Even a Stopped Clock is Right Twice a Day: Donald Trump’s Tax Policy

      Even a Stopped Clock is Right Twice a Day

    Donald Trump’s Tax Policy

If there is one big positive about Donald Trump,  it’s the fact that he understands that meaningful job creation can only become a reality if the U.S. corporate tax system is overhauled.

In the first Clinton-Trump debate, he commented very briefly on his plan to reduce the corporate tax rate and to impose a substantial import duty on goods manufactured by foreign subsidiaries of U.S. companies that are brought in for sale here. He also said that, if elected, he would move to abolish estate and gift taxes.

In this  blog article, I’ve restricted my comments to the subject of the possible consequences of changes to the  corporate tax structure. I happen to agree with Mr. Trump that  estate and gift taxes are not really necessary (as long as some other modifications are made to The Internal Revenue Code). I will discuss this topic sometime soon.

 

 

Say what you’d like about Donald Trump’s campaign, but I think most Americans would agree  that it certainly isn’t boring . On the  one hand, one has to question whether it makes sense to vote for a candidate who proposed building a 3,000 mile wall separating the United States from Mexico and who also advocated banning all Muslims from entering our country.

However, once in awhile, The Donald makes a valid point.  I agree with him that corporate tax rates in the U.S. are too high and that this  is a major factor why many businesses have moved their operations  outside the country. Trump  suggested (albeit briefly) that a 15% corporate tax rate would be more appropriate than the 35% – 40% range that applies today,when one takes  into account State as well as Federal taxes.

The critics immediately condemned Mr. Trump for advocating  tax breaks for  the wealthiest 1% at the expense of everybody else.

However the truth is a bit more complex. The U.S.  presently has one of the highest corporate tax rates in the world. The U.S. rate is exceeded only by the United Arab Emirates and Puerto Rico. The world-wide average corporate income tax rate, across 188 countries and tax jurisdictions, is 22.5 percent.

 

 

Trump’s suggestion to reduce the corporate tax rate to 15% immediately invited  comparisons to Ronald Reagan’s experiment in the mid 1980’s to lower the top rate of Federal personal tax from 70% to 28%. The theory behind what became referred to as “Reaganomics” was that, if taxes  on the wealthiest Americans were lowered substantially, they, the “movers and shakers”, would have an incentive to expand their businesses, invest in new equipment, and hire people. Reaganomics also became known as “trickle- down economics”, since the benefits given to the wealthy would presumably filter down to workers in general. However, notwithstanding his presumably good intentions, Reagan was accused of bringing in tax reductions mainly in order to reward his wealthy supporters.

In retrospect ,trickle down economics didn’t work as Reagan expected for two reasons. The first is that, although personal taxes were reduced, corporate taxes were left at unacceptably high rates and there were actually no real incentives for the millions of American small businesses. The second reason Reaganomics failed, is that globalization really began on a large scale in the mid-1980s and  the focus of business expansion moved outside the U.S.

Mr. Reagan is famous for his plea to Mr. Gorbachev asking him to “ tear down the Berlin Wall”. Ironically, his request was clearly motivated by a desire to end repression and spread the freedoms we enjoy in America, Reagan’s speech was symptomatic of the call for the expansion of business into areas of the world where labor and overhead costs are significantly less than they are domestically.

 

 

Very few people are tax experts and most Americans are not interested in the complexities of the tax system. Those who blindly assume that a 15% corporate tax rate will encourage the wealthy few to accumulate millions and millions of cheaply-taxed profits in their companies are very much mistaken.  There are provisions in the Internal Revenue Code that prohibit any business from accumulating profits, without additional taxes falling due, unless these profits are earmarked for business expansion.  Any business is permitted to retain up to $250,000 of earnings. However, any additional retention is only permitted  if these profits are needed to expand-by buying equipment, hiring additional workers etc. Failure to use accumulated profits for these purposes allows the IRS the discretion to impose further corporate taxes that will  up the burden to an amount equivalent to that which is paid by individuals   in the highest tax bracket.

What I am basically saying, is that limiting corporate income taxes to 15% as Donald Trump suggests, would provide a tremendous incentive for all businesses, including  thousands upon thousands of privately-held  small companies, to expand their operations. Obviously ,this would lead to more hiring and less unemployment.

Just for comparison purposes, Canada permits privately owned corporations to pay approximately 15% tax on the first $500,000 of annual business profits. Surprisingly, there is no requirement that the retained profits be used for business expansion. The business owners can, if the choose, use the retained earnings to accumulate investment capital.  Canadian large businesses pay a tax rate of approximately 25%. The actual rate varies depending on the province or provinces in which a company operates

I believe that, if Trump’s suggestion to reduce corporate taxes is implemented, this would provide great incentives for small business expansion in the U.S.

However the question remains whether or not this would be sufficient to stop large businesses from moving their operations to countries such as Mexico. This brings me to the second suggestion the Mr. Trump made in the first debate. He proposed a  30% import duty on goods manufactured by foreign subsidiaries of U.S.parent companies which are then sold to the American parents for ultimate resale to customers in the U.S.  Mr. Trump implied that the imposition of such a duty would make it unattractive for an American company to operate foreign subsidiaries, unless the intent is to sell goods to customers outside the U.S.

In order to determine whether (in addition to a reduction in the general corporate tax rate that I discussed above) Trump’s second measure has merit, I created a set of examples that follow the text of this blog.

 

 

Example one shows what happens if goods are manufactured in the United States. I have assumed sales figures as well as material, labor and overhead costs that would provide a profit before income taxes of 23%. My numbers are for illustration and comparison only. They are very simplistic.

The second example assumes that production is moved to Mexico. There are a couple of points that should be considered before reviewing this example. The first, is that the Mexican corporate tax rate is not much lower than the U.S. rate  (30% vs 35%). The real advantage is that material, labor and overhead are presumably substantially less in Mexico. My figures again are arbitrary and are presented just to illustrate the concept of possible benefits of moving businesses outside the U.S..

In addition, I have constructed the example assuming the goods manufactured  in Mexico are sold to the U.S. parent at a price that would give the U.S. parent a small profit on which the current 35% corporate tax rate would apply. Working the numbers in this example shows that the overall net profit that would be reported on the consolidated financial statements of the parent company and  its subsidiary  is much higher.

Surprisingly, the savings from moving production to Mexico in NOT in corporate taxes. The total corporate tax is actually greater.  However, the U.S. treasury comes out with substantially less.  The Mexican treasury reaps the benefit.  Nevertheless, the overall net profit is much higher. The additional net profit is as a result of a substantial decrease in total production costs, including overhead.  The additional net corporate profit arises at the expense of U.S. job losses  

From example two,  I conclude that that the shortfall in U.S.  corporate tax revenues  could be recovered by imposing a tax on profits made by a foreign subsidiary that are not repatriated back  into the U.S. The only problem  is that such a tax  on unrepatriated profits would not bring back jobs to America. (Note that under current tax law,there is what I believe to be a serious loophole in the system whereby foreign business profits earned by a U.S. corporation through foreign subsidiaries is not taxed as long as the profits remain outside the U.S.)

 

 

In my third example, I assume that production remains in Mexico however a 30% import duty is imposed by the U.S. when the goods manufactured in Mexico are acquired by the U.S. parent company for ultimate sale in this country. At the same time, in drafting this example, I applied a corporate tax rate of 15% on the American parent’s profits instead of 35% . This  third example incorporates BOTH of Donald Trump’s proposals.

If one makes an allowance for a 30% import duty, you will notice in reading this last example, that the Mexican subsidiary would have to charge significantly less for the product sold to the U.S. parent  in order to allow the parent to make at least a small profit after the import duty.

The numbers in this example show that there would still be a substantial savings in total production costs because (obviously) labor, material and overhead would be cheaper in Mexico than in the United States.

 

 

However, in spite of reducing U.S. income tax rates, the imposition of a substantial import duty results in total government levies that eliminate a substantial portion (two-thirds in my example) of any of the cost savings. If the US also imposed a 20% tax on unrepatriated business profits, the additional charge would effectively make it unprofitable for U.S. companies to incur the costs of starting up operations outside the U.S.

Please note that no import duties would be levied if production outside the U.S.  is sold to foreign customers. Nevertheless, it may prove beneficial to still charge a 20% tax on unrepatriated business income to encourage American corporations to manufacture domestically for export purposes.

What is unknown at this time is whether other countries would retaliate if the U.S. imposes large import duties on goods manufactured in these other countries by their foreign subsidiaries. What is, however, quite clear to me is that, without an overhaul of the U.S. tax system, it will be difficult for any future government to create worthwhile long-term jobs.

So, let’s not dismiss Donald Trump’s tax proposals out of hand- despite some of his other policies that most of us might consider unreasonable(to say the least).  Even a stopped clock is right twice a day!

My examples follow:

Assumptions:

Sale to third parties $6,000 U.S. Federal corporate income tax rate

Material costs in U.S. $2,500 Currently 35%

Material costs in Mexico Trump proposal 15%

$2,500 x 70% $1,750* Mexican corporate tax rate 30%

Labor costs in U.S. $1,500 U.S duty imposed on goods from Mexico

Labor costs in Mexico  Currently NIL

$1,500 x 30%  $450 *   Trump proposal 30%

Overhead in U.S.  $600

Overhead in Mexico

$600 x 80%  $480*

* Converted to U.S. dollars

Example 1: Goods are manufactured in U.S.

Sales $6,000

Cost of sales

Materials $ 2,500

Labor $ 1,500 $4,000

Gross profit $2,000

Overhead $  600

Profit before income tax $1,400

U.S. corporate tax  35% $  490

Net profit $  910

Example 2: Production is moved to Mexico

Mexican corporation sells goods to U.S. parent for $5,500

U.S. corporation resells to third parties for $6,000 in order to make a small   (taxable) profit

Sales by Mexican subsidiary to U.S. parent $5,500

Cost of sales

Materials $1,750

Labor $   450 $2,200

Gross profit $3,300

Overhead $  480

Profit before Mexican income tax $2,820

Mexican corporate income tax 30% $   846

Net profit $1,974

Sales by U.S. parent to third parties $6,000

Cost of goods bought from Mexican subsidiary $5,500

Profit before U.S. corporate income tax $   500

U.S. corporate tax 35% $   175

Net profit $   325

Conclusions:

The savings from moving production to Mexico in NOT in corporate taxes. The total corporate tax is actually higher – $1,021  ($846 +$155) versus $ 490. The additional tax is $1,021- $ 490= $ 531. However, the U.S. treasury comes out with  $615 less ($490-$175).

Overall, however the net profit is much higher $2,299 ($1,974 +$325) versus $910.

The additional net profit is as a result of a substantial decrease in total production costs, including overhead. ($1,750 + $450 +$480) $2,680 versus

$4,600 ($2,500 +$1,500+ $600).  $4,600-$2,680= $1,920

4.   The additional net corporate profit arises at the expense of U.S. job losses   

  

Note: The shortfall in U.S. corporate tax revenue of $315 ($490-$175) could be recovered by imposing a tax of 16% (in this example) on profits made by a foreign subsidiary that are not repatriated into the U.S. ($1974 x 16%= $315.84).

 

 

However such a tax would not bring back jobs to the U.S.

Example 3: Production remains in Mexico. However a 30% import duty is imposed by the U.S. on the cost of goods manufactured in Mexico. At the same time, the U.S. corporate income tax rate is reduced from 35% to 15%.

In order for the U.S. parent corporation to make at least a small profit after having to pay the 30% import duty, the sale from the Mexican subsidiary, the sales price from the Mexican subsidiary to the U.S. parent would have to be reduced from $5,500 to $4,500. :

Sales by U.S. parent to third parties $6,000

Cost of goods bought from Mexican subsidiary $4,500

Profit before proposed import duty $1,500

Import duty 30% x $4,500 $1,350

Profit before U.S. corporate income tax $  150

U.S. corporate tax 35% $    22

Net profit $  128

Sales by Mexican subsidiary to U.S. parent $4,500*

Cost of sales

Materials $1,750

Labor $   450 $2,200

Gross profit $2,300

Overhead $  480

Profit before Mexican income tax $1,820

Mexican corporate income tax 30% $   546

Net profit $1,274

* $1,000 less than in Example 2 to offset the impact of the 30% duty to be paid by the U.S. parent. U.S. parent must show at least a small profit to satisfy the IRS.

Conclusions:

1. By moving manufacturing operations to Mexico, there is still a savings of $1,920 in total production costs.
2. However, total duties and taxes are:

U.S. corporate income tax        $22

U.S. import duties collected $1,350

Total U.S. levies $1,372

Corporate taxes paid to Mexico $  546

Total $1918

U.S. corporate income tax in Example 2 $   175

Corporate taxes paid to Mexico in Example 2 $  846

Total $1,021

Conclusion:

Although moving production to Mexico still reduces total operating costs by $1,920, the U.S. will collect additional taxes of $1,197 ($1,372-$175). This eliminates almost two-thirds of the cost savings.

If the U.S. also imposed a 20% tax on unrepatriated foreign subsidiary business profits, the additional levy of $255 (20% x $1,274) would effectively make it unprofitable for U.S. companies to incur the costs of starting up outside of the U.S.

Please note that, under these proposals, no import duties would be levied if a foreign subsidiary sells its production outside the U.S.  Nevertheless, It may prove beneficial to still charge a 20% tax on unrepatriated foreign business income to encourage U.S. corporations to manufacture domestically for export purposes.

 

The post Even a Stopped Clock is Right Twice a Day: Donald Trump’s Tax Policy appeared first on Thoughts From Outside The Box.

source http://thoughtsfromoutsidethebox.com/2016/10/26/168/

The Constitution is Outdated-Part III

 

 

In the first two installments of this blog on constitutional reform, I recommended that the United States should implement a Parliamentary system of government. whereby the leader  and deputy leader of the party that has the most seats in the House of Representatives  become President and Vice President. I also made proposals that would delineate specific responsibilities for both the Senate and the House of Representatives to avoid overlap. In addition, I made suggestions concerning the timing of federal elections.

 

It almost goes without saying that the same reforms would work well at the State level. Although I don’t want to dwell on this issue to any great extent, I find it somewhat absurd that there are so many elections for positions that could more effectively be filled by appointment rather than by election. Examples would include members on school boards, hospital boards, airport boards, police commissions and even district attorneys and judges. Appointments should be based on qualifications and not likability.

 

We Need HONEST Government

 

In this last blog installment on political reform, I would like to concentrate on ways of making our government more honest, as well as efficient. My first recommendation is that lobbying by special interest groups should be much more closely regulated

 

In a free-market system, including a framework based on Enlightened Capitalism  (Capitalism with a Conscience) the right of freedom of speech must be cherished. I am not suggesting that any particular industry or organization should be prohibited from hiring and training people to promote its interests. In fact, without advocates, our society might never change for the better. For example, slavery might never have been abolished and women might never have obtained the right to vote. In my opinion, there is also nothing wrong when a special interest group decides to support one candidate over another for election. After all, each party should have its own distinct platform.

 

 

However, I believe that lobbyists must be prevented by law from offering monetary or other personal incentives directly or indirectly to candidates for political office and members of their families.  Restrictions should include paid vacations. the use of private jets, significant campaign financing and offers of post-political employment and or directorships.

Let’s  Regulate Each Candidate’s Campaign Spending

 

 

I also believe that campaign financing legislation should be introduced to impose reasonable limits. I really don’t have the necessary personal knowledge or experience to propose specific monetary limits, so I will restrict my comments to the concept of tightening the rules governing campaign financing.

 

in 1976, the US Supreme Court ruled that it would violate the First Amendment to limit what any candidate could spend on his or her own behalf. In so ruling, the Court extended the right of free speech perhaps beyond the original intentions of the people who drafted and approved this amendment. I believe that, since the First Amendment does not protect racism or hardcore pornography, the doctrine of unlimited campaign spending should not be protected either. Let’s amend the First Amendment.

 

Can one seriously expect someone who is a multi-millionaire or is a member of a multi-millionaire family to consistently represent the needs and wishes of the Common People? John F. Kennedy once remarked during the 1960 West Virginia primary that he had received a telegram from his father, telling him not to buy another vote since his father refused to pay for a landslide.

 

I believe that good government would be well-served by requiring most (if not all) allowable campaign contributions to be made to the parties and not the candidates.  I covered this in Part II of this blog. The parties   could then decide how much to allot to each congressional candidate. A larger “ slice of the pie” could be allocated to the people who are their parties’ respective nominees for President and Vice President.

 

Let’s Also Regulate Overall Campaign Spending.

 

 

In this, the 21st century, is it really necessary to clutter our roadsides with signs and placards that promote candidates for office? Is it not true that we can learn all we need to know from radio, television and the internet? Don’t the high-profile candidates debate each other, and aren’t these debates recorded and posted on YouTube and Facebook? If you’d rather tune into hockey, basketball or a sitcom, can you not record candidate debates and watch them at some other time? Don’t the candidates post bios and outlines of their platforms in the newspapers and in the voting pamphlets we receive prior to each election?

 

Again, I don’t believe that I can suggest monetary limits. However, if campaign spending and campaign financing could  be  realistically curtailed, this would go a long way to reduce political dependency on special interest groups.

 

Although it would be difficult to implement rules of good conduct, I strongly recommend that it would be much more beneficial if candidates spent their allotted dollars emphasizing their own  credentials without taking potshots against their opponents.

 

 

 

Lawmakers Must Themselves Obey The Law

Perhaps my most significant recommendations in this segment of my blog on Constitutional reform are targeted to ensure  that our lawmakers obey the law. Since the members of our Congress are the lawmakers of our nation, in that they create our laws, we, the people, must, in turn, formulate effective methods to make sure that they also obey them.

 

My first recommendation is  that each Congressperson and adult members of his or her immediate family should be subjected to an independent annual audit to determine whether changes in their net worth are commensurate with their legitimate incomes and personal net worth at the end of the preceding year. I believe that these audits should be continued until five years have elapsed after they have left office. Penalties for corrupt activities should be as onerous as those in place under the provisions of RICO (Racketeer Influenced and Corrupt Organizations Act).  These include criminal prosecution and confiscation of assets.

My second recommendation is to introduce the administration of periodic polygraph test to members of Congress. Under current legislation, the Employee Polygraph Protection Act limits ( but does not prohibit) employer use of lie detector tests. However, Federal, State and local government employers are exempt from the Act.

 

In general, a public company employer, whose business is covered by the Act, cannot require, or even suggest, that an employee or prospective employee take a polygraph test. The only exception is for investigations involving economic loss or injury to the employer’s business. This includes theft, embezzlement misappropriation or any act of unlawful industrial espionage or sabotage.

 

These criteria could easily be adapted to test Congresspersons, especially when an audit  turns up reasonable grounds for further investigation. The potential existence of offshore investments and or corporations or trusts set up by others for the benefit of Congresspersons and their families should be a major focus of these tests.

 

 

Let’s Make an Efficient Use Of Internet Polls

 

Finally, I would like to recommend that more use should be made of internet polls.  Historically, government representation has always been a necessity, since no one could never expect all citizens, or even only all concerned citizens, to weigh in on important matters. With the proliferation of the internet, this is actually no longer the case. The internet allows for mass participation in the political process.

 

Granted, many existing polls are administered by organizations (including the media) that have an agenda or bias. However, an independent polling system could be established through which our country’s citizens could participate in referendums on “hot button” issues, such as gun control and how to deal with illegal immigration.

 

Identification of participants in these polls by way of social security numbers and birthdates would eliminate abuses that might otherwise arise from the casting of multiple ballots. Participants’ responses could also be protected to eliminate privacy concerns.

 

I am not really in favor of putting every single measure under review by the individual States in the form of a poll. In California, for example, there are always a number of Propositions that are placed on the ballot when one votes for Presidents and Congresspersons. Although  an attempt is made to show both sides of a given argument, it is very difficult for anyone who is not extremely knowledgeable to make an informed judgment.

 

Recently, I looked through the Official Voter Information Guide that I found in my mailbox that was prepared in advance of the upcoming Federal election. One of the issues under discussion in California is legalization of marijuana. Those who are opposed, pointed out that, in Washington State, automobile accidents and fatalities rose  after legalization. On the other hand, supporters  of legalization provided data proving that there  really was no difference in the number of automobile accidents and fatalities following legalization in the state of Colorado. Who should I believe?

 

Another Proposition deals with a proposal to require shoppers to pay a fee when using plastic grocery shopping bags. Supporters provided arguments that rules geared toward reducing plastic consumption are ecologically sound. Those that were opposed viewed  this measure as simply a means of subsidizing grocery store profits.

In my opinion, measures like these would be better dealt with by our elected officials . In my mind, however, there is no doubt that 21st Century technology can ensure that our government is one “ of the People, by the People and for the People” .

The post The Constitution is Outdated-Part III appeared first on Thoughts From Outside The Box.

source http://thoughtsfromoutsidethebox.com/2016/10/13/constitution-outdated-part-iii/

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The Constitution is outdated Part II

In Part I of this blog, I presented my reasons why I believe that the U.S. Constitution requires a major overhaul. However, simply calling for change is a rather useless exercise, unless the person advocating change has viable and reasonable alternatives. To reiterate, I made the recommendation that Presidential elections should be abolished and that the President should be chosen as the leader of the party with the most seats in the House of Representatives.

 

 

In Part II, I would like to consider the evolution  (or devolution) of Congress over the past few decades. Have you noticed that in the novels and movies of today, most elected officials are depicted as evil and/or corrupt? They are generally obsessed with their own agendas, and even resort to violence and murder. Rogue Presidents and Vice-Presidents are a favorite fiction topic as well.

In Part I, I referred to George Washington as America’s King George I, but without the Divine Powers of a monarch. The U.S. Senate and House of Representatives were also modeled after the English system that consists of a House of Lords and a House of Commons. The main difference is that, in England, the House of Lords is honorary and rarely assumes an active role in creating or passing legislation. Our neighbor to the north, Canada, has a system that mirrors the English House of Lords, in that members are appointed and not elected. In England, membership in the House of Lords is inherited, while in Canada, appointment to the Senate is generally in recognition of meritorious service to the country. In both cases, the “real” governing body is the House of Commons, whose members are voted in by their own constituencies. They represent the various political parties, each with its own platform.

Neither England nor Canada has a President. Instead, each political party chooses its own leader, and the leader of the party with the most seats in the House of Commons becomes the Prime Minister. In turn, the Prime Minister appoints his or her cabinet members, generally by selecting persons who have also been elected to the Commons. At any time, a party’s caucus of senior members can vote to replace the Prime Minister. Elections in Canada and England take place every four years or so. As long as one party holds a majority of the seats, it can pass legislation unimpeded. The opposition parties can raise objections and these are made known to the general public through the media. If the public-at-large is displeased with the actions of the governing party, it can vote an opposition party into power in the next election. On, occasion a shift in power can result in the reversal or amendment of prior legislation.

Both England and Canada have two or more well-established parties. In cases where one party does not garner the majority of the seats, two or more parties will usually form a coalition and govern together. If and when they can no longer agree, an election is called. The concept of a coalition gives other (smaller) parties an opportunity to participate in government, if their members have been elected in certain jurisdictions.

The Parliamentary system works well because those in power can govern without worrying about party politics. There is little need for “horse-trading” to get votes. As I just explained, if the general public becomes dissatisfied, there’s always another election looming within the foreseeable future.

In the United States, a very serious problem often occurs in cases where the President’s political party does not control either or both divisions of Congress. In Part I of this blog, I provided numbers showing how prevalent these splits have been over the last sixty years. The problem is magnified if different parties control one of  the two houses. Legislation often becomes watered-down and vote-getting becomes a function of excessive compromise.

I really enjoyed the movie Lincoln (not the movie Abe Lincoln- Vampire Hunter) . Lincoln depicts the extent of the convoluted deal-making and out-and-out blackmail that Abraham Lincoln had to resort to in order to push through the 13th Amendment to the Constitution in 1865 that abolished slavery. And Mr. Lincoln did not have to contend with the 12,000 lobbyists that haunt our nation’s capital today.

In Part I, I suggested that the decision in 1787 to divide the U.S. Congress into two Chambers was influenced, at least in part, by the system that was already a fixture of the governing system of England. The Founding Fathers decided that two Chambers would provide checks and balances to forestall tyranny and carefully weigh both long-term and short-term implications of pending legislation.

The House of Representatives was formulated to champion the will of the people.

The House of Representatives was formulated to champion the will of the people. Memberships were (and still are) allocated based on relative population by State. California, at one extreme, has 53 Representatives, while seven States have only one each. There are 435 seats in total. The House has several exclusive powers, including the ability to initiate revenue bills, to impeach officials and to elect the U.S. President if there is no majority in the Electoral College. Members serve two-year terms only. This last provision is, in my opinion, a recipe for gross inefficiency.  This is because members of the House must constantly devote a great deal of their time and efforts towards seeking reelection by raising money, instead of concentrating on their jobs. It is probably quite common for
members to cast their votes based on the  dictates of wealthy and influential campaign contributors .

The existence of the Senate has as its basis the consensus of the Founding Fathers that each Sovereign (self-governing) State should be equally represented by two delegates. The exclusive powers of the Senate include ratifying treaties with other countries and confirming the appointment of cabinet secretaries. federal judges and ambassadors. Members serve staggered six-year terms.

 

In summary, the Founding Fathers envisioned the House as representing the will of the people and the Senate as being responsible for the nation as a whole.

It is interesting to note that, while George Washington was a proponent of the bicameral framework for its ability to provide checks and balances, Thomas Jefferson advocated the efficiency of a single-chamber.

The world has become far more complex than it was in 1787. We have made tremendous strides in our ability to expand, not only within our own borders, but our influences are also felt world-wide. Yet, party politics, graft, corruption and special-interest lobbying continue to hobble our society. As we all know, law- making today is a time-consuming process and is, in many instances, watered- down by political compromise.

 

I therefore make the following specific recommendations:

1. All elections to both the House and the Senate should take place at four year intervals, as is the case now with Presidential elections.

I strongly believe that the current term of members of the House is too short. The system is costly, since members must devote a disproportionate amount of their time worrying about reelection, instead of concentrating on their legislative responsibilities. Further, since one must “make hay while the sun shines”, as the saying goes, there is the inclination to grab as much as possible for oneself in the short time allotted.

Four year terms for Senators would serve to streamline the system. The current policy of six- year staggered terms theoretically allows the senior Senator to teach the junior Senator from his or her State. However, I believe that Senate candidates should run on one ticket as a team, since the function of the Senate should not be to champion any particular State, but rather the country as a whole.

2. The respective roles of the House of Representatives and the Senate should be redefined to eliminate overlap.

I suggest that each of the Chambers should retain the exclusive rights and powers that they now enjoy. However, I believe the House should be made specifically responsible for domestic issues while the Senate’s activities should be restricted primarily to matters affecting international relations.

3. I recommend that Presidential elections should be abolished.

I believe that each party should elect a leader and a deputy leader internally. These people would become President and Vice-President respectively, if their party wins the majority of seats in the House of Representatives. Each candidate for the Presidency would campaign as they do now but, instead of expounding on  their own attributes (while dissing their opponents), they would be forced to emphasize the major platforms of their respective parties.  All contenders would probably represent different States and, winning or losing a personal race would become much less important than the results of each person’s party as a whole. After all, there is little advantage in winning a seat if your party winds up in a minority position on a nation-wide basis.

As it now stands, it is not the popular vote that determines the winner of a Presidential campaign. Rather, it falls upon the Electoral College, whose membership is determined with reference to each State’s relative population, to elect the President. Each State is allowed to appoint a certain number of representatives to the Electoral College and the members generally cast their ballots State- by- State in favor of the candidate who has received the most popular votes in that particular jurisdiction. In a few States, the votes may be split in proportion to the popular votes received by each candidate within the different districts.

If my suggestion to choose the person who is the leader of the party that has the most seats in the House of Representatives as president is adopted, the Electoral College would become redundant.

Under my proposed system, the President would always be working in tandem with the House. It is true that the majority in the Senate could be comprised of members of another party and the President would then have to deal  with a potentially hostile Senate on international matters.

As is the case today, the President would retain the opportunity to address the Senate to make known his or her his or her concerns, and the right of a President to veto Senate bills would be retained. Again, if the President’s own party does not agree with their leader on  significant issues, as I said before, the party’s caucus  could then vote to replace their leader.

In the third and final installment of this particular blog topic, I will deal with both lobbying and campaign financing issues. I will also propose measures to ensure that lawmakers obey the law. I will explain why contributions need not be made specifically  to Presidential and Vice-Presidential candidates. Rather, contributions should be directed  to the individual parties, and the leaders of each party could then decide how to allocate the funds.  They would be forced to recognize that their major objective is NOT to elect one or two people to positions of high-power, but to accumulate the most seats on a country-wide basis.

Please stay tuned.

The post → appeared first on Thoughts From Outside The Box.

source http://thoughtsfromoutsidethebox.com/2016/10/06/141/

Face it America – The Constitution is Outdated

The Constitution is Outdated – Part I

The US Constitution is OUTDATED and has not been ratified since 1788.  Ask yourself,  does it really make sense that a document created almost two hundred and thirty years ago should be valid today?

If you really need an example of how obsolete the Constitution is, you need look no further than the Second Amendment which states the following:

“A well-regulated militia being necessary to the security of a free State, the right of the People to keep and bear arms shall not be infringed.”

Take a moment to reflect on life as it was just before the turn of the 19th century. There existed a constant  threat of warfare against England, France and the native Indians. At that time, early Americans could not count on their government to supply weapons in times of conflict. Thus, the Second  Amendment.

Did  Washington and Jefferson even begin to contemplate  handguns that would  fire six bullets, let alone automatic and semi-automatic weapons? If someone joins the military today, do they bring their weapons with them? And yet, there are millions of Americans who  really believe that the Second Amendment has given them an inalienable right to bear arms.

Nevertheless, the topic of gun control is not the main purpose of this blog. I want to discuss the structure of our Federal government and how it can be improved. Of course, it is very difficult to convince people  to think outside the box and take the initiative to effect change. But sometimes, one has to bite the bullet, if you will pardon the pun.

In my opinion, nothing is completely sacred except the Golden Rule of “Do unto others” etc. Many Americans believe in the Bible, and yet few adhere to the laws in the Old Testament that prohibit the consumption of pork products and shellfish. Realistically, most of us recognize that rules such as those were appropriate at a time when  refrigeration did not exist.

President Obama’s platform in his first presidential campaign  promised an era of “Change”. Change implies the recognition that was what was the norm in the past, isn’t necessarily relevant in the future.

In the early 1900’s, there was resistance against the adoption of the automobile to replace horses. Today, life without cars is practically unthinkable and the next generation  of Americans  will likely have cars that drive themselves. Around 1985, a good friend of mine who was a partner in one of the big four accounting firms swore he’d never have a computer on his desk.

At this point, I want to stress that I only brought up the issue of one’s right to bear arms to prove  that what was legislated so many years ago is not necessarily  valid today. My real objective is to discuss the structure of our Federal government and to suggest how a broken system might be fixed.

Please note, I am not affiliated with either of the two major political parties in the United States. I am also not a member of any political organization whatsoever . I’d like to think therefore that my comments are unbiased.

King George Washington and King George the First – One in the Same

In my opinion, George Washington and King George the First of the United States were on in the same, since the U.S. Congressional system was actually modeled after the governing system in England. However, long before the U.S. Declaration of Independence was signed, the English king had become not much more than a figurehead. In the centuries following the ratification of the Magna Carta in 1215, an elected Parliament assumed the rights and responsibilities of  government. The last time a British monarch exercised the right to veto a measure passed by Parliament was in 1708.

In America, by way of contrast to the English model, the Founding Fathers decided to invest our President with numerous powers, including the role of Commander-in-chief of the Armed Forces, primary responsibility for the management of national and international affairs, and the right to veto bills approved by Congress. Some of these powers were contained in the Constitution and some evolved over time. Harry S. Truman summed it up nicely with the sign on his desk that read ” The buck stops here”.

Consider the many changes that have occurred over the past two hundred and fifty years that prove the constitution is outdated. In the early history of our nation, there was generally little need to consider anything more pressing than domestic issues – the concept of Manifest Destiny- which stood for America’s quest to expand its borders from coast to coast.

Compared to today, international trade was quite limited; there was no highly- sophisticated stock market, and the U.S. did not have to deal with enemies possessing weapons of mass destruction. In our time, I believe that it is clearly impossible for any one person to be knowledgeable and expert in all matters both foreign and domestic. In the decades after General Dwight D. Eisenhower’s Presidency, has there been an American President who has had the experience to assume the role of Commander-in-Chief of our armed forces?

Any President must therefore choose his or her advisers wisely, and if the only readily available advisers are motivated by political leanings or, even worse, accumulating personal wealth, I believe that it becomes relatively easy to mislead a President-even if his or her intentions are well-meaning.

American Political Policy or American Political Heist

I believe that, perhaps the best example of recent bad policy, is the adoption of Obamacare (the topic of another blog in the not-to-distant future).Ask yourself: Why did George W. Bush invade Iraq? Was it the Iraqis who perpetrated 9/11? Did Saddam Hussein really harbor weapons of mass destruction? Was the second President Bush largely motivated to make up for his father’s decision not to send the American troops into Baghdad in 1991? Or was his decision made, at least in part, to protect our sources of Middle East oil? What influence did Vice President Dick Cheney, whose company Halliburton was eventually awarded contracts totaling $ 39.5 billion  in Iraq, have?

I am not suggesting that the Office of the President should be replaced. I am, however, suggesting that  we should  consider changing the method of how the President should be chosen. At the very least, we should do whatever we can to ensure that all Presidents receive sincere and unbiased advice.

We should start by  asking ourselves : What motivates people to vote for a particular Presidential  candidate? Is it the party which he or she leads, or is it the person?  If it is the person, the whole exercise becomes one of relative personalities. Who was more likeable- Kennedy or Nixon?

Ironically, in this coming election, the issue may very well boil down to who is least unlikable? Neither candidate has a positive approval rating.

If decisions should really be based on the platform of the party which he or she leads perhaps there should be no Presidential  election.

In the second part of this blog, I will explain why the President should simply be   the person who leads the party that wins the majority of seats in the House  of Representatives. I will explain why The Senate and the House should have specific and separate mandates.  I will explain why Executive Powers need not be given to any President and how there is an pressing need for judicial reform in the Supreme Court.

Permit me to close with one important observation. As we all know, it is very difficult for any government to function when its President and its Congress represent different parties .

In all the two-year periods between 1901 and 1954,  (corresponding to the election cycles in the House of Representatives) the President and his Congress were only from different parties four times-  eight years in total.

From 1955 through 2016, there were 21 two-year periods where the President and his Congress represented different parties – a total 42 years out of the last 61. I hope you will agree with me that this is not an effective method of governing a great country.

Please watch for my out-of-the-box proposals for Constitutional reform.

The post   Face it America – The Constitution is Outdated appeared first on Thoughts From Outside The Box.

source http://thoughtsfromoutsidethebox.com/2016/09/28/face-america-u-s-constitution-outdated/