Wednesday, January 25, 2012

Radical Idea #2: Simplifying Federal Income Tax Rates

In light of the current debate about tax reform, I believe the first step in that reform is changing the way we assess our citizens' income taxes on their hard-earned wages. The balance is to not punish those in society who have been successful in this capitalistic system while not shifting the burden of tax payments on the working class. In other words, fairness.

Currently, there is a push to tax the wealthiest Americans, that is those who make more than $1 million a year in adjusted gross income, at a rate of 30 percent. While in this battle between the haves and the have-nots, that seems fair and appeals to our populist nature, it does give the impression that our government, who has historically benefited from the successes of the captains of industry, now want to put a damper on those financial achievements.

In Mississippi, we tax our citizens' income in this manner: The first $5000 is assessed at 3 percent, the second $5000 at 4 percent and the remainder at 5 percent. That means basically every worker in Mississippi is paying taxes in all three tax brackets. It is lower than the current Federal rate and could be replicated at the Federal level, but it would be a significant decrease in revenue to operate the national government.

Here is my radical idea, based on the 2010 national adjusted gross income for the United States, which was around $8.3 trillion: I believe that there should only be three tax brackets, and corresponding rates, for generating tax revenue. The first bracket should consist of all incomes below $50,000 and should be taxed at a rate of 7 percent; the second bracket should consist of all incomes between $50,000 and $99,999.99 and should be taxed at a rate of 12 percent; and the third bracket should consist of incomes from $100,000 and over and should be taxed at a rate of 15 percent.

Based on that $8.3 trillion gross income figure, this bracket system will generate over $1.032 trillion in income tax revenues. That would be a reduction of $131 billion in tax revenue collections compared to last year, but if my previous idea is enacted dealing with reforming Medicaid, the Medicaid savings would be greater than the loss of revenue in the new tax plan.

For those who think this would be a regressive tax on those with lower incomes, let me make this argument: the average median income in the United States is around $45,000 or $3750 a month; in the present tax structure, the monthly Federal income tax withholding on $3750 a month is around $405. If my idea is adopted, the monthly withholding would decrease to around $263, a savings of $142. I know I could use an additional $142 a month in my pocket, and so would every American taxpayer.

Ever since the 16th Amendment to the US Constitution was ratified in 1913 (Mississippi was the 5th State to ratify the amendment in March of 1910), fairness in taxation has been an issue. This is my radical idea to address that age-old concern. As always in the legislative process, there is still more work to do in dealing with restructuring the tax code to address standard deductions and so forth, but I contend that in order to have those discussions, this issue has to have consensus first.

For too long we, in America, have treated fairness like beauty, it is truly in the eyes of the beholder. To me, fairness should never be subjective, it should be a universal standard, and I think this idea leads us toward that goal.

Monday, January 23, 2012

Radical Idea #1: Changing Medicaid

Having been a candidate for the United States Senate, my thought process has been focused more at a national level than a local one for quite some time. Although I totally base my national thought process on how it would improve the lives of the people in my adopted home state of Mississippi, it is a national thought process nonetheless.

Upon expressing that, I also believe that the country that I live in has gotten into a rut concerning radical political policy. We have truly become a country of political cowards, deeming every man-made policy as a sacred institution, that whenever some think about changing the way we do things, those individuals are treated as heretics or blasphemers.

Well, since I am not a candidate on any ballot in the year 2012, I have nothing to lose by expressing my thoughts about radical changes that need to be made to make my country great again. My reputation in the Mississippi Legislature was to introduce legislation to provoke thoughtful discussion and hopefully change policy for the betterment of the people I served. It is in that sense of self-made tradition that I offer this suggestion.

Medicaid was instituted in 1965 to provide medical aid to a limited number of low-income Americans receiving government financial assistance. In 2010, the cost to the Federal Government to operate this noble endeavor was $275 billion. With increasing medical costs, this program could basically take up half of the Federal budget over the next ten generations. That thought alone makes the current way we deliver Medicaid cost prohibitive in the long term.

I say let's do something radically different with the way we allocate Medicaid dollars. Instead of Medicaid being essentially a medical insurance policy for impoverished Americans, let it become a grant program for those same Americans to get quality, private health insurance. If the recent health care reform law survives the Supreme Court's constitutional review, it will be a requirement for every American to have health insurance by 2014. Why not make Medicaid the delivery system to make that happen?

For what we are paying now for some 45 million Americans to have complete annual health care access, we can pay a $183 monthly premium for every American for five months. Thus if we applied that same monthly premium payment for those same 45 million Americans for a year, it would only be $99 billion, a savings of almost $175 billion. The $183 monthly premium number is the average Americans paid for individual health insurance in 2011. The average deductible was around $2500.

Now the critics will say that insurance companies will not want to insure these individuals because of the propensity for increased payouts. My argument is that health insurance will always have a greater propensity for payouts compared to life, auto or property insurance regardless of the clientele because of the nature of the insurance. Everybody wants to be healthy, therefore they will do what is necessary to be that way, which means going to the doctor when they are not feeling well.

The way the system is setup now, people run to the emergency room when things become a crisis, there is no incentive for preventive care and the majority of Americans cannot identify a family physician when asked. Private insurers offer those wellness incentives with their policies.

The specifics for cost controls within the new Medicaid program could be legislated, but they do not have to go any further than within the current program. Currently, several states offer Medicaid/SCHIP-funded premium assistance programs already. My contention is that the premium assistance program should be the primary focus of the new Medicaid program I am suggesting.

This will help states trim down or totally eliminate their Medicaid burden, which is essentially a Federal tax assessed on the states in the form of matching funds, thus freeing up their respective budgets. And if the states have more money, then taxes do not have to be raised to cover these increasing costs and maybe they might put more money in other programs, say like education for example.

Also, with the insurance companies having more skin in the game, so to speak, then the private industry of insurance can challenge the private industry of health care to deal with controlling the cost of health care and pharmaceuticals without the immediate threat of the government clamping down on the free market system as it relates to health care.

There will be those in the social justice community that will state this places an undue burden of the poor. That argument is hallow in light of the fact that the President they supported mandated that everyone must have health insurance and it is unrealistic in these political and economic climates to expect any elected official to just raise taxes to pay for a service that rises quicker than any pay raise or tax increase, or the rate of inflation for that matter.

This radical idea stays within the Preamble of the US Constitution in regards to promoting the general welfare, but it adds that dimension of individual responsibility that is needed for a society, and the very basic unit of that society, the family, to survive.

Again, this is my radical idea. Every idea I have heard so far basically cuts out the families that are already under the system and does not create the environment for thorough discussion, let alone consensus, of controlling the cost of health care. This one, I believe, relieves the pressure of the Medicaid program on the Federal and the respective states' budgets while providing a much needed program to the citizens of this great nation.

I am sure I am not the only one who has thought about this but I am putting it out there. Maybe, as it was when I was in the Mississippi House of Representatives, this will get people talking about it and, more importantly, doing something about it. Because that is what enabling public policy is all about.

Monday, January 16, 2012

How Dr. King inspired me

I remember in 3rd grade, I first heard the famous refrain from the "I Have A Dream" speech. As a child, I believed that anything was possible, including a world where the content of one's character was more important than one's appearance. I was optimistic for a better world even though I did not know how bad the world I lived in was.

I never experienced racism as a child in Chicago, although I lived in a segregated society. When it was time for me to ride the bus, I could sit wherever I wanted. When I went to a store, I did not have to enter in the rear entrance. When it was time for me to register to vote, I had no problems doing so. When I found out that the Rev. Dr. Martin Luther King, Jr., the author of that great sermon, was one of the driving forces to make those things possible, I was inspired.

As an ardent student of Black History, it appalled me that American citizens were denied these basic rights because of the way God made them. Therefore, as I read about the struggles of the Civil Rights Movement and how Dr. King, using tactics from Gandhi and guided by his Christian theology, became the inspirational leader of that movement, I was motivated to follow the calling God placed in me.

That calling was politics. I believed that through public service, I could contribute to making "The Dream" a reality for all of America's citizens. Economic opportunity, personal advancement, peaceful co-existence, those were the goals of the movement and of Dr. King. I adopted those goals as well, and did my dead-level best to create legislation that allowed those things to come to fruition.

My inspiration was fueled by an internal passion to do well, but it was guided by a very simple principle Dr. King stated, "A man who has nothing to die for, is not fit to live." I took it as a challenge personally to do all that I could to do what needed to be done.

I am a better person because of Dr. King. Hopefully, when my life is over in this realm, I will hear the words, "Well done, my good and faithful servant." When I hear that, then I know that I lived up to the expectations Dr. King believed all of us could achieve as children of God.