 78367.515 + 10435.425 = 156747.25 percent of wage in taxes is 39.19%
1000000 = 17000 *.143 = 2431
+ 52000 *.2145 = 11154
+ 70350 *.3575 = 25150.125
+ 72950 *.4004 = 29209.18
+ 166850 *.4719 = 78367.515
+ 620850 *.5005 = 310735.425
2431+ 11154+ 25150.125 + 29209.18 + 78367.515+ 310735.425 = 457047.25 percent of wage in taxes is 45.7%
So let us compare the two.
,000 of dutible wage increased by 4.3%, ,000 of dutible wage increased by 5.52%, ,000 of dutible wage increased by 6.02%, 0,000 of dutible wage increased by 7.73%, 0,000 of dutible wage increased by 8.62%, 0,000 of dutible wage increased by 10.31%, 0,000 of dutible wage increased by 11.72%, and ,000,000 of dutible wage increased by 13.71%. My end is that applying a flat 143% to the current tax brackets will growth the personal wage taxes in a progressive fashion that I believe to be fair to all.
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Affordable Health Insurance.
