There is one certainty in American politics that neither Democrats nor Republicans want to deal with. The United States government desperately needs more revenue.
The Treasury Department’s projected federal deficit of the United States for the fiscal year 2018 is $440 billion, The Balance revealed. That deficit increased by 14% between 2017 and 2018. Uncle Sam’s spending of $4.094 trillion exceeds the currents revenues of $3.654 billion the Office of Management and Budget reported.
The sane thing to do in this situation is to increase revenues but that is not happening. Democrats are ignoring the problem; while Republicans are hoping that economic stimulus from tax cuts will increase revenues sometime in the future.
Nothing but Social Security threatens our Future
New sources of government revenue; in other words taxes are desperately needed and fast. Government spending is about to grow dramatically because of America’s aging population. Data from a GoBankingRates investigation indicates that Congress will soon face intense pressure to dramatically increase Social Security and Medicare payments.
The pressure will be there because Social Security will soon be the only source of income for tens of millions of Americans; including 74.9 million Baby Boomers, the oldest of whom are now in their seventies. GoBankingRates discovered that a majority of these people will have nothing but Social Security for income in their Golden years.
Here’s how broke America’s Senior Citizens will be:
- 56% of Americans have less than $10,000 saved for retirement.
- One-third of Americans (33%) have nothing saved for retirement.
- 63% of women admitted they had less than $10,000 in retirement savings.
- 52% of men admitted that they had less than $10,000 in retirement savings.
These people will have no money but they still have the vote. In just a few years “raise Social Security payments” will become the only issue in Congressional and possibly Presidential races. Politicians that do not agree to big increases in Social Security and Medicare will stand no chance.
Given these disturbing realities new sources of government revenue new taxes are needed now.
Some Potential Sources of New Revenue we should investigate
The good news is that America’s businesses, inventors, and entrepreneurs are as creative as ever. They seem to be coming up with new sources of wealth each day – the bad news is that government is not tapping that wealth.
Here are a few ways that government can tap the wealth being generated by new technologies and business models for revenue:
- Put a 5% tax on digital advertising. Digital advertising is a cash cow for companies like Alphabet (NASDAQ: GOOG) owner of Google. Google raked in $79.38 billion in ad revenue in 2016, Statista figures indicate. A 5% tax would have netted Uncle Sam $3.969 billion from Alphabet (NASDAQ: GOOGL) alone in 2016.
- Google is far from alone in cashing in on digital advertising. Citi analysts predicted that Amazon’s advertising revenues will increase to $50.6 billion in 2028, CNBC reported. Amazon (NASDAQ: AMZN) generated $10.20 billion from advertising in 2017.
- Put a 1% tax on cryptocurrency mining. Since companies like Kodak (NYSE: KODK) want to take the activity mainstream government should profit from it. This can be collected automatically by algorithms built into the mining software.
- Put a 1% tax on cryptocurrency transactions. Like mining, this tax can be collected automatically as the transactions are made. This can potentially generate a lot of revenue because the top cryptocurrencies; Bitcoin (BTC) and Ethereum (ETH) had Market Capitalizations of $170.235 billion and $104.462 billion on 30 January 2019.
- Create a U.S. national cryptocurrency, and charge investors and institutions a 5% fee for mining it.
- A cryptocurrency can be built to automatically pay the Treasury a fee every time it is used. Such a fee would be an excellent source of income.
- Have the U.S. Treasury sell cryptocurrency smart bonds and annuities based on the Ethereum smart contract Such instruments can be programmed to pay interest or make payments in the U.S. national cryptocurrency. Wholesale and retail markets for such instruments can be another source of revenue for Uncle Sam.
- Put a 5% tax on eSports and Video game sales. Statista predicted that the eSports market’s revenue will grow by 40% to $1.5 billion by 2020.
- Levy a 5% tax on all digital video and music sales and subscriptions.
- Legalize recreational marijuana nationwide and levy a 10% federal tax on it. Proceeds would go to Medicare and Medicaid.
- Institute a 2% federal sales tax on soft drinks, alcohol, sugar, candy, cookies, iced cream, snack foods, coffee, caffeinated drinks, cookies, pastries, donuts, and junk food. Proceeds would go to Medicare and Medicaid.
- Legalize online gambling and put a 5% tax on it. The tax would cover bets and all gambling
- Put an additional 5% tax on all bets and gambling winnings that exceed $100,000.
- Put a .05% tax on all e-commerce transactions.
- Put a 1% luxury tax on all new and used private vehicles, clothing, antiques, art collectibles, jewelry, and luxury goods that exceed $100,000 in value.
- Put a 5% luxury tax on all new and used private vehicles, clothing, antiques, art collectibles, jewelry, and luxury goods that exceed $1 million in value.
- Put a 1% luxury tax on all private homes that exceed $500,000 in value.
- Put a 5% luxury tax on all private homes that exceed $1 million in value.
- Put a 10% luxury tax on all private homes that exceed $10 million in value.
- Implement U.S. Senator Bernie Sanders’ (I-Vermont) plan for a .5% “Robin Hood” or sales tax on investment transactions.
- Place a $1 million limit on charitable deductions for individuals.
- Place a 10% tax on all political contributions.
- Implement a carbon tax on fossil fuels.
- Institute a 1% or 5% tax on electric vehicle sales proceeds would go to road building and maintenance.
- Require employers to withhold Social Security and Medicare taxes from freelancer and contractor payments.
- Place a .5% sales tax on the sale of apps.
- Consider taxes on robots, artificial intelligence, and other job-killing technologies.
- Seriously consider the Republicans’ “border adjustment tax” proposal.
Investigate a Sovereign Wealth Fund
A sovereign wealth fund is an entity that invests a portion of a nation’s wealth on behalf of the country’s people.
Norway’s sovereign wealth fund; or Government Pension Fund, was worth $1 trillion in October 2017, Forbes contributor Niall McCarthy calculated. That amount is equal to the size of Mexico’s economy and translates into $190,000 for each of the Kingdom of Norway’s 5.2 million citizens.
Norway got that money by reinvesting oil revenues. The USA can make far more money by reinvesting the proceeds of Silicon Valley and Wall Street. One way to build such a fund would be to allow highly-profitable and well-managed companies to donate stock to the Wealth Fund in lieu of income taxes.
Just imagine how much money such a fund might generate if it Alphabet, Berkshire Hathaway (NYSE: BRK.B) and Apple (NASDAQ: AAPL) contributed large blocks of stock to it. Another suggestion would be to simply buy such stocks on the open market.
Other ways to generate money for the wealth fund would be leases for oil and gas drilling on federal land, mining leases on federal land, patent and copyright royalties (companies that qualify could donate patents or copyrights to the fund in lieu of paying taxes), and proceeds from the rent or sale of government-owned real-estate. Another potential moneymaker would be to have the wealth fund retain ownership of all patents developed with government funds.
Another possible source of revenue for the wealth fund would be for it to mine cryptocurrencies or run its own cryptocurrency mining operation. Owning businesses such as data centers is another potential source of revenue for a wealth fund.
The wealth fund would also be in a position to make direct venture capital investments and own specific pieces of infrastructure such as railroads, telecommunications systems, battery farms, satellites, power lines, power plants, or the Hyperloop. An excellent use of the wealth fund would be to own and operate energy sources such as battery farms, nuclear power plants, solar electric facilities, and wind farms. These facilities can generate income that the fund can harvest.
As you can see there are many potential sources of wealth government can tap. Voters need to start asking politicians the vital question why are you not tapping them? Our nation’s wealth is growing our government revenues should be expanding with that wealth.