Friday, December 19, 2008

Auto Bailout? Hell NO!

As you are aware this current economic crises has been looming for a long time. In my opinion it was driving by not only the liberal media with their disdain for the Bush administration but also by the super large corporations which have been permitted to grow beyond their abilities to operate efficiently. I hear it said referring to the likes of General Motors, AIG & several banking institutions that they are “too big to fail” thus need government to bail them out;. I say if they are that big they should not exist!

This applies particularly to GM whose stockholders deficit grew 40 billion in 2007 after realizing, that their recognition of future tax obligations on profits would be offset with past losses, was in fact a mirage! This principal of accounting was also enabled by the AICPA’s who allowed this violation of sound accounting principles.

These super large corporations become too bureaucratic and no different than governmental bureaucracies. Innovation and imagination is stymied. Very few patents come out of their research departments as they wait for small start ups to prove the value of new products, then like vultures buy them out. The consumers see little if no benefit from this kind of growth.

The solution to this auto fiasco is Chapter 11 bankruptcy, but let the federal government guarantee warranties until they are solvent. At that time they should be required to establish a fund or insurance program that would back up their warranty commitment.

All readers should call their congressional reps and ask them to vote against any further bailout plans.

Friday, October 3, 2008

Open Letter to John McCain & Sarah Palin

10/3/2008 12:48:59 PM

TO: John McCain
Sarah Palin

As it appears right now (in spite of today’s Rescue Package passage) your campaign is doomed to fail! And again IT IS THE ECONOMY STUPID as driven by the media and our broken tax system.

I am gambling that my message will find it’s way through your screeners and handlers and after you understand the concept of making the Fair Tax (HR25) fair as I outline in the enclosed document or which you can also access on my blog you will kick in your maverick tendencies and have the courage to endorse the fair tax plan after redefining consumption, This tactic will undoubtedly win the support of many democrats once they understand that the financing of the affairs of state will be born by all who have the means fairly. Note that the side benefit will have the benefit of correcting the ills of wall street and get top management moving to intermediate and long term planning and not next quarters earnings report!

The last three pages that are stapled together that shows that the current Business USA tax paying ranking is 76 out of 178 nations will drop to number 1. Under your leadership I believe we can take the composite rating to number I as well.

(SEE Details posted 9/12/08)

James D. Lynch
3705 S 112th St
Omaha, NE 68144

402 333-2291

Sunday, September 14, 2008

The Demise of Public Education

John Adams our 2nd president might well be deemed the Father of our Public School System; however, if he were alive today he would definitely be sickened by the deterioration that prevails and point out where we've gone wrong. Education addresses the six questions of, How: Who: What: Where: When:  and Why. The most important being Why? Since the ultimate Why is God who can not be mentioned in today’s public schools due to the ill conceived notion and interpretation of "separation of Church & State" then whole of education can never be completed.


Looking at our public school structure today we need to redefine the roles that come under the umbrella of the delivery system in place. Rethink how the education can be publically funded but privately delivered.


Abolish public education as it exist today, and replace with a results oriented system that will tract recipients of the education for 13 years and beyond and award dividends to institutions for  proven success.


Develop a standard for defining “special educational needed students” whereby an intensity level between ½% and 100% is applied coupled with areas of deficiency are apparent. Then equivalents of ability for learning are applied to the student population. Similarly troubled student definitions that pinpoint source of problem needs to be addressed. A one strike –two strike then (you are out and into a reform school) approach whereby student and parents are simultaneously evaluated and parenting skills monitored. This category of student would be assigned to schools similar to how poor auto drivers are presently assigned for high risk to various insurance companies. When homes are identified where poor parenting is obvious evening parenting skill courses would be offered.


The above is intended to give a kick start to the whole notion of primary and secondary education: publically funded but privately administered.

Friday, September 12, 2008

Long Overdue: Immigration Reform

Wednesday, August 25, 2008


We must not repeat the errors of the 80’s when an amnesty program proved to be a dismal failure. Current proposals all lack the teeth required and provide only a “wink” and lip service. Pseudo enforcement tactics employed the past thirty five plus years is only causing mistrust and disgust by the general public. Blame is currently misdirected at those poor people who are only trying to  escape poverty caused by their own corrupt governments.  Our own government is equally at fault for not properly funding and enforcing rules and regulations for entry and visitations. When the US Immigration and Customs Enforcement  Agency (ICE) tries to be innovative more dismal failure occurs such as the recent voluntary exit program that yielded  168 calls and eight actual departures costing the taxpayers $41,000.


To avoid the Reagan calamity we need to examine how we can effectively police illegal entries as well as overstays (Which must be deemed a felony and punished accordingly). Perhaps we need to remove this responsibility from the INS where some thirty or so years ago they asked aliens to quit registering annually as advertised by TV announcements for they at that time were seven years behind recording the annual registrations. (My Canadian wife was so told) Obviously  there is a sever problem in that agency with either under funding or management or some combination of both.


Thus, one quick way to get a hold of the illegal stays & entries is to offer a bounty to licensed bounty hunters who would be supervised by the US Marshals office for lets say $500 per head. Public service announcements could be televised by the US Marshal offices requesting tips from the public. An incentive would be an award of a refundable  $100 income tax credit for each nabbed violators. How else can we make a dent in reducing the estimated 12 million currently in our midst?


At the same time laws must be passed that would fine any employer who does not follow new identification requirements of  all employees the sum of $20,000 per individual violation. Prospective employees would be required to have a Digitalized  Identification Card  (DIC)  if they  can not present a birth certificate issued by any state of the USA or other Certificate of Alienation issued by INS. This  work requirement  would also be required for all current employees within six months of enactment.


The DIC tamperproof card would have a digital photo with digitized iris scans and fingerprint that could be read like a credit card. It would upon hire be transmitted to the Department of Labor and Social Security Administration for verification of guess worker status. The Card would have a unique number such as Gxx-xx-xxx1. It would display the expiration date as well.


A Guess Worker Program (GWP) would be adopted whereby all functions and monitoring  guest worker status would be privatized. Compensation for this services would be designed around an incentive program that would insure that follow up by Head Hunters Agency (HHA) are following the dictates of the GWP. This could be in the form of  a $3000 employment fee paid by Employers who submits an order to a HHA and the sharing of the employees portion of Medicare and FICA taxes withheld from GW. Large Employers could assign personnel to work with any HHA foreign office to help expedite and screen favorable applicants


In Mexico, where an estimated 90% of all GW will come from, an employee has 1.5%  social security taxes withheld compared to 7.65% US and an addition 7.65% paid by employer. This  15.3% tax could be split with  5% remitted to HHA after GW completes his satisfactory status the balance could be split between Mexican SS administration and the retuning guess worker upon completion of his status.  Furthermore $30 per month will be paid by either employee or employer monthly and remitted directly by employer to HHA.


Guest Worker Status (GWS) would be issued for permitted for no more than a five year term. They would be eligible for a restatement as a GW after returning home for a minimum of 5 years.   While they are in USA charitable institutions that want to improve the GW education would be encourage to educate them  so that they would have an minimum of a GED education with the aim of making them more productive citizens for the benefit of their homelands. Likewise, Employers will be required to notify HHA immediately upon termination. That Gw could work with HHA to find new employment within a 60 day period.


 HHA would be empowered to set up offices throughout Latin America (and Canada if program adopted by NAFTA) where they would be given guidelines for interviewing and screening GW and issuing the DIC documents needed for entry.


Current Illegals (who would be denied credit for any social security coverage  while in the “Illegal Status”) would not be barred from applying if recommended by existing employers and they had a clean record. All fees would have to be paid and the applicants returned to their respective homes where proof of citizenship there would need to be presented to the HHA.


All government employees and officials, along with any charitable organization who accepts any taxpayer funds would be required to request The DIC from anyone who they expect should be subject to the GWP. Profiling would be an acceptable tool and reasonable request for administering the provisions of this program. Any children born in the USA to couples where the parents are under this GWP would not be granted citizenship and any laws to the contrary would be null and void.


Any USA workers can file a complaint that they lost a job or prospect for the same to Department of Labor and will be offered employment doing equivalent work in a country that participant in this program. (The HHA foreign offices will need janitorial services, etc)


After this program is enacted the INS or their replacement will initiate the Conscription Status) CS for any caught illegals (both male & female regardless of age) into special units of our military to serve for 4 years at home or abroad doing tasks that befit their skill levels.


At the completion of their guess status HHA would submit GW names to  customs authorities before they exit this country. This notification in person act will be required to avoid surrender of withheld social security funds due them along with any income tax refunds. All other guess workers who didn’t comply with the exit requirement would have their names submitted to the draft boards for  conscription into a para-military group for service. Any unlocated  overstays not reporting for military duty immediately would have their names then turned over to the bounty hunters for capture and removal.  


While  under conscription they could receive additional education at some level to make them better citizens of their home countries upon termination of service. Upon completion of their 4 year conscription they would be graded on a numeric graded from zero to 99 with the cream of the crop awarded  with good references for fast track citizenship if they still seek opportunities in the US. Deportation for non-honorable duty acceptance would place them on a non-acceptable database file with iris scans and digitized fingerprints.


Perhaps national border respect could be gained by these conscripted illegals if they were assigned to build any fence on our southern border! Let them escape only to the south.


The State Department or agency that replacing INS should set up offices through out Latin America that would offer short seminars to would-be guess workers. They could be handed out tapes and other English learning educational materials. The program would stress the need to obey and respect local law enforcements authorities and highlight civic matters that guest should be aware of. These offices would work with the HHA’s  who would have quotas for  finding high quality guest workers. Follow-up evaluation of the respective offices must be monitored and evaluated periodically to make certain the program is running properly.


Large signs on the boarder in Spanish should forewarn  any new Illrgal arrivals about their upcoming four year conscription commitment. Perhaps the Mexican governments (which now expects the USA to operate their poverty program) will have to rewrite the pamphlets that now encourage illegal entry activity. Mexico must realize that we will never have an open border until their standard of life and culture is similar to ours.


 The Following is a quick Cost projection of this program.

Estimated Illegal Aliens:



year !


Less: Children under 16


Employer fees

 $ 18,000,000,000.00

       :  Unemployed Jail Etc









Required Agents:


currently employed



  Number per Day






  each office


Number that will Return Vol:


annual enrollment per off













number of offices






Revenue Per off

 $           48,000,000












Salaries Per Office






Rent, overhead & profits









Available for BH











year 2


Bounty Fees



Employer fees

 $  6,000,000,000








If Each BH had revenues of 100K


Required Agents:






  Number per Day


Tax credits  ($100 per)

 $ 200,000,000

  each office






annual enrollment per off













number of offices






Revenue Per off/new

 $           24,000,000





Payroll Tax 5%






  total rev


 $           40,000,000












Salaries Per Office






Rent, overhead & profits






Cost to Follow up in US




I need help posting!

As you might expect my first blog was done by copying and pasting from two separate files . The first part is from a MS Doc file & the table at the bottom is from an excel file. While editing my blog I could find no "undo" key. 

I am a guy that never had a typing class, (educated in the 50's & 60's) . So, if you are interested in helping an old guy communicate . Send me an e-mail an I'll send you the files that i tried to merge. Yes you can teach an old dog new tricks!



  1. 9/21/2006

As a tax professional I realize that the Fair Tax (HR 25) it is indeed a simple plan that will put me out of work (but I can live with the plan if it is indeed fair)

The Plan is strictly a consumption tax that eliminates the income, payroll and inheritance tax system now in effect. It has two major flaws in my estimation that can easily be fixed which I shall address briefly.

1) The proposed rate acknowledges that the payroll tax portion of the current system (7.65% X 2, or 15.3%) is included in the proposed rate of 23 to 26% or about 60% of the new rate. However, the current and future retirees (next 20 years) have already funded their portion of their respective SS retirement program and now would be expected to repay into the retirement system by a consumption tax, this could be adjusted by allowing for an annual 5% declining monthly additional allowance equal to 60% of the proposed monthly stipend. An alternative would be to using the same 20 year phase out and gross up their current determine social security benefit.

2) When one considers annual income that an individual receives there is in reality 3 distinct categories based upon the use of that income, it is either (A) consumed, (B) Given away or (C) invested. Temporary savings can be ignored for it will ultimately end up in one of the three categories so mentioned. It is the Invested portion of the income that must be addressed to make this system truly fair. I would apply 40% (granting that the payroll tax element has been satisfied by consumption) of the proposed rate to all investment transaction at date of investment. In other words if the fair tax rate is 25%, charge 10% tax on all security transaction to the buyer on equity securities including all stocks (except original issuance stocks), traded partnerships and any property that is not used in an active business venture, i.e. farm land. This approach recognizes that stock exchange transactions (the vast majority of Invested Income transactions) has little economic benefit and if anything has adverse effect (as the current trend by too many in the business community is concentration on quarterly results for favorable marketing of stocks leading to Enron's, WorldCom's, etc. This would greatly effect the stock market as we know it today for an investor would be thinking of longer term results as he now must recoup 110% of his investment in order to break-even. Because it would be such a shock to the stock market system it could be phased in over a 10 year period beginning at !%. All Corporations and Institutional Investors as well as individual would pay this tax thus the overall rate of 23% could be greatly reduced.

The supporters of this Fair tax plan claim that consumer prices would see a decrease and cite studies that economist have made. I have not been able to find any of these actual studies and suspect that they were made by academics that have never had any real world experience. I have not heard of any major corporation endorsing this concept and my own analysis (though brief) would expect a company such as GE to decrease their prices by no more than eight percent.

The big argument over financing the affairs of state seems to be on how to do this instead of who should carry this burden. Remember the Income tax system when it began started taxing only the wealthy then in the early 40’s when withholding was introduced the masses were sucked into the system. A simple concept was used by applying a formula of X times Y where X was a variable rate and Y was taxable income. Thus the complexity of defining Y has led to a mired of complex regulations that leaves us in the mess we are in today while the politicians tried to pull the wool over the publics eye by trying to simplify X.

The burden should be born from all but in proportionate to each ones source of income. Income is used to satisfy ones, needs, wants and excesses... These three objects are indeed complex so in an attempt to simplify the FairTaxers concentrate on the first two Needs & wants with a consumption tax and ignore the Excesses. I believe their approach would only lead to a society that has two classes the Super Rich and the rest of us.

My approach with the fair tax after the two major flaws are corrected may be worth considering.

However, what would happen and how to prevent moving cash to foreign source investments needs to be kept in mind.

Revisited: 05/01/2008

As I have been watching the Fair tax move forward at a snails pace with the conviction that this could evolve into a truly fair plan a look at the big picture is in order. To find this big picture I surfed the web and found the following two sites:

1). specifically Table 1.1.5 Gross Domestic Product.

2). http:// First chart “How Congress Spends Your Money”

From this information the spreadsheet Exhibit A has been generated. Now a little caution is in order. I am an accountant and not an economist however the concept presented herein can easily be refined to satisfy the purest and tweak the methodology to accomplish the end. That is to finance the affairs of state. This financial burden must be borne on the backs of those strongest to bear the burden; that is a relevant task that will have a progressive burden but at the same time should not be demotivational. In other words only a fool who has acquired by his own efforts a sum 100 times the average of the masses would turn down a sum that increases his proportion to 101 if his additional burden is less than 1 but proportionally higher than the average and not punitive.

When looking at the chart and numbers think in terms of any average family budget. Replace that scary term trillions and think of it as your income. If your personal income were $13,308.30 and your tax burden was $3,235.20 now you must figure out: do I spend 9,355.50 on my wants and needs leaving only $717.60 for investment or to pay down and retire part of my $9,400.00 debt. Last number makes this Trillion dollar debt seem manageable as the interest is in government expenses and the total assets are not even calculated! Why do you ask is that $717.50 not the $2,227.60 investment per line 6. This is due to the $+700 import deficit and the 700 for social security taxes.

There are two other obviously benefits to this approach that are needed in order for us to build a more perfect union. 1) The collection process will start locally by the venders of the consumed products and services then remitted to the state. 2) Corporate governance and motivation will move away from the quest for quarterly numbers that excite the secondary investors to long term steady and responsible growth in profits and quality.

Notice that the Government Expenditures number of $3 + trillion includes state and local taxes as well as Federal taxes. We should keep the inheritance taxes in place with a $12,000,000 exclusion per beneficiary (but indexed for inflation) as l under Exhibit A , this plan would get rid of state and local income and sales tax in there present form along with gasoline and all excise taxes as well. The inheritance tax would be split 50/50 between federal and state of residence: let this undetermined tax serve as the source for the politician’s pork projects.

If this legislation were in the form of a uniform state law adopted by all 50 states as other Uniforms Laws such as the Commercial Code then in effect we could have the federal government collect one tax return for each state. The state would deduct a standard allowance for all activities such as publically funded (but privately administered with vouchers) road maintenance and other infrastructure now funded, Medicaid and other social programs and any existing mandated programs. An alternative would be to pay the federal government a per capital tax for only those services such as Military, Courts System and other that all states agree are necessary.

Probably the biggest unknown impact of a fair tax is what will this do to corporate profits and the related cost of consumer products and services. Large corporations particularly those whose stocks are exchanged by investors continue to grow and growth but who benefits by that growth. Corporate governance and leadership too often becomes like a government bureaucracy and inept in adapting to change and innovation. We need to encourage competition and innovation by making room for new companies that will grow and proper.

A mom & pop operation that continues through several generations and is privately owned should be able to add to their equity (built up by profits {that beautiful concept}) by having an initial public offering whereby new stock ownership is expanded. This type of investment should never be taxed even when the original shares are sold to a new Investor. It is only those shares exchanged at the next level for that activity does nothing for improving the performance of the entity itself. Likewise hedging activities do not appear to stabilize prices of commodities but too often accelerate the price of products used by business up/or down depending on what those investors fill the effect of political shifts will do to various industries. The Value of these Futures transactions will exceed $300 trillion in one year. A system needs to be developed to tax these transactions so that these activities are limited. When three hedge fund managers can earn over $7 billion in one year who loses, most likely the consumer. It’s time that we let supply and demand work itself through the business cycle.

The securities subject to that designated consumption application can be defined as that under USC Title 15, Chapter 28 Par 78ee (b) (c) and (d).

EXHIBIT A ( $ in trillions)

LINE YEAR 1 2 10
  1. GROSS DOMESTIC PRODUCT 13.308 13.308 13.308
  2. Pers Consumption Expenditres 9.356 9.356 9.356

6. Gross Private Domestic Inv't 2.228 2.228 2.228

    20. Gov't consump'n Exp't/gross Inv 2.535 2.535 2.535

    A. Social Security/Medic Taxes (est) .700 .700 .700

    B. Total Tax Burden 3.235 3.235 3.235

      C. Percent of tax to PCE 34.58% 34.58% 34.58%

      D. Secondary Investing 48.000 45.600 30.252

      E. Inv't Amt deemed Conms'n 2.5% 5.0% 25.0%

        F . Portion deemed Consumption 1.200 2.280 7.563

          G. New Consumption Base 10.556 11.636 16.918

            H. Rate Required to Maintain

            Tax Burden 30.65% 27.80% 19.12%

              Notes: Numbered lines are correspond to descriptions on BEA Table 15.1.1 amounts vary slightly due to data updates.

              Lettered lines are those that Author has added to demonstrate this conceptual revision of a FAIRER TAX system.