Politicians with a sorry record of managing our economy say that we have a spending problem. In fact, we have a solvable revenue problem, and we can balance the federal budget very soon as the following analysis shows.
According to CNBC’s Maria Bartiromo on March 11, the corporate sector in the U.S. has $3.6 trillion of cash on its balance sheets. According to the CBO and BEA, the fraction of GDP paid in corporate taxes under President Obama is 1.26 percent, lower than any president since Johnson. Having $3.6 trillion, the corporate sector can afford to play a role in deficit reduction.
If the fraction of GDP paid in tax were raised to 3.7 percent, 1 percent above the peak of the Bush2 administration, this would result in about $580 billion of revenue, the additional $300 billion coming out of the $3.6 trillion. The corporate tax could be raised by about $300 billion-500 billion.
The inheritance tax could be raised by $25 billion-50 billion per year, and this would help prevent the formation of an aristocracy in our country, which is an affront to American values.
In 2011 European Union Commission President Jose Manuel Barroso noted that after being fed 4 trillion euros of bailout money from the EU, the banks could afford to pay a transaction tax of 50 billion euros. This tax is in the works now. In our country, such a tax could raise $100 billion-200 billion per year.
According to CNBC’s Robert Frank on March 18, wealthy Americans avoid $40 billion-70 billion of taxes each year by offshoring. Collecting this tax will end the flouting of the law by wealthy individuals like Mitt Romney.
According to Sen. Elizabeth Warren on March 26, “too big to fail” banking institutions in the U.S. currently receive a subsidy of $83 billion per year due to their Dodd-Frank-induced lower funding costs. A tax imposed on these banks to recoup this subsidy would raise a welcome $83 billion.
Eliminating what remain of the Bush2 tax cuts would generate roughly $100 billion.
The total revenue generated from these taxes works out to be $648 billion to $1.3 trillion per year, with the mid range being $825 billion. Since the CBO projects an $845 billion deficit this year, if these taxes were passed, the result would be a budget deficit of $20 billion.
These measures satisfy the Republicans’ feigned desire to balance the budget and do no harm to the economy. Most importantly, they put a stop to the piling of debt onto young Americans.
As usual, the primary obstacle to repairing our country is the intransigent Grover Norquist idolaters who inhabit the House of Representatives. This group won control in 2012 with 47.7 percent of the popular vote. They offer our country no solutions other than hacking the government to nothing and irresponsible anti-tax fanaticism.