The HAL Project’s purpose is to address, what I consider, three of the most pressing issues (besides COVID-19) facing the country: guaranteeing a living income, mitigating the nation’s wealth disparity, and creating a rainy day fund. These three interconnected, non-mutually exclusive objectives can be achieved in due course.
A LIVING INCOME
It is in the country’s interest to improve the financial lives of those on the lower rungs of the income ladder. Working Americans should be able to afford food, housing, and health care. In the event businesses do not provide a living income to its employees, federal, state, and local governments should provide the difference between what someone earns and a living income.
In addition, all Americans should have access to a job. If jobs in the private sector are not available, then the government needs to step up to the plate. These jobs can and should improve society, even if it’s cleaning streets, subways, or parks.
A prorated living income for those who choose to work part-time and a living income for those who are physically or mentally unable to work part- or full-time should also be guaranteed. Consequently, need-based government programs, such as food stamps, housing subsidies, and Medicaid, are not needed.
THE WEALTH GAP
A healthy democracy cannot afford considerable inequality between the haves and have nots. Net wealth levels that mirror the 1950’s, 60’s, and 70’s should be the aim. While this time period had the smallest wealth inequality in the United States since records have been kept, it is not necessarily the Holy Grail. A national debate on what constitutes an appropriate level of wealth disparity is needed. For example:
Should the Bottom 50 Percent Quartile = the Top 1 Percent?
Should the Bottom 50 Percent Quartile = the Top 2 Percent?
Should the Bottom 80 Percent Quartile = the Top 20 Percent?
Should the Bottom 90 Percent Quartile = the Top 10 Percent?
There is not one right answer. But, that doesn’t mean, as a country, we shouldn’t have a conversation on wealth inequality.
RAINY DAY FUND
Regardless of one’s opinion on the merits of deficits, the fact is for every dollar spent servicing the national debt could be used to improve the country’s standard of living, e.g., increase the living income amount or reduce taxes or both. The country should strive for surplus budgets. There are times, such as wars, economic crises, natural disasters, and necessary infrastructure projects, e.g., the Interstate Highway System, when deficit spending is either required or beneficial. A rainy day fund should be created for emergencies, such as pandemics, as the national debt is eliminated.
AN INTERACTIVE WEBSITE
People make decisions and hold certain beliefs based on hearsay, false information, wrongheaded perceptions, or one-sided facts. In order to improve people’s lives through governmental policies, a website providing factual and complete information is needed to educate the public.
As an integral part of the campaign to change public opinion and laws, an interactive website will be developed to enable individuals to determine how government programs and tax laws impact their (financial) lives. This website will address, at a minimum, the following five topics.
1. Do individual recipients receive more or less in Social Security and Medicare benefits than the amount of their contributions?
Inasmuch as Social Security and Medicare benefits will have a direct influence on The HAL Project’s success in achieving its objectives, these benefits must be addressed. People have absolutely no idea if they receive more or less in Social Security and Medicare benefits than what they contribute. Information is needed before an intelligent and honest discussion can occur on the rate of future benefit increases.
The website will calculate the amount of Social Security and Medicare taxes an individual and his / her employer(s) have contributed along with a rate of return on these contributions since that person has been working and then extrapolated to the person’s actuarial life expectancy. Once these numbers have been calculated, they will be compared with the amount that individual is scheduled to receive.
The website will also calculate the contributions of those individuals who will never receive Social Security and Medicare benefits as well as those who receive disability or survivor benefits. These calculations will include what they and their employers have contributed along with a rate of return on these contributions.
A. Are the Social Security and Medicare contributions an individual makes and benefits received actuarially sound?
B. Will an individual receive more or less in Social Security and Medicare benefits than if his / her contributions had been invested in T-Bills and index funds of the DOW, S&P, and NASDAQ?
C. Compare the ROR of the Social Security and Medicare Trust Funds with the ROR of T-Bills and index funds of the DOW, S&P, and NASDAQ.
2. How much is spent by federal, state, and local governments to provide public assistance and how much revenue is lost from earned income tax credits and need-based charitable tax deductions?
The website will calculate the amount of public expenditures to provide need-based assistance, such as food stamps, housing subsidies, and Medicaid. These expenditures will also include the operating expenses of government programs, such as staff and office costs. Plus, the amount of increased tax revenue that would result from eliminating need-based tax deductions will be calculated.
3. Provide wealth disparity data by year since 1910.
This information will be in absolute terms and by percentages. The value of the dollar will be constant in order to make accurate comparisons.
4. Calculate the amount of revenue that could be generated from the following sources to fund a living income, lessen the wealth gap, and create a rainy day fund.
A. The first new source of revenue applies to nonresidents who have investments in the United States. These investors will pay an investment tax (TBD) based on the value of their American investments.
B. The next source of revenue is a living income tax (TBD) on businesses whose employees don’t earn a living income. This tax is based on a percentage (TBD) of the amount federal, state, and local governments disburse in order for these employees to have a living income. The living income tax will be prorated for part-time workers based on the number of hours worked.
C. Another source of revenue is an outsourced tax (TBD) on businesses that outsource workers. This tax is based on a percentage (TBD) of the amount federal, state, and local governments would disburse in order for these employees to have a living income if they resided in the United States.
A byproduct from this tax is the diminution of the financial advantage to outsource.
D. A net worth tax is another source of revenue. The tax rate (TBD) is based on the net worth of an individual, trust, foundation, or corporation.
The Estate tax will be abolished when a net worth tax is enacted.
E. The fifth source of revenue is capturing the loss of revenue when individuals and businesses receive special tax benefits, such as agricultural subsidies and the oil depletion allowance.
Some special tax benefits are in the public interest. It’s not The HAL Project’s purpose to say what a special tax benefit is or if such a tax is worthwhile. Instead, the right and left will identify what they consider an unfair tax advantage. Then, the website will calculate the increased revenue from reducing or eliminating each of these special tax benefits.
F. The elimination of tax exemptions for religious and private educational institutions is yet another will of potential revenue. While this one might be a tad controversial, it should be part of the conversation.
i. Determine the amount of taxes that religious institutions (churches, synagogues, mosques, etc.) would pay if their tax-exempt status was revoked.
Why are religious institutions given tax exemptions? The HAL Project should be a party to an amicus “Separation of Church and State” brief that tests the Constitutionality of giving religious institutions a preferential tax treatment. Currently, the State decides what constitutes a religion in the tax code. Isn’t that a form of a State sanctioned religion? Does the Constitution allow such a recognition? Focus on overruling (At least one part?) of the Lemon test. Strict Constructionists – if they are intellectually honest – should agree with our position.
i. Determine the amount of taxes that private educational institutions would pay if their tax-exempt status was revoked.
Why are private educational institutions, such as Harvard, Yale, and other Ivy League schools, given tax exemptions? And, why should financially strapped taxpayers subsidize students from other countries as well as students from wealthy families who go to private schools?
5. Calculate the cost to fund – depending upon various income levels – a living income policy.
The working poor frequently don’t qualify for government assistance because they earn too much. People should be encouraged, rather than penalized, for working. In the event this policy is phased in over time, the working poor should be the first group to receive a living income.
The HAL Project will execute a marketing campaign advocating the enactment of laws supporting a living income policy, reducing the wealth gap, and creating a rainy day fund. The resources required for the advertising aspect of the campaign may only be available if HAL is developed or outside funding is obtained. Notwithstanding the availability of HAL contributions, The HAL Project may consider raising funds from other sources if needed to ensure the successful adoption of its three objectives.
Guaranteeing a living income policy, reducing the wealth disparity, and eliminating the national debt are worthwhile societal aims. All three objectives can be achieved in a fiscally responsible manner if several of the following occur.
Monies saved from eliminating federal, state, and local government need-based expenditures.
Increased revenues from eliminating earned income tax credits and need-based charitable tax deductions.
Monies saved to service the debt as the deficit decreases and the national debt is reduced.
Increased revenues from enacting a nonresident investment tax.
Increased revenues from enacting a living income tax.
Increased revenues from enacting an outsourced tax.
Increased revenues from enacting a net worth tax.
Increased revenues from reducing or eliminating special tax benefits.
Increased revenues from eliminating tax exemptions for religious institutions.
Increased revenues from eliminating tax exemptions for private educational institutions.
The HAL Project is a heavy lift. Implementing these proposals borders on the unrealistic in the realm of possibilities. If Donald Trump can be elected president, then anything is possible in today’s political climate.
The likelihood for legislative success will largely depend on decoding the DNA gene that causes people to have political and economic viewpoints that are not fact-based and are antithetical to their beliefs and value systems. This is our challenge. This is my calling.