Mike Kolls (L) for Congress

United States House of Representatives
Texas District #24 - map

email - Rep@tx24.us

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Real Tax Reform

 

Yes, we are taxed enough already. Half of us bear the burden for all. This needs to change.

And, the existing US Tax Code is dysfunctional. It is certainly ineffective and even more so, inefficient. At its core, the tax code is a fountain of unintended consequences and crony concessions. Every desired outcome (a foolish notion...) has failed to materialize. Nudging public behavior via “Tax Policy”, is a nonstarter.

The Real Pressure

As bad as the above picture is… there is a darker, more-sinister scandal. Federal spending is out-of-control. Every federal program escapes review, is NOT re-evaluated or analyzed... nothing is corrected. Federal programs run on auto-pilot and extort more tax dollars each year.

The White House has cried for “Tax Reform” [July 2017] to alleviate burdensome taxes (a mere symptom). Surface-level “reforms” will NOT reverse the deeper currents of out-of-control federal spending. If these superficial tinkerings are revenue-neutral or reduce tax receipts, they will further aggravate annual deficit spending... and the massive federal debt.

The pressure is building. Mr Trump's "reform"/tinkering will cause a fiscal explosion. (right)

In 2017, with an annual deficit and a massive, expanding federal debt of near $ 20,000,000,000,000, wholescale tax relief is a dangerous idea - yugely dangerous.

Federal tax cuts in July 2017? I vote – NO.

By 2040 (hopefully), YES...


Tax Reform


Drain the water / Debt

The National Scandal

The federal gov’t spends too much - plain and simple. Each year it spends more than it extorts from We The People.
  •   The accumulated federal debt is near $ 20,000,000,000,000!
  •   The FY17 deficit is $ 693,000,000,000, per the CBO
  •   A flood of debt (left)

My plan is simple in concept… but, exceedingly difficult. It requires real change in federal spending and a new national philosophy.

When our federal debt is reduced, it will be time to discuss tax reductions. IMHO, we can begin discussing tax reductions when the massive federal debt is less than $ 10,000,000,000,000, about half of the current federal debt. We will then continue to pay-off the federal debt in-full.

Under no circumstances can federal taxes be increased. Let Congressmen be warned. Increased taxes will result in a ticket home.

 

Do Tax Cuts Stimulate? Enough?

Today1 = with an annual deficit and a massive federal debt

Plans to cut-in-half corporate income taxes will NOT work today1. To produce the same tax receipts, business would have to double their profits… impossible. Anything short of this miracle would reduce tax receipts… and increase the annual deficit.

Besides, corporate income taxes are only about 12% of total federal tax receipts. Tinkering here will NOT have a major impact.

Plans to cut individual income taxes will also NOT work today1.

Let's assume a 20% cut to individual income taxes. If all “saved taxes” are spent (and they won’t be), federal income tax receipts would be reduced by 11%.

Hypothetical 20% CutFY18 ProjectionChangeRevised AmountNotes
Individual Income Tax$ 1,827- $ 365$ 1,462The 20% cut
Corporate Income Tax$ 365$ 128$ 493Corporate rate is 35%
Net$ 2,192- $ 237$ 1,95511% less income tax receipts

Amounts in $ Billions

This hypothetical 20% tax cut could increase the annual deficit by $ 237,000,000,000. If some of the "tax savings" are NOT spent... the deficit is incrementally larger.

Revenue Neutral?

Revenue neutral means somebody else pays the tax. Who gets the reduction? and who get a larger burden? Those who make the rules decide. NO.

With the same receipts, the issue of deficit and debt continue out-of-control.

NO! A huge waste of energy and time.

 

A Sad Reality

With gov’t there will be taxes.

Gov’t, of itself, produces nothing. It only consumes; it has a voracious appetite!

For gov’t to “act” it needs funding. The more it does… the greater the need for funding. A federal gov’t intent on overseeing/nudging everything, is exceedingly expensive. And BIG gov’t, when “making decisions", erodes Liberty!

 

A Better Model

Civic and societal action should take place locally, where the need is. If a neighbor can assist a neighbor, there is no need to involve an HOA, a city council, a county official, etc… Local Control.

In this model, most situations are solved by THE PEOPLE, and sometimes by a community or county. In rare instances, each sovereign state becomes the final authority in civic and social issues. Neighboring or friendly communities can observe successful outcomes and adopt that strategy. Not all communities will pick the same strategy. Metroplex suburbs and Dallas have different goals and different challenges. More so, Texans and Californians see the world differently... It’s okay.

Decisions and funding will be at-worse, at a state level – but, still closer to The People. Local decisions will fit the needs of The People better than via a distant, ideological, one-size-fits-all, federal “solution”. A federal gov’t doing less will require less funds… considerably less taxes levied/extorted.

This is part of a return to US Federalism.

With strong sovereign states, We The People can engage in state-level governance and make a real impact/difference. Local Control!

 

A Big Swing

Repeal Amendment XVI when the federal debt is reduced to $ 10,000,000,000,000... or less.

Repeal would:

A Clutch Single

Re-instituting an income tax on fringe benefits might be a start to address our national healthcare crisis. This is a rare instance where I advocate reintroducing a tax... that is effectively mitigated away2.

During WWII the War Labor Board declared fringe benefits (including health insurance) as not taxable. This rash edict from the executive branch tied health insurance to employment - a large factor in our national healthcare crisis. It was hurriedly caused by gov't 70 years ago. The War Labor Board does NOT exist, but we operate using is flawed dictate. It is time to right this wrong.

A wrinkle to address - inflated income and the additional tax assessment/burden. Because this was NOT the fault of hardworking citizens, a tax adjustment MUST occur. A lower tax rate, to cancel the tax amount of fringe benefits, should be determined and implemented. [A tax credit is really a subsidy and NOT an acceptable adjustment.]

For example, an annual salary of $60,000 and fringe benefits of $12,000. Reducing the tax rate by approx. 20% would “negate”2 the taxes on fringe benefits. People NOT receiving fringe benefits would get a small “bump” – a lower tax bill due to a lower tax rate.

 

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Life, Liberty, Property!