Although there are countless "pundits" who pretend otherwise, it's astonishingly simple to repair the U.S. federal budget:
- Restore corporate and personal income taxes to early Reagan Administration levels.
- Treat capital gains exactly the same as any other income, albeit with capital gains indexed to inflation.
- Treat estate transfers exactly the same as any other income, with $3 million (indexed to inflation) and spousal exemptions.
- Eliminate the "carried interest" and related loopholes.
- Introduce a 40% tax rate plus time limitations on non-repatriated corporate earnings, less credit for foreign taxes paid.
- Offer states and localities centralized federal collection of their corporate and personal taxes. They could set a single percentage based on federal taxes owed. Residents of states that choose not to participate would default to 3%, which the federal government would keep. Whether participating or not, states and localities would still be free to levy their own taxes.
- To reign in healthcare spending (and improve outcomes), open up the Veterans Affairs and Medicare health insurance programs to all Americans.
- Extend Social Security contributions so that there's no income cap and so that all forms of income are included. Also exempt the first portion of income (e.g. the first $15,000, indexed to inflation).
- Cap defense spending at 4.0% of GDP for 5 years then 3.5% of GDP thereafter, with exceptions only permitted if the U.S. Congress passes a formal declaration of war against a specifically named country, if the excess funds are dedicated to that narrow purpose, and if Congress renews that declaration every 24 months.
