Wheels pounding down, and We have a short time to get there! Read this Post from the Tax Foundation. State and Local entitlement commitments continue to increase at real performance rates, yet taxes are assumed to be gaining; though not anywhere near 2008 standards. Current recapture rates means there will not be a equivalent Tax base until sometime in 2014. It is my estimate that State and Local commitments will have increased by around 28% within that Time-frame, and States were not paying the bill even in 2008.
The situation is left in the air with this Post information. You can really begin to groan when We reach the understanding this concerns federal commitments, and not the State and Local commitments discussed in the previous paragraph. We are short of revenue at all three levels of Government, and almost no one comes to rescue even with Suggestions. The We face the reality that any redress proposed will be opposed by practically half of the body politic. It may be time to await the Collapse, but I will attempt some sensible Rules which might get a mild majority of support.
Rule Number One: Separate Social Security and Medicare. It is the only way to shore up the real Social Security Fund, and allowed Medicare to integrate with Medicaid and Private Health into a guaranteed Health Care program. This later is utterly necessary to save State and Local forms of Taxation without breaking the bank.
Rule Two: Establish a formal agreement between Local, State, and Federal Government on the type and consistency of taxation. This agreement should clearly outline that Localities are expected to pay for 70% of their budgets from Property taxation, and receive the rest (30%) of their budgets from State transfer of Sales taxes, and Entertainment admittance Taxes. States will collect all Sales taxes, but are committed to paying 20% of Local budgets from Sales taxes. States will also collect 20% of all Property tax revenues within the State, the Sales taxes, and no more than 20% of their budget requirements from Income taxation. The federal government will receive full value for all Excise taxation, and all Income taxation must be based upon the federal Income tax system. The federal government, in order to get State and Local agreement to limit their intrusions in federal tax areas, will pay Local governments the entirety of all Capital Gains collected within the locality; this while granting State and Local authorities to stop reduction of such Capital Gains below 15%. States will be disallowed from collection of Inheritance taxes, but the federal government must agree to collect at least 15% on all inheritances exceeding $5 million which they must share equally with State and Local governments (33%-33%-33%). Now We can start the Argument. lgl