economicmultipliers_157

Economic Multipliers (157)
 
Do you know what these are?
They help CREATE wealth in systems.
This will never happen (#3):  If it did, it would be a HUGE economic multiplier for the United States.
         
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The federal government is never going to apply employee level Social Security and Medicare taxes to individual revenue streams exceeding $500,000 per year, with the money set aside for very specific, visible and measurable expenditures, while repealing the existing (rather oddly devised) high income provision for Medicare taxes.

It’s important to read the previous sentence carefully.

Why $500,000?

A lot of potential (Social Security) taxable income in between the current cap and $500,000 would be missed and to simplify paperwork, a separate small add-on Medicare tax for high income earners would be repealed while raising the cap to $120,000 (a nice round number of $10,000 per month that would make a lot more sense for employers AND employees).

Up to $500,000, most Americans can believe that houses are built, products are bought, education is paid for, kids are raised, all sorts of services are purchased and people travel and eat at restaurants and donate to their favorite charities.  All of these things help support jobs,  the communities people live in and the nation.

In the United States, most Americans believe (I’m not stretching) that if a person has revenue streams exceeding $500,000 per year, that opportunity is because they were lucky enough to live in a place where that could happen and fortunate enough to have the right kinds of surrounding forces in their life.

Note:  I did not use the words ‘earned income.’  I did not even use the word ‘income.’  I wrote the words ‘revenue streams.’

Revenue streams could be a combination of the following:
  • income of any sort (earned, interest, dividends, royalties, etc. less standard tax deductions)
  • annuities (excluding the return of capital)
  • prizes and/or lottery winnings (excluding the cost to win)
  • large monetary gifts (and any large non-monetary gifts that are monetized)
  • large non-monetary gifts (reported as a running list and if ever monetized, included in the revenue stream … this would allow people to easily pass on family businesses and investments during their lifetime without worrying about whether the transfer would, as an example, destroy a business’ ability to survive … and if a business investment ever was monetized, amortized by choice if a lump sum was supposed to cover ‘time’ … like a retirement account would … since many business owner’s businesses are effectively their retirement account)
  • pensions, disability payments and/or Social Security payments
  • retirement account distributions (excluding the return of capital)
  • insurance payments in excess of direct expenses (amortized by choice if a lump sum was supposed to cover ‘time’)
Why ‘revenue streams’ versus ‘income’?

In the United States, it’s odd to think that an individual with $5000 in ‘ income’ and over $495,000 in other revenue yearly wouldn’t ‘owe’ the nation that allowed that to happen a bit of something extra back.  Perhaps it’s not possible to live on $500,000 per year in other countries.  It’s certainly possible in the United States.

Why ‘employee level’ taxes?

At this individual revenue level, the criteria is no longer about paying in enough to cover that individual’s long-term Social Security and Medicare distributions.  The criteria is about all the surrounding people and opportunities that helped create the ability to make that revenue.  In this case, across the board, the nation and government that allowed that revenue to be generated is the equivalent of a ‘matching employer.’

What would you do about couples who file joint returns? 

For this ‘revenue’ based tax, double the limit to $1,000,000.  The last thing a nation wants to do is discourage people from getting into stable relationships whereby they are in a position to help support each other, their children and the community they live in … particularly as they grow older.

Why would you set the money aside for very specific, visible and measurable expenditures?

Do you have any idea how much money the federal government collects in Social Security payments and Medicare taxes annually?  I don’t (right now).  Federal revenue collection and federal expenditures for most people are the equivalent of a black hole:  Money gets sucked in and almost always, when extra large sums come out (usually borrowed), it’s because there’s been some sort of explosion (crisis).

Imagine wanting people to do well and have large revenue streams because a tax pool (not their individual returns) generated by those specific revenue streams is VISIBLE.

Imagine knowing specifically how those revenue streams and the resulting tax pool would VISIBLY and MEASURABLY be spent and benefit each and every community.

Who would determine how the money should be spent?

For this taxed revenue stream … this pool of money, the people who pay the extra money in should get to vote based on their contribution.  For every $10,000 increment exceeding $500,000 which they pay extra tax on, they would get one vote.  An individual with revenue of $2 million dollars (0.0765 x 1.5 million in 2015) would pay $114,750 into this pool and get 150 votes.  They would still have $1,885,250 to ‘survive’ on.  And, people who have a focus on creating wealth are in a good position to make some good allocational decisions for the nation.  ‘Wealth’ usually believes in creating ‘more wealth’ AND wants to live in communities and a country where people thrive.

Again, why does this pool of ‘investment’ money need to generate visible and measurable returns?  We need to make sure that we set people and communities up for good futures.  ‘Black holes’ don’t do that.  It would be a ‘senior’ investment for future generations.

Allocational areas to vote on:

For the Social Security component (imagine developing a strong long-term BASE):
  • A no interest reverse mortgage pool for individuals in need who own at least 25 percent of their homes (available to people who lose their jobs, have reduced income measured against expenses or who could afford to stay in their homes (versus a long-term care option) if they could affordably access the equity).  Long-term, this pool of money would always increase if more was allocated to it since at some point in time, most homes get sold and the reverse mortgage money would be paid back.  This would be a national safety net for older individuals who spent decades making mortgage payments to build equity and who are sometimes ‘tricked’ into quickly losing that equity and their homes.  It also would encourage young people to build sufficient equity so the pool would be available to them if they ever had a need.
  • A no interest long-term lien pool if an individual needed a new furnace, roof, windows and doors, upgraded bathroom or basic plumbing repairs and could not otherwise afford it.  Contractors who had established competency of work, fair pricing and installation of high quality, durable, easy to maintain equipment could be pre-vetted so individuals accessing their equity through this pool of money had a list of suitable contractors.  Older homeowners on fixed incomes would more easily be able to maintain their homes (and prevent degradation in value), neighborhoods would be better maintained and local contractors could more easily ensure that they would get paid if someone in their community had a crisis (like a furnace going out in the middle of winter).
  • Orchards and gardens on school properties.  Communities may lack health care facilities and many other public services.  They rarely lack schools.  And, schools have teachers, libraries, meeting spaces, cafeterias and bathrooms.  Communities could apply for funds (from an investment pool) to jumpstart community orchards and gardens to help feed the growing need for elderly food assistance.  Upon development of a food production program, they could also apply for funds for building and/or reconditioning publicly accessible bathrooms and building a high quality tornado proof and flood resistant storage garage.
  • Busing for senior citizens to community meals and/or meal delivery to them.  If a community could find a way to ‘fund’ its own meal program and find a sufficient number of adequately trained and insurable drivers, the community could apply for funds to lease transportation for people and/or meals.  New vehicles with good gas mileage and required maintenance (part of the lease fee) would be provided initially.  Upon expiration of the lease, the community could apply to ‘own’ the vehicle if they demonstrated that they could use the vehicle to fill other ‘unfilled needs.’  Otherwise, the vehicle would be sold with any extra money returned to ‘the broader pool’ or the community’s ‘gas/transportation pool.’  Prior to expiration of the lease, the community could apply for funds for another new vehicle if they demonstrated that they had used the current vehicle to help keep the community healthier and had properly maintained the vehicle (at little or no initial cost to them).  To encourage efficient use, the community would need to find a revenue source for gas (through a small user fee, local tax and/or donations).
  • Professional garden and kitchen tools/equipment to produce and process food for community food programs.  Schools and community centers have many times shifted away from processing fresh fruits and vegetables.  This shift means that equipment is not always readily available.  A community with a strong agricultural base may never see a need to plant and maintain orchards and gardens.  They may have a need for equipment to process local produce that might be bought or donated.
  • Lower cost, high quality privately run community housing with orchards and gardens.  Any ‘rents’ would require a ‘set aside’ account for long-term repairs, maintenance and replacement items.  Housing and communities which are well maintained are long-term assets.  The United States is ‘aging out of’ affordable housing for a lot of elderly people who might need some ongoing assistance as they age.
Wealthier communities today routinely build assisted living facilities and lower cost apartments, many times adjacent to or near nursing homes, to help fill this need.  Communities with lesser resources have the same needs and lesser resources.

I’m going to get in trouble here.  If a tax funded pool of money is used to build a lower rent community housing project in a community which otherwise could not afford it, housing first should be offered to individuals who sign a statement that they will not drink or provide alcohol to others IN the housing (although not everyone has a problem, alcohol use is strongly correlated to domestic violence), use or provide recreational drugs to others and if they or others smoke on the property, they smoke only in designated smoking areas outside.  (Note that most Americans would find most or all of these statements offensive). 

If a community intends to leave high quality, well cared for things behind for future generations, the individuals who use those things must be willing to take care of them.  Lots of people are willing to take care of things and the housing provided by ‘this pool’ of money has ‘wealth’ standing behind it.

Many issues crop up when ‘troublesome statements’ are made:
  • If a 12-year old child ended up getting involved in drugs, would the ‘family’ get kicked out?
  • What do you do about the 12-year old?
  • Could a pastor bring communion wine to a shut-in?
  • If an 81-year old cigarette-addicted individual smoked inside on a day when the wind chill was 15 degrees below zero, could they lose their housing?
  • What if a doctor told someone to drink a hot toddy if they got a cold?
  • Could you require tenants to participate in energy efficiency or property maintenance programs which help keep costs down while preserving the value of the property?  Individuals who own condominiums usually have some responsibilities along these lines.  Is it unfair to ask renters to take on some of the same responsibilities?
I’ll get out of trouble here.  You can’t dictate who people are.  You can’t dictate behaviors which are not illegal.  You can require people to adequately maintain property which they use which does not belong to them.  You can expect that people respect the rights of their neighbors and help create safe and healthy environments for their and other’s families.

For the Medicare component (imagine developing healthier communities):

NOTHING is better for the Medicare system than individuals who take care of their health AND help other people take care of theirs.

Even when people take care of their health, problems can crop up.

People with lesser resources have ALWAYS historically had greater difficulty getting adequate medical care.

Societies do not ‘win’ when the medical system does not help people stay and/or get healthy.
  • Those things being said, communities need transportation … well equipped travelling medical vans and vans to transport people to medical facilities or community meeting places where group problems can be addressed.
Schools have bus systems.  They may lack funding.  Imagine, as an example, picking up underserved yet mobile diabetics who lack transportation and taking them to a local community center where they could have their blood, medications, eating habits, eye sight and feet checked monthly or quarterly.

Imagine community hospitals and clinics being able to apply for funds for a dental checkup van, a medical checkup van and/or an eye checkup van.  Backlogs of human beings who lacked dental care or dentures or eyeglasses or simple basic medical care could be whittled away, with a requirement of the services being that those who receive them demonstrate that they are willing to help themselves and everyone around them stay (and/or get) healthy … particularly critical if they have contact with young children.

People could be transported to the vans (parked at local schools perhaps) or the vans could travel to the people.

Keep in mind that we are talking about underserved populations, which, if they are healthier, so is everyone else.

Since I believe that some people will never feel ‘wealthy’ no matter how much money they have, some people in communities like to look ‘poor’ even when they are not, ‘wealthier’ people have a tendency to demand ‘higher quality’ services so when they show up, quality is usually better for everyone, you never know what expenses any individual has that offsets any perceived income and many ‘wealthier’ people donate money, materials and equipment to organizations which provide them and their families with good services, access to these basic health services would not be restricted based on income.

Personally, I’d like to see any individual who helped create this pool of expanded health care services become a user of them.  Likewise, I believe that even if money was distributed proportionately based on population (across projects proportioned by the taxpayer pool), wealthier communities would be MUCH more efficient at developing community multipliers and would pave the way for tracking systems which other communities could use (software development) and video and audio materials which promote good health and high quality (independent living) upgrades to senior and/or disabled housing.  Appreciate that it’s easier to modify homes which start out in good shape and wealthier communities usually already have formal and informal programs for independent living upgrades.
  • Durable medical equipment, ramps and personal items which help people live as independently as possible … with individuals in the social services, health care and emergency response communities helping define ‘homes in need.’
  • As part of a community-based club activity (any age could participate, learn and/or teach):
Any community that taught high school students how to maintain and refurbish scooters could apply for funds for replacement parts and new batteries.

Any community that taught high school students how to install ramps and grab bars and modified steps at homes of individuals in need could apply for funds for the tools and materials to work on predefined projects.

Any community that taught high school students how to assess bathrooms for potential installation of easier to use ‘commodes’ could apply for funds for equipment and installation by a certified plumber.

Any community that taught high school students how to assess lighting for potential installation of power strips and ‘lighted’ light switches could apply for funds for equipment and installation by a certified electrician.

Any community that taught high school students how to assess clothing and basic care needs for individuals who can no longer shop for themselves could apply for funds to purchase some basic items such as shoes, socks, undergarments and basic daily wear items.  For these funds, a ‘web site’ featuring the items, their acquisition or purchase location and the price would be required as a learning tool for others.  Young people who know that socks, shoes and undergarments are best if high quality and new and that donated, discount and altered clothes and thrift store purchases can greatly expand how far other dollars will go for daily wear items are in a much better position to make good choices for themselves and their own families as they grow older.  Likewise, older individuals sometimes need ‘modified’ clothes to accommodate physical limitations.

Any community that had high school students prepackage frozen meals (one bowl complete nutrition soups, casseroles and chili’s which might only need the addition of some bread or cereal) … could apply for funds to purchase food processing equipment, freezer containers, small slow cookers and plug inline timers (much less likely for any stovetop fires to start) and a small delivery vehicle.  If the community already had a well-established meals-on-wheels program, they could write a proposal for funding to participate in enhancing and/or expanding the existing program.

Do you see a common thread through the prior suggestions?:  High school students.  
  • Young people who are aware of the needs of the community are more likely to find ways to easily fill those needs.
  • Young people who are aware of the needs of the community are more likely to understand all the social costs related to living in communities.
  • Young people who are connected in positive ways to older people in the community are more likely to see their lives as a continuous flow:  They will one day be older and the problems of the young and the old are not all that different.
  • Young people who work with individuals who have skills develop skills themselves which they may someday pass on.
The community that I live in has multiple ‘partners’ with other communities globally which have lesser resources.  Different ‘groups’ partner in different ways.  The ultimate ‘goal’ of these partnerships is for the core need (not the friendships) to go away, with someday those communities partnering with other communities with lesser resources than them.  When you live in a community which also has many unmet needs (and yet is by far much wealthier than many other communities in the world), it can be hard to say that this pool of money should be for U.S. projects only.  Based on my own observations, I do know that the wealthier Americans are and feel, the more they contribute to global projects and needs.

Money is always chased.

It’s good to remember that all pools of money are ‘chased.’  The very same wealthy person who might end up contributing to this pool is also the same person who would want to ‘profit’ from the expenditure of funds.  There is nothing wrong with that if the money is properly managed, properly allocated and the expenditures help create individual, community and national wealth.

MEASUREABLE … VISIBLE … DURABLE

Measurable:  When you have a ‘continuous’ stream of money that can grow over time simply because a lot of people do well financially, it’s important to keep track of it AND know why it exists.  You never want to destroy legitimate opportunities which help create jobs and wealth and stable communities.

Visible:  When opportunities to create wealth ultimately benefit everyone and it’s possible to see the benefits ‘trickle down,’ there’s a clear incentive to want a lot more people to do well financially and help create the avenues which make that happen.

Durable:  When ‘things’ like community facilities and community skill bases and community equipment expand and all is well built, well maintained and routinely upgraded, young people know that the community they live in and the world they are working to help create is worth working for.

Of course, something like this will never happen:  It’s way too practical (See P.S.)

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P.S.  Communities across the nation have been working on the ‘programs’ I’ve featured here for years, in varying capacities.

What is lacking are visible and measurable ways to adequately support future needs, particularly in communities with lesser resources.

What is lacking are visible and measurable ways to help all individuals across the nation stay as independent and as healthy as possible so the health care system and families do not get overwhelmed.

What is lacking are visible and measurable connections between the money spent and the value returned.  Never desire to ask someone for money that you want to ‘spend down.’  Always desire to ask someone for money and/or resources that helps create more money and/or more resources.