REVENUE REFORMS

A key concept of Catastrophic Thinking is to inject fiscal discipline both before and during a catastrophe. The temptation for politicians is too great to spend without regard to revenue sources. They do that now. They did it to the tune of several TRILLION dollars during the COVID crisis. Think what they would do in a real catastrophe. There are three general areas of revenue reforms that your input may be helpful.

First, Income tax reforms which encourage capital formation. One approach would be to eliminate double taxation of dividends but instead make the dividends deductible just like interest on debt financing is now. To fund this proposal, eliminate deductibility of W-2 compensation greater than the salary of the vice president of the United States (currently $235,100.00). Increase FICA to be charged up to that compensation level. The corporate employees who are paid more than that level would be paid in after-tax dollars, just as shareholders are now.

Second, require full funding from current revenues of the unfunded liabilities hidden from the federal budget, like flood insurance, crop insurance, and COLAs of all types. Nothing could be paid under any federal program until the revenue streams or accumulated cash reserves are greater than or equal to the proposed or mandated expenditures.

Third, partnerships, sole proprietorships, and other entities would be subject to the same compensation rules as corporations. In addition, partnerships would be required to end their fiscal years on September 30th so their K-1s would be timely issued for use in preparing individual (1040) tax returns instead of being issued in April, after tax season is over.