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Nickel Tax
The Nickel Tax Plan
(Stop Kicking the Can Down the Road for Our Kids and Grandkids)
The Mess
I have a solution for all of those politicians and pundits who claim to
be concerned about the economic crisis of our nation, kicking the can
down the road, and the mess we're leaving for our children and
grandchildren. Regardless of how we got in this mess, the
facts are that the federal government spends 17% more ($500 billion)
more than it receives, and because of this, we owe a $19 trillion
national debt. I'm a fiscal conservative, and I think we need
to curb our spending, but we can't fix this without also increasing
revenue. Because we're the ones responsible for this
mess, I'm willing to also temporarily increase
taxes in order to fix it for the next generation.
Still, the key to the plan is spending cuts. It cuts ALL
spending, so whoever gets money from the federal government will get
less, whether you're a defense contractor or a retiree. If you
don't receive any money from the federal government, there's nothing to
cut. However everyone who pays taxes will temporarily pay more.
The Nickel Plan
I propose the Nickel Plan to not only balance the budget, but to also
pay off our national debt. Here are the components of the Nickel Plan:
- Permanently decrease ALL spending (no exceptions) by 5% per year for three years.
- At the end of three years, enact a Balance Budget Amendment,
freezing spending forever at the current level at that time.
- Temporarily increase all taxes by 5% per year for 11 years.
(Yes, it hurts. We did it--We fix it.)
- At the end of 11 years, freeze the elevated tax rate for three more years (at about 67% of the 2015 level).
- At the end of 14 years, cut taxes by 50%, to a level of approximately 88% of the current tax levels, forever.
Results:
- Balance the budget in 2 years.
- Pay off the national debt in 14 years.
- In 2029, hand our children a
balanced budget, no debt,
$560 billion in the bank,
and a lower tax
rate at only 88% of the 2015 level.
Details
- Permanently Decrease ALL spending (no exceptions)
by 5% per year for three years.
This means that for every dollar spent by every department of the
federal government in 2015, only 95% of that amount would be spent in 2016.
For example:
- Instead of spending $1,042,000,000,000 on Social Security and pensions like we did in 2015,
we would spend only $990,000,000,000 in 2016.
- The average Social Security check would decrease by $60, from $1200 / mo. to $1140.
- With this plan, it would take 6.5 years for a person to get back everything he had paid in, instead of only 6 years.
- Instead of spending $960,000,000,000 on Medicare & Medicaid like we did in 2015,
we would spend only $912,000,000,000 in 2016.
- Instead of spending $627,000,000,000 on national defense like we did in 2015,
the military would have to scrimp by on only $596,000,000,000 in 2016.
- Instead of spending $534,000,000,000 on welfare like we did in 2015,
we would spend only $507,000,000,000 in 2016.
At the end of three years, the budget would compare as follows:
|
2015 |
2018 and Beyond |
| Social Security / Pensions |
$1,042,000,000,000 |
$886,000,000,000 |
| Medicare / Medicaid |
$960,000,000,000 |
$816,000,000,000 |
| National Defense |
$627,000,000,000 |
$533,000,000,000 |
| Welfare |
$534,000,000,000 |
$454,000,000,000 |
| Interest |
$228,000,000,000 |
$193,000,000,000 |
| Other (Education, Transportation, etc. |
$259,000,000,000 |
$219,000,000,000 |
|
$3,650,000,000,000 |
$3,101,000,000,000 |
- Increase all taxes by 5% per year for 11 years.
This means that if a person was in the 15% bracket in 2015, he would
pay 15.75% in 2016. If he paid $10,000 in federal income
taxes in 2015, he would pay $10,500 in 2016, or $500 more. If
a person was in the 25% bracket in 2015, he would pay 26.3% in
2016. If he paid $15,000 in federal income taxes in 2015, he would pay $15,750, or $750 more.
At the end of 11 years, freeze the elevated tax rate for three more
years (at about 67% of the 2015 level). At this point, the
person who paid $10,000 in 2015 would be paying about $16,667 for the next three years.
At the end of 14 years, cut taxes by 50%, to a level of approximately
88% of the 2015 tax levels, forever. At this point, the
person who paid $10,000 in 2015 would be paying about $8,800, forever.
Here are the details:
The Nickel Plan
| Year |
Spend |
Receive |
Deficit / Surplus |
Debt |
Current 15% Tax |
Current 25% Tax |
| 2015 |
$3,650,000,000,000 |
$3,249,000,000,000 |
-$401,000,000,000 |
-$19,000,000,000,000 |
15% |
25% |
| 2016 |
$3,467,000,000,000 |
$3,411,000,000,000 |
-$56,000,000,000 |
-$19,056,000,000,000 |
15.8% |
26.3% |
| 2017 |
$3,284,000,000,000 |
$3,582,000,000,000 |
$298,000,000,000 |
-$18,758,000,000,000 |
16.5% |
27.6% |
| 2018 |
$3,101,000,000,000 |
$3,761,000,000,000 |
$660,000,000,000 |
-$18,097,000,000,000 |
17.4% |
28.9% |
| 2019 |
$3,101,000,000,000 |
$3,949,000,000,000 |
$848,000,000,000 |
-$17,249,000,000,000 |
18.2% |
30.4% |
| 2020 |
$3,101,000,000,000 |
$4,147,000,000,000 |
$1,046,000,000,000 |
-$16,204,000,000,000 |
19.1% |
31.9% |
| 2021 |
$3,101,000,000,000 |
$4,354,000,000,000 |
$1,253,000,000,000 |
-$14,951,000,000,000 |
20.1% |
33.5% |
| 2022 |
$3,101,000,000,000 |
$4,572,000,000,000 |
$1,471,000,000,000 |
-$13,480,000,000,000 |
21.1% |
35.2% |
| 2023 |
$3,101,000,000,000 |
$4,800,000,000,000 |
$1,699,000,000,000 |
-$11,781,000,000,000 |
22.2% |
36.9% |
| 2024 |
$3,101,000,000,000 |
$5,040,000,000,000 |
$1,939,000,000,000 |
-$9,841,000,000,000 |
23.3% |
38.8% |
| 2025 |
$3,101,000,000,000 |
$5,292,000,000,000 |
$2,191,000,000,000 |
-$7,650,000,000,000 |
24.4% |
40.7% |
| 2026 |
$3,101,000,000,000 |
$5,557,000,000,000 |
$2,456,000,000,000 |
-$5,194,000,000,000 |
25.0% |
43.0% |
| 2027 |
$3,101,000,000,000 |
$5,019,000,000,000 |
$1,918,000,000,000 |
-$3,276,000,000,000 |
25.0% |
25.0% |
| 2028 |
$3,101,000,000,000 |
$5,019,000,000,000 |
$1,918,000,000,000 |
-$1,358,000,000,000 |
25.0% |
43.0% |
| 2029 |
$3,101,000,000,000 |
$5,019,000,000,000 |
$1,918,000,000,000 |
$560,000,000,000 |
25.0% |
43.0% |
| 2030 |
$3,101,000,000,000 |
$3,129,000,000,000 |
$28,000,000,000 |
$588,000,000,000 |
13.0% |
22.0% |
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