Budget balancing should not mean slashed social services. It means that we live within our financial realities.

Today, the numbers behind our realities are sobering. For years, the federal government has spent more money than it has raised, and this extra spending was funded by borrowed money. Since 2002, the Federal budget deficit (how much it borrows) has ranged between $200 billion and $1.4 trillion. The total national debt owed by the United States today stands at $19.5 trillion. Increased debt comes with increased interest payments, which today is around $230 billion every year. Yet come 2025, our interest payments are estimated to exceed $700 billion per year - money that's effectively thrown out the window.

There are solutions to this problem. But each carry their own degree of political drawbacks as they underline realities that large swaths of our society - especially special interests - do not want to hear. Indeed, if the old west adage of “if you seek to speak the truth, keep one foot in the stirrup” was to ever prove true, it would be within a public discussion of budget policies. So what we hear instead is political tightroping between an inconvenient truth and a reassuring lie.

The Alliance Party is not in the business of lying, so the truth - as inconvenient as it may be - is that of the solutions to this problem, there are three and only three:

  1. Cut spending by slashing government programs.
  2. Raise more revenue.
  3. Make government more efficient.

Yet it's also true that no one solution can cut it. Slashing government programs guts the social safety net and the middle class, and leads to cascading social afflictions that just sap resources from other government functions. Raising more revenue simply helps bail out more water from a leaking boat and rewards fiscal irresponsibility on the part of government. Making government more efficient is politically precarious and requires unity within government - a task made all the more troublesome since special interests profit greatly from public waste and financial mismanagement.

So today, our circumstances are framed by team #1 fighting with team #2 trying their best to ignore reality #3 because the interests who fund the election campaigns of both teams make a killing from it. As a result, the problem just continues to get worse.

The Alliance Party's plan is to recognize all of these realities at the same time and incorporate them accordingly into our budget model.

First: we seek to reduce government spending while keeping the scope of public services intact at improved quality. We plan to accomplish this goal by consolidating the redundant and opaque functions of government and streamlining them through our Government 2.0 model for public service that is held to higher accountability standards.

This will downsize the federal workforce overall, yet increase it in key areas to make government a service that works for the people. Additionally, we plan to cut government spending by standing down the immensely wasteful war on drugs, cutting military expenditures not verifiably necessary to national security and reforming public health programs into a streamlined single-payer healthcare model.

Second: with government spending brought under control while making government operate more efficiently, we propose an overhauled tax and revenue structure that works for all Americans. Our plan lowers taxes for small business owners, small-scale investors and families from the upper-middle class on down. It also lowers taxes for most corporations. It raises taxes on income earners making more than $1 million annually on a gradually progressive scale.

This approach also seeks to raise additional revenue through several sources. We plan to legalize and tax the sale of marijuana at the federal level while modestly increasing taxes on certain vices such as alcohol, tobacco and gambling. Luxury taxes on certain items (sports cars, mega yachts, private jets, five-figure jewelry) will also be proposed, as will the leasing and sale of unused federal property (excluding national parks and forests).

With this strategy, we cut waste without cutting critical services or reducing their quality. We make government operate more efficiently and transparently, so taxpayers can verify that public funds are truly being spent responsibly. We then cut taxes for most corporations and everyone but the wealthy and ultra-wealthy. As we would be raising more money than we spend in this approach, we would use the budget surplus to fund Universal Energy and build a next-generation economy with advanced infrastructure while paying off the national debt over a period of 20-25 years.

How we plan to execute this strategy is based on three areas: caps on spending, increased revenue targets and a revamped tax code. We'll go over each of these from here in that order.

Caps on Spending

Caps on Spending

Our budget would limit funds to functions of government through spending caps that each is expected to operate within - barring emergencies or a transparent and well-reasoned justification to increase it. The rest of us have to operate within a budget limit for our lives, government can and should as well. These conceptual caps, as approximate numbers that would be adjusted for future inflation, cover the following areas:

Military. Today, our total military spending is around $1.1-$1.3 trillion every year. That figure includes roughly $600 billion for the Department of Defense, $170 billion for Veterans Affairs services, $150 billion for additional security and intelligence functions (Department of Homeland Security, National Intelligence Program, maintaining our nuclear arsenals, etc.). And as much as 80 % of our national debt is due to war, that's another $180 billion.

This expenditure dwarfs the rest of the world even if we only consider the ~$600 billion defense budget, which is half of our total military spending. Any effort to scale this back is decried as “weak on defense” by politicians in the pocket of special interests engaged in war profiteering, but that's only one angle to this problem. The real reason we spend so much money on the military is because much of our economy is geared to build weapons and the military is the single-largest employer of Americans.

The Alliance Party believes we can stand up to our adversaries and destroy our enemies without going bankrupt in the process. We believe large numbers of active duty soldiers and unemployed veterans would be happy to hang up their uniform for a well-paying career building the next-generation technologies America needs for a prosperous future. We also believe we can focus our military towards actual threats, not involving ourselves in unnecessary wars that cause more harm than good.

But none of this will happen until we can bring our military spending back to reality.

Through several measures detailed in our Government 2.0 model for public service and approach to defense and security, our budget model places a spending cap of $350 billion on military efforts. This is $150 billion more than Russia and China combined, and of the 17 top defense spenders worldwide, all but two are our allies.

Interest on loan debt would be paid separately, and Veterans Affairs health services would be absorbed into the National Health Service.

Discretionary Spending. “Running the government” is what we think when we hear Discretionary spending. Roughly 50% of it is devoted to the military, with the rest on functions like NASA, the Department of Justice, Food and Drug administration and so on.

Through our streamlined Government 2.0 model for public service, we intend to restructure government operation to be more consolidated and efficient. Furthermore, we also intend to refocus its priorities towards our actual needs as a society, forsaking wasteful and failed ventures like the war on drugs and inappropriate foreign subsidies.

Presently, the Non-Defense Discretionary Budget is $585 billion annually. 21% ($123 billion) of that is healthcare services that would be absorbed into the National Health Service in our model. That leaves $462 billion remaining that we believe we could cut 25% of through consolidation and efficiency improvements, coming to a budget cap of $350 billion.

Mandatory Spending. Consists of major federal healthcare programs (Medicare, Medicaid, Veterans Affairs), Social Security, income security programs (unemployment, food stamps, etc.), retirement programs for retired federal employees and other programs such as disability, agriculture subsidies and child tax credits.

According to the Congressional Budget Office, mandatory spending is roughly $2 trillion annually ($2.3 trillion with $305 billion in offsetting income from fees on natural resource extraction). Of this spending, $861 billion is for major healthcare programs, with $668 trillion going to Social Security, which in our model would be funded as a separate, standalone expenditure.

The remaining money is spent as follows (using approximate figures):

$140 billion: disability insurance
$340 billion: income security programs (unemployment, earned income tax credits, food stamps)
$153 billion: federal civilian and military retirement
$80 billion: veterans benefits
$95 billion: other programs such as housing and agriculture subsidies

Total: $808 billion.

We plan to reduce mandatory spending to an annual budget cap of $400 billion through the following approaches: streamlining federal services while reducing waste. Strenuously investigating fraud and misuse of disability insurance and unemployment. Ending tax credits that encourage people to have more children and inappropriate agricultural subsidies. Consolidating food and income assistance programs and focusing them only on the truly needy. Incorporating veteran's benefits into the National Health Service.

Most importantly in the context of unemployment and welfare, we plan to dramatically increase the demand for jobs by investing in Universal Energy and next-generation infrastructure, which would dramatically decrease the number of people requiring unemployment and welfare assistance.

Lastly, the Alliance Party would seek to cease offering pensions to federal employees and instead provide matching 401(k) contributions. We would also seek to have existing pensioners voluntarily agree to roll their pensions into 401(k) funds through incentives including lump-sum compensation, immunity from income tax for a set time period (or life) or offering lump-sum payments to their children on passing. Over time, this would work to reduce the burden of public pensions at the federal level while ensuring current pension holders are compensated as promised.

Single-payer healthcare. As a core measure of our platform, the Alliance Party would replace Medicare/Medicaid/CHIP/Veterans Affairs and their trillion dollar+ annual expenditure with a nationwide single-payer healthcare framework through the National Health Service. In this model, healthcare is primarily paid by tax revenue, and one wouldn’t have private insurance unless they wanted platinum-level care (which would still be cheaper than what insurance costs today for most people).

In the United Kingdom's model, which is considered best in the world by the World Health Organization, they pay $3,405 per person. Applied to our country, this comes to $1.1 trillion. Adding in a 25% buffer for unforeseen costs, the Alliance Party would cap healthcare spending at $1.375 trillion annually, or around $4,250 for every person in the United States - which would put this at the higher end of most single-payer healthcare programs abroad.

To facilitate this approach, the National Health Service would include several measures that would forgive student loans for all medical professionals that worked for the NHS up to a fixed amount ($250,000 or greater). We're serious about making healthcare affordable and are willing to do what it takes to see that result delivered.

Social Security. In this model, as a “trust” funded program, Social Security is paid outside of the federal budget through a separate tax on income as it is today through FICA, and would not be included in the budget at all. In short, what goes into Social Security comes from Social Security taxes, and what goes out only comes from Social Security taxes, which are raised or lowered to maintain long-term solvency. If people require living stipends beyond that, special assistance would be provided under more transparent and stringent accounting standards outside of federal mandatory spending.

All combined these caps put an annual budget limit of $2.475 trillion for federal government functions (excluding social security), adjusting for inflation in future years.

Revenue Targets

Revenue Targets

Spending caps are one-half of the equation; the other is a realistic assessment of how much money can be raised annually. Currently, the United States takes in about $2.8-$3 trillion each year in revenue, mostly through taxes. This model’s annual revenue target is $4 trillion which would be raised apart from Social Security funds (as Social Security spending would be isolated from the standard federal budget).

We plan to raise this revenue through a reorganization of our income tax code, as well as a few measures beyond income tax.

Some of these measures include legalizing and taxing the sale of marijuana, social vices and luxury goods, implementing a federal sales tax, selling/leasing unused government property and issuing special treasury bonds. Others involve an overhaul to how we tax income, payroll, social security, incorporated business and the most wealthy among us.

The details of this plan are extensive and elaborated upon in Chapter 19: Budgets and Finances of A Future Worth Having, the basis for the Alliance Party's creation. But as a general overview, here's how we'd proceed with this plan:

With $4 trillion raised annually and spending capped at $2.475 trillion, this provides an annual budget surplus of $1.525 trillion (as general numbers, rounded for inflation). This surplus would be used for three functions and only three functions:

  1. Paying off the national debt in full.
  2. Fund Universal Energy and the construction of advanced, next-generation infrastructure.
  3. Establishing a surplus fund for projects within the following categories exclusively: advanced manufacturing, healthcare, education, space exploration, scientific research and development.
  4. Once the national debt is paid in full and Universal Energy is fully funded with our infrastructure rebuilt, a period we estimate to take 20-25 years, taxes and revenue targets would decrease until government operates at a small surplus. If you're skeptical at any claim of government lowering taxes in the future, we understand why. We're here to build a financially responsive government that earns the trust of the public through its actions. And this is the only way we're going to be able to get ourselves in a financial position to do so.

Revamped Tax Code

Revamped Tax Code

The Alliance Party takes a position towards taxes that is sadly alien to today's political class. Senator Elizabeth Warren misspoke when she made her  “you didn't build that” speech, suggesting that wealthy entities didn't reach success based on the effort they invested to do so. She's wrong. They absolutely did.

But they did so using the tools and provisions that those who came before them built - and they were built using the collective resources of society. They used publicly funded roads, airlines that were made possible - and safe - by federal regulation, market protections through federal enforcement and an internet system that was created through federal investment to build their business. Their shipments are protected by law enforcement and the might of the U.S. military. Regulatory agencies ensure their suppliers are honest and build things to the standards they're claimed. Our capitalistic economy is powered by the investment we all place in society.

That requires of us to provide a portion of the labor society helps facilitate back into society - all the more for those of us who have reached extreme success. Not so that we may ourselves benefit selfishly, but rather so that all of us may continue extending the provisions of an advanced society that allow future innovators to succeed based on the labor of those who came before them.

The great yet under-appreciated strength of the American spirit is that it's built from teamwork. We build things for each other because it earns us money, but it earns us money because the things we build for each other are used by each other to in turn build better and greater things. And that is the mindset we incorporate into our tax model.

Government isn't a great builder of things. It invests in systems that invest in people to build great things. We intend to further this goal through our investment in Universal Energy, a next-generation economy with advanced infrastructure, single-payer healthcare and inexpensive higher education, but we also can't have a tax policy that sucks money from business and lower economic classes to fund that effort either.

The failure of our tax policy today is that it expects American business to pay a burden spared of America's ultra-wealthy, and that is a problem we seek to change. Business is the driver of American commerce and American ingenuity. Provided that they abide by certain standards (and a fair average worker to executive pay ratio), America should make it as inexpensive as possible to do business, because a more prosperous business hires more workers which moves our society forward.

Instead, we advocate raising taxes on the millionaire and billionaire classes, alongside raising additional revenue through taxes on vices, luxury items and the sales of certain products to fund a next-generation society and economy.

Although conceptual in nature, here's how our tax model would function:

Proposed Income Tax Structure

Marginal Tax Rate Annual Income: Single Annual Income: Married Filing Jointly Annual Income: Head of Household
10% $0 - $10,000 $0 - $18,000 $0 - $13,000
15% $10,001 - $40,000 $18,001 - $75,000 $13,001 - $50,000
20% $40,001 - $90,000 $75,001 - $150,000 $50,001 - $125,000
25% $90,001 - $200,000 $150,001 - $225,000 $125,001- $225,000
28% $200,001 - $400,000 $225,001 - $550,000 $250,001 - $400,000
30% $400,001 - $650,000 $550,001 - $850,000 $400,001 - $750,000
33% $650,001 - $1,000,000 $850,001 - $1,000,000 $750,001 - $1,000,000
38% $1,000,001 - $1,500,000 $1,000,001 - $2,000,000 $1,000,001 - $1,750,000
43% $1,500,001 - $2,500,000 $2,000,001 - $3,500,000 $1,750,001 - $3,000,000
48% $2,500,001 - $5,000,000 $3,500,001 - $5,000,000 $3,000,001 - $5,000,000
52% $5,000,001 - $7,500,000 $5,000,001 - $7,500,000 $5,000,001 - $7,500,000
55% $7,500,001 - $15,000,000 $7,500,001 - $15,000,000 $7,500,001 - $15,000,000
60% $15,000,000+ $15,000,000+ $15,000,000+

In this structure, (which excludes married-filing-separately as an option as they’d file as single) income earners are separated with more nuance than today, nearly doubling the amount of possible tax brackets.

As noted above, it lowers the tax rate for the lower and middle classes. Accordingly, it also does the same for the upper-middle class, recognizing that even if you make significantly more than the lowest wage earners, you still aren’t as “rich” as it might seem, especially in areas where the cost of living is higher than the national average.

Cognizant of this, the Alliance Party’s tax model doesn’t apply high tax brackets until an income earner has exceeded the million dollar mark. After that threshold is reached, however, tax rates rise significantly higher than they are today, up to 60% for people making more than $15 million per year (with a few exceptions noted below).

This model would also incentivize small business through special tax credits. Contrary to popular belief, taxes are not the same based on your type of employment. All American income earners are subject to income tax, but they're also subjected to payroll taxes (also known as FICA), which are an additional 15.2% applied on top of income tax. If you work for a company as a W2 employee, the company pays all but around 6% of that tax. But if you're self-employed, you pay all 15.2% in addition to any money owed to income tax. This makes starting a small business much more expensive than it should be. For this reason, the Alliance Party would seek to include special tax credits for small business to offset higher payroll taxes.

Capital gains taxes are modified as well in this model.

In much of the tax debate today, we see how wealthy individuals are able to pay lower income tax rates than even the lower-middle class because they make their money through investments as opposed to salaried wages. These taxes are lower in order to encourage investment, which translates to social and economic benefits for society. The Alliance Party agrees with this assessment, but only to a point. To help explain, the approach we propose for capital gains and investment taxes is as follows:

For sales of stocks and other financial instruments, the capital gains tax would depend on the Corporate Class of the company the investor purchased stock in and the length of time it was held: short term (less than 1 year), or long term (more than 1 year).

Class A corporations: 0% long term. 10% short term.
Class B corporations: 10% long term. 20% short term.
Class C corporations: 15% long term. 25% short term.
Class D corporations: 20% long term. 30% short term.
Class E corporations: 25% long term. 35% short term.

For these stock sales, the capital gains tax would apply until the amount exceeded $2 million. Any amount over that would be subject to the personal income tax brackets as shown above, yet starting at 0% from the first dollar over $2 million. This threshold incentivizes investment in companies, specifically more ethical and socially beneficial companies, but only allows the benefits of that investment to extend to a certain level. After that, proper tax rates should apply.

For companies that an individual invested in directly as a partial owner of, such as with startups or partnerships, if the business is sold, the capital gains tax would be 15% to a maximum of $100 million. Any amount over that would be subject to the personal income tax structure as shown above, starting at 0% from the first dollar after $100 million. If you invest in or start a new company and it sells for a massive sum, you should certainly be rewarded for your ingenuity. However, there should be a limit to the degree in which you are so without a full tax basis applying.

Notably, this figure and tax basis only applies to individuals. If you're the owner of a private company and you re-invest large profits back into the corporation, your company's tax basis remains low. This is the measure the Alliance Party takes to allow billion-dollar profits to be made with lower taxes - just so long as that money's spent researching and developing innovations that build a more prosperous workforce and a better society.

Estate taxes: this model does not increase nor decrease estate taxes, leaving them effectively as they are today.

Earned income while living abroad: if you are a U.S. citizen living and earning income abroad, you would not be taxed on income in our model. The fact that the IRS does this today is frankly absurd and the Alliance Party would put a stop to it.

Proposed Corporate Tax Structure

Proposed Corporate Tax Structure

The Alliance Party recognizes that the United States has one of the highest corporate tax structures in the world, which in a globalized economy, affords companies choices as to where they base their operations. Consequently, our tax rate has led many companies to migrate their headquarters overseas in avoidance of our taxes. Therefore, the Alliance Party proposes that corporate taxes be lowered through the following structure:

Note: it may be helpful to review our proposed Corporate Classification structure when reviewing this tax model.

Taxable Income ($) Tax Rate
$0 - $200,000 10% (Rate limit if Class A)
$200,001 - $1,000,000 20% (Rate limit if Class B)
$1,000,001 - $2,500,000 25%
$2,500,001 - $5,000,000 30% (Rate limit if Class C)
$5,000,001 - $50,000,000 38%
$50,000,001 - $100,000,000 45% (Rate limit if Class D)
$100,000,001 - $500,000,000 50%
$500,000,000+ 55%

Like our personal income tax model, our corporate tax model gives smaller and less profitable companies a tax break, ideally in furtherance of hiring more employees and sustaining small businesses. It also rewards companies who act for the public benefit and the well-being of their employees through generous caps on tax rates.

Standard corporations (Class C) pay a tax rate that is capped at roughly 8% less than it is today, providing a substantially lower tax burden. Yet at the same time, companies that profit at the expense of social health will pay more taxes for it – especially if they make extremely large profits.

Combined, this approach 1) lowers taxes for all but the ultra-wealthy, on which it raises taxes appropriately, 2) provides a model to allow healthy returns on investments while ensuring a fair share of taxes are paid past a generous threshold, and 3) appropriately restructures corporate taxes, both incentivizing socially minded businesses while also making sure that socially destructive businesses pay for profiting from social harm.

It gives us the nuance that our current tax code lacks and shifts the higher tax brackets from the upper-middle class to the jet-setting millionaires who have reaped society’s benefits without providing a proportional contribution back to society, to allow us to get out of debt and build a stronger nation.

U.S. Treasury Building

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