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It's a weekend, so I figure I'll take the liberty to explain a bit about why I seem to confuse some as to whether I'm a liberal or a conservative. I would probably classify myself as more interested in what is fair (seems to be increasingly rare today).

I guess, though I've avoided the topic since I started posting on the Fools, it's time to explain a bit about my personal philosophy as apparently some have become confused by my stances.

My belief on taxes is that enough taxes should be collected to pay for the level of services that we demand from our country.

In order to understand my view of taxes, it helps to understand that my views of the economic strata of this country go back to what I learned in school, adjusted for inflation.

Simplistically I'll separate these by assets, rather than earnings (but the taxes would be on earning - which can be usually projected from the asset base).

At the top of the food chain are the "multi-millionaires" (those whose assets would have been a couple of million bucks or more when I was a kid). Today they are referred to by banks as "Ultra High Net Worth" individuals and are now presumed to have assets (excluding primary residency) in excess of $25-$30 million US (depending on the bank). They can afford servants.

The intermediate class of "millionaire" seems to be missing today.

The next identified tranche is "high net worth" which the banks usually define as individuals with assets of $5 million or more (excluding primary residence. These are not wealth enough to hire full time servants (in the US, at least) and, consisting of lawyers, doctors, many financial types, small and medium sized business owners, etc. make up the tranche which was known previously as "middle class". This class has always been less than 5% of the total population (usually 2-3%).

The vast majority of Americans belong to what used to be called "working class", but nowadays is called the "middle class". This change of name is important as it has changed consumers to striving to attain the trappings associated with middle class by overextending themselves. It has also been more successful in increasing US consumer sales than placing "rinse and repeat" on the labels of shampoos.

Below this tranche are the "working poor" - those who work for a living, but whose salary does not allow them the luxury of owning those trappings of our society which are expected: cell phone, car, plasma TV and so on.

At the lowest rung are those who, for one reason or another, do not have employment and are on public assistance of one sort or another.

Before discussing how to pay for the services, we have to decide what to prioritize as a society.

1) Every civilized government on earth has a national health program. In general these provide excellent care at no direct cost to the patient. They are efficiently run with cost of pharmaceuticals and appliances negotiated by the government to be as low as possible. In many countries pharmacists can prescribe for most simple medical events and doctors used for more necessary tasks. Doctors are well enough compensated to live at a somewhat higher than standard lifestyle (but their life is more predictable and less stressful because they are generally not held liable for medical malpractice). Hospitals are compensated well enough to provide professional, clean care, but expensive pieces of diagnostic equipment (such as MRI's CAT scans and so on are generally shared by all the hospitals in a community. When Japan's government cut down the reimbursement on CAT scans, Toshiba responded by building lower priced units. Our current "attempt" at a national program is a travesty which serves the purposes of the health insurance companies, rather than our population (or even our hospitals).

2) We have had a number of very successful decades (say two generations) of social programs designed to level the playing field based on race. Somehow "minority status" has expanded to include close to a majority. Somehow Asians are a minority in the US, but Albanians are not. We have a president who is half minority, and many who claim status if they are 1/4, 1/8 or whatever. At this stage of the game, it is economic status which should be far more important when it comes to assistance than race, religion, sex or so on. This does not mean we should relent on laws which forbid discrimination, but rather that our preferences for assistance change towards those who most need it today (rather than those who needed it 50 years ago).

2) Free higher education for those who score well academically is important. We currently have an educational system which has become so expensive that it is a burden for many to attend. The very wealthy can afford school and the poor are assisted. The talented caught in the middle have problems. While we cannot force high quality private schools to change their policies, I truly believe that all public colleges should be free (or charge nominally) to all students whose national test scores (SAT's) exceed the 75th percentile. We should offer incentives to those entering technical subjects such as engineering and the sciences as these will be the areas most likely to generate future national growth.

3) Food assistance programs should only cover the cost of foods which are "good for you". They should not cover cheese "product", sugary foods (anything with a prize in the box probably isn't even food) and so on. If we have a health problem with obesity, diabetes and such in this country, curing it at this level will help keep health costs in check.

4) The indigent should receive public assistance to a better than subsistence level, but not including luxuries (such as cell phones).

5) The government should, as part of it's communications franchise agreements provide high speed inexpensive internet on a national basis. While provided through utilities in Europe, connection is universal, much higher speed and far cheaper than in the US. While each of our phone bills has a "Universal Service" charge on it, no one seems to have thought about using it for this purpose.

6) While we need a military, we need to resist the temptation to get embroiled in wars which do not justify the expense in money and lives. We have recently spent a great deal of money fighting two wars - the first in Iraq where the "winner" was Iran and the second in Afghanistan where there is no winner and no particular objectives (other than the relocation of terrorist training camps) seems to have been accomplished). The theory that this budget is never allowed to be cut should be taking in the context of what our military's mission is and how best to accomplish it.

It is important to realize that all it means when the federal government cuts aid to states is that state taxes will have to be increased to compensate if people want to retain the same level of service. Screaming by governors seems ludicrous as it really doesn't matter to me which government I pay my taxes to.

Of course there's lots more to spend money - these are just a couple that come to mind.

So now come where we pay for this. Before we begin, it's important to realize that, under today's estate tax rules, the wealth basically give over half their net worth to the federal government when they kick the bucket. They contribute without cap to Medicare and then pay close to four times what everyone else does to participate. That said, they can afford to pay a somewhat higher percentage towards income tax than others, but it is important to realize that this country was not formed with a social contract which included wealth distribution - in fact with the opposite position in mind. We are simply paying for shared services when we pay taxes, not charity from the wealthy to the middle class.

So I've already drawn the tranche lines above. In my mind, there should be NO deductions (none, nada). Income is income (doesn't matter the source, be it wages, dividends, interest, rent or whatever). A flat tax on the (current) middle class, a 5% surcharge on the "high net worth" tranche and an additional 5% on the "ultra-high net worth" tranche. The working poor would get nothing. Those on unemployment for greater than 26 weeks would have to work at a public service oriented job at a compensation level equal to their unemployment insurance. If they are truly interested in working, but there are no jobs available to suit them, at least we, as a society, should benefit from our generosity.

The tax rate will be adjusted to cover our expenses. If this is not sufficient, a national "value added tax" (sales tax) of 10% will be added to all purchases excluding food.

Everybody's nominal percentage of income tax will be reduced. Everybody's contribution towards taxes will increase (in the case of those who consume a lot, like the wealthy, this may be by a lot). Will the middle class pay more taxes? Yeah, so what - at least they will get a great deal of benefit from them. Will the rich pay more? Of course. Are the poor protected - yeas, they will have housing, not only not starve, but be forced to eat healthier food.

Those of our citizens who live outside our borders (since Medicare doesn't work there, our military doesn't protect us, etc., etc.) would (like the citizens of every other nation on earth) be able to chose whether to pay US taxes or those of the country of our residency.

Yes, I know this sounds like Europe. So what - we have some good ideas, but so do they.

Obviously, since I want services to go up for everyone, I'm not a "conservative" as the word is used today. As I want taxes to increase for everyone and to end Affirmative Action for minorities as it exists today (though it will be replaced with a similar program for the financially disenfranchised) it would be hard to call me a liberal. Both political parties would blanch at what I've outlined above, so I guess I am an Independent.

We are the "home of the brave", but we are far from being in "the land of the free". Until we have a major rethinking of what our priorities are and how best to achieve them, we will be tools for others who have their own agendas and manipulate us for their benefit.

Jeff
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