The challenge facing this country is daunting. The primary reason it is daunting is simple: Greed.

We have far too many people who think taxes are for other people to pay. We also have far too many people who think checks from the government are some form of “right”. This is greed on both ends of the spectrum.

This is going to be an attempt at addressing both the spending and taxing sides of the equation. Everything listed below is being done without links, nor exact language from Congress nor the IRS.

Many here will already know what a lot of the items below are, but many more will not. If what you see here seems simplistic, congratulations, you already know it. But please respect that others may not.

STEP 1. The first thing we need to do to get spending under control is eliminate “base line budgeting”.

Base line budgeting, by definition, factors in a fixed increase each year for a program, and “increases/decreases” are based on this number.

For example: If you have a program that costs $1000, and it has assigned to it a baseline of 5 % per year, over 5 years, the Congress will set the program up to look like this:

Year 1 – $1000
Year 2 – $1050
Year 3 – $1103
Year 4 – $1158
Year 5 – $1216

If a congressperson were to look at this program and decide that we could not spend more than $1094 in year 5, most of us would look at the $1094 spent in year 5 and conclude that this is a 9.4% increase over the 5 year period.

Base Line Budgeting calls this a 10 % CUT in spending over the 5 year period.

If we keep the identical annual increase as listed above, it’s not considered an increase. That’s right, under current rules, $1216 after 5 years is NOT an increase.

The first step towards getting our budget under control is to end base line budgeting. We need leadership on this.

STEP 2. Freeze all spending at current levels for the next 5 years. After that, have an honest debate each year based on actual dollars instead of the current baseline dollar math. This freeze will be on entitlements, defense. ALL of the budget except interest on the debt is frozen.

Yes, people will scream. But to these people: can we not run this government with $19 TRILLION over the next 5 years?

Step 3. Put into place an honest tax plan. An honest tax plan should do two things: Raise the necessary revenue to run the government and NOT inhibit economic activity more than necessary.

The plan should also be as “responsible and fair” as possible.

In order for a tax plan to be both fair and responsible, the following issues should be a part of the plan.

A. All REAL income is taxed in the same basic tax schedules. This means income from a job (wages, bonuses, perks like a company car), dividends, capital gains, interest income and/or any other source of income is considered a part of one’s income.

This idea that income from Capital Gains, Dividends and Interest income has already been taxed just is not true. If one buys a stock for $10,000 and sells it for $20,000, one made a profit of $10,000.

If one invests $1,000,000 in a CD that pays 5%, one made a profit of $50,000 that year. It’s income.

ALL the income one makes is added up for a total.

For deductions, though, we have the following:

Interest Income, Dividend Income and Capt Gains income are all indexed for inflation. Under the example above where $50,000 was earned on the $1 million investment, let’s assume a 3% inflation rate for that year. This person did not NET $50,000 after inflation. The net income is now $20,000.

As we are taxing interest income, interest paid on loans is a deduction.

Outside interest paid and charitable contributions, the only additional deduction to one’s income is a $10,000 deduction for each the husband and wife plus $5000 for each child. The family of four pays nothing on the first $30,000.

For those who think that Dividends and Cap Gains should NOT be counted as income, think on this:

Can you imagine what happens when people start looking at the Wall Street guy making $3 million in cap gains paying ZERO in taxes while the small business owner pays a flat 20%?

We then have a one or two rate system with a rate no higher than 25% at any time. It can be a flat 20%. It can be 15% up to a certain level and 25% above that. Both will work.

Step 4. Eliminate FICA, Estate and Corporate taxes. The flatter tax will take care of FICA while Estate and Corporate taxes are both job killers.

The guy who inherits $100 million (usually this is a business) will pay plenty of taxes when he/she earns Dividends, Interest, etc … as it becomes taxable. In the meantime, we are not tearing this business apart by forcing the heir to pay a huge up front tax burden on the estate.

The corporation that has a nice bottom line profit can reinvest the profit to grow tax free. When this corporation pays bonuses to whomever, this becomes income.

The business owner no longer has all these tax burdens. This would have the additional benefit of making export products cheaper.

I know this is not a sophisticated use of language. Plain language’s use was “on purpose”.