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Hilbert Morales

The ideas presented here are those which favor the appropriate and fair taxation of all residents including business entities which the U.S. Supreme Court recently decreed were “individuals who speak with their money.” An admonition is to apply the biblical statement saying, ‘Much more is expected from those who have much more than the impoverished.’

Please take note and remember for use during this coming 2018 Midterm Election who voted for the changes made in the enacted version of the 2017 Comprehensive Tax Reform Act. Elected officials these days are often beholden to those who made significant contributions to their campaign.

The ideal is that elected officials, especially House and Senate members, have the responsibility, as public servants to become informed in order to participate in negotiations, debates or discussions which permit evidence based or core value based decision making required to define public policy.

Public policy must be reflected clearly and explicitly in legislative wordings which become the ‘law of the land’ when this nation’s Chief Executive Officer (CEO) signs off. This process is described in this nation’s U.S. Constitution.

Republicans favor a very conservative approach favoring a smaller federal government. Presently the Senate (50 members) and House of Representatives (435 members) both have Republican Party (i.e., conservative) majorities. The proposed tax reforms reflect their very conservative approach and ideology.

Nonetheless, governmental agencies with appropriate staffing levels are necessary to conduct the business of ‘We, The People’. Since 2011, both the House and Senate have not been effective governance bodies because of legislative gridlock supported by Conservatives who refuse to negotiate and compromise so effectively that the legislative process (decision making process) has been gridlocked by those unwilling to craft legislation needed.

A major exception are concerns about national security. The “Military-Industrial-Complex” has successfully ensured that our military receive more than adequate funding. (Pentagon budget for FY2017/2018 was expanded by $54 billion while all other agencies, commissions and departments received budget cutbacks).

So this IRS Tax Reform is very significant because it may be a way for ‘We, The People’ to ensure more adequate funding to allow for the delivery of adequate services: Education -pre-K to K12, college/university and post graduate; Health care services… especially for Veterans, Health and Human Services (Medicare for All and social welfare programs); Departments of Homeland Security; Justice; Attorney General; Transportation; Agriculture, Commerce; Food & Drug Administration; Security & Exchanges Commission; and Social Security Administration; etc.

All of these departments, agencies, and commissions have been crippled by inadequate budget funding levels which determine staffing essential to implementation of approved programs.

Of great interest is the budget planning which leads to a proposed addition of $1.5 Trillion to an existing national debt of $20 Trillion. All of this is made possible by the full faith and honor of “We, the People”. The following are major concerns:

IN EDUCATION: The proposal to tax funds received by graduate students, pre- and post-doctoral fellows is counter-productive in several ways: a) Professional education will become accessible only to the elite wealthy; b) students from low income families will be severely hampered by payment of taxes on fellowships and internships.

While their funds may be thought of as a salary, which may be subject to taxation, this approach will severely restrict access to professional training undertaken by individuals who originate in low income communities having high levels of persons of color.

Diversity issues will be exacerbated in all hi-tech professions; administration, bio-medical, business, commerce, economics, legal, social, psychological, psychiatric, engineering (civil, electrical & mechanical), Agricultural & veterinary, etc. As it is, our local Silicon Valley commercial firms are always seeking skilled knowledge- workers trained elsewhere. Any and all individuals undertaking pre-professional training programs should not have their fellowships, internships, and tuition-free programs taxed as wages or salaries. This nation already has a shortage of skilled professional personnel whose origins are low income, marginalized communities.

HOUSING: The mortgage loan interest paid by an individual or head of household who is attempting to own the family’s home must continue to be an income tax deduction to facilitate home ownership which provides equity and collateral. In addition, those who are able to own their home make purchases of durable goods (stoves, refrigerators, furniture and other goods and services) ending up supporting many retail outlets.

Those individuals who have a home are less likely to need mental and behavioral health services plus have a greater stakeholder interest in community safety and security. The local property taxes paid support local public schools. Interest paid on home mortgage loans need to remain ‘personal income’ tax deductions.

Corporations which own and operate facilities need to continue to be able to depreciate these properties as a cost of doing business. These corporate properties need not benefit inappropriately from Proposition 13 exemptions. Since the inappropriate application of CA’s Proposition 13 policy.

The level of local property taxes paid by ‘corporate individuals’ are used to support public schools, have dropped down to 25% of total property taxes collected. These reduced property tax revenues have resulted in CA’s education funding (once at the top) to drop down to the national bottom. This hidden corporate subsidy must be eliminated ASAP.

HEALTH CARE: Those proposals to eliminate the usual and customary expenses of health care paid by an individual or guardian, need not be implemented nor included in the final federal income tax program. It is in the best interests of this nation’s society and its commerce to have a healthy and physically able work force.

Logic based upon Judeo-Christian core values, establish the standards of care which is applied to the handicapped, impoverished and all disabled individuals whose usual and customary care costs must remain deductible.

Social Security Administration’s programs escrow funding which are the accumulated employee contributions matched by employers must not be privatized. In addition, no funded program can be allowed to continue to be ‘off the table’.

Full transparency requires that all Federal funded programs be available for monitoring by the public who provided the taxes resulting in those accumulated escrow funds and therefore are ‘stakeholders’ who need to be kept truthfully informed.

THOSE WITH VERY HIGH INCOMES AND WEALTH: This cohort must pay its fair share of federal income taxes. The principle to be applied is that this cohort must not be allowed to have any special privileges or entitlements since ‘much is expected from those who have much already’. This group must pay the same income tax percentage as the middle-class level of 25%.

CORPORATE INDIVIDUALS now pay 35% tax rates on profits earned. If these corporations want lower taxes, this cohort must ‘give up’ subsidies, accelerated depreciation write-offs, tax credits, Land Bank payments, etc. on a QUID-PRO-QUO BASIS which reduces tax rates in 5% reduction increments (35% to 30% to 25% to 20% with 15% floor).

In the future, all subsidies, tax credit programs, and other financial incentives used to promote past economic development must each have a sunset scheduled termination date or be required to be reconsidered by a commission whose members have no conflict of interest.

The purpose of the above recommendations is to establish a simplified federal taxation program which is administered by the Internal Revenue Service (IRS) fairly and equitably.

The ideal to be achieved is the collection of revenues sufficient to pay for all governances on a ‘pay as you go’ basis and to reduce the national debt presently totaling $20 trillion. It is only fair to do that much for all of us, especially ‘We, The People’.