A Sensible Way to cut the Deficit
Repeal all of the 2001 and 2003 Bush tax breaks for the top two percent. Repealing the 2001 and 2003 tax breaks for the top two percent would reduce the deficit by about $1 trillion over the next decade. After President Clinton increased taxes on the top two percent, the economy added over 22 million jobs. After President Bush reduced taxes for the rich, the economy lost over 600,000 private sector jobs.
Create an emergency deficit-reduction surtax on millionaires. Enacting a 5.4 percent surtax on adjusted gross income of more than $1 million would raise over $383 billion over 10 years, according to the Joint Tax Committee. According to a February 2011 NBC News/Wall Street Journal poll, 81 percent of the American people support the creation of a millionaires surtax to reduce the deficit.
End tax breaks and subsidies for big oil, gas and coal companies. If we ended tax breaks and subsidies for big oil, gas, and coal companies, we could reduce the deficit by more than $113 billion over the next ten years. The five largest oil companies in the United States have earned about $1 trillion in profits over the past decade.
Establish a Wall Street speculation fee of 0.03 percent on the sale of credit default swaps, derivatives, stocks, options, and futures. Both the economic crisis and the deficit crisis are a direct result of the greed and recklessness on Wall Street. Establishing a speculation fee would reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and reduce the deficit by $350 billion over 10 years without harming average Americans.
Eliminate tax breaks for companies shipping American jobs overseas. Today, the U.S. government is actually rewarding companies that move U.S. manufacturing jobs overseas through loopholes in the tax code known as deferral and foreign source income. During the last decade, the U.S. lost about 30% of its manufacturing jobs and over 56,000 factories have been shut down. If we eliminated these tax loopholes, the Joint Tax Committee has estimated that we could raise more than $582 billion in revenue over the next ten years.
Prohibit abusive and illegal offshore tax shelters. Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations. The situation has become so absurd that one five-story office building in the Cayman Islands is now the "home" to more than 18,000 corporations. The wealthy and large corporations should not be allowed to avoid paying taxes by setting up tax shelters in Panama, the Cayman Islands, Bermuda, the Bahamas or other tax haven countries. Cracking down on offshore tax shelters could reduce the deficit by as much as $1 trillion over the next decade.
Establish a currency manipulation fee on China and other countries. As almost everyone knows, China is manipulating its currency, giving it an unfair trade advantage over the United States and destroying decent paying manufacturing jobs in the process. If we imposed a currency manipulation fee on China and other currency manipulators, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.
Tax capital gains and dividends the same as work. Taxing capital gains and dividends the same way that we tax work would raise more than $730 billion over the next decade. Warren Buffet has often said that he pays a lower effective tax rate than his secretary. The reason for this is that the wealthy obtain most of their income from capital gains and dividends, which is taxed at a much lower rate than work. Right now, the top marginal income tax for working is 35%, but the tax rate on corporate dividends and capital gains is only 15%.
Establish a Progressive Estate Tax. If we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $300 billion over 10 years. Sen. Sanders introduced the Responsible Estate Tax Act that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans who lose a loved one would never see a dime of their loved one's estate paid in federal estate taxes.
Reduce unnecessary and wasteful spending at the Pentagon, which now consumes over half of our discretionary budget. Much of the huge spending at the Pentagon is devoted to spending money on Cold War weapons programs to fight a Soviet Union that no longer exists. Sen. Tom Coburn (R-OK) and Lawrence Korb, an Assistant Secretary of Defense under Ronald Reagan, have estimated that we could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.
Require Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry. Requiring Medicare to negotiate drug prices, similarly to what the VA currently does, would save more than $157 billion over 10 years.
Eliminate waste, fraud, and abuse within every federal government agency. Virtually everyone agrees that there is waste, fraud, and abuse in every agency of the federal government. Rooting out this waste, fraud, and abuse could save between $150 billion and $200 billion over the next 10 years.