Newsletter No. 1
The Ownership Society Institute (“OSI”) is a think tank (California Charitable Trust #CT0136416) dedicated to simplifying life for all Americans. Its mission is to research and devise plans to reduce the complexity and burden placed on all Americans by the enormous government it has created to regulate its activities.
In its attempt to do the “common good”, the government has inadvertently sapped the spirit of self-reliance America’s founders built this country on and replaced it with a dependency on central government the founders designed this country to avoid. We need your help in restoring self-reliance in America. Government has grown too burdensome and too complicated and we will need your help to simplify it.
To simplify government, one function and one function only demands our attention. That function is taxation. Government runs on the property taken from self-reliant individuals and transferred through the process of taxation to government.
In 2008 almost $3 trillion will be taken from individuals to pay for Federal government services that many self-reliant individuals would prefer to do themselves. A trillion dollars is a million times a million – an enormous sum to extract from individuals. That is an annual $10,000 tax bill for each and every one of our 300 million citizens – man, woman and child – and that is only what the federal government takes. State and local taxes are additional burdens.
Taxes taken from the individual reduce the property, the capital, the very resource individuals use to grow the economy Taxes confiscated by government could be invested in new business and create new jobs. Most importantly taxation reduces the ability of millions of individuals to save money, invest it and create a nest egg for themselves. OSI is dedicated to reducing taxation on individuals and in the process implement a plan to make America a more prosperous nation by enabling all Americans including the working poor to attain the wealth necessary to achieve financial independence.
Americans have been in reducing income taxes on individuals over the last 45 years. For example, the top income tax rate on dividends received by individuals has dropped from 91% to 70% to 28% to the 15% it is today. More and more Americans are investing in the stock market to take advantage of this low rate.
However, OSI has determined that the Federal income tax on dividends and the 35% tax on ordinary income which is disproportionately paid by wealthy Americans should “not” be the focus of the organizations initial efforts.
Through the work of its founder, Richard McDonald, OSI believes that “payroll taxes” - those amounts paid to government for Social Security, Disability and Medicare – not “income taxes” should be targeted. In round figures the government collects $1.3 trillion in “payroll taxes” but only $1 trillion in “income taxes”.
As payroll taxes are a greater confiscation of individual property, it only makes sense to address their elimination first. As the poor and middle-class pay so little in income tax we focus on the payroll tax they are forced to pay which amounts to 15.3% of their working-life income – an enormous penalty to pay for the return they get.
By taking that $1.3 trillion of payroll taxes collected annually by government and returning the ownership thereof to the individual and forcing the investment of those funds into the capital markets two major OSI objectives are achieved – the individual gets a nest egg that eventually makes him wealthy and the American economy receives an enormous shot in the arm with the infusion of over a trillion a year to fund an explosive growth of the economy.
Details of OSI’s plan which it calls “Rise Up America” can be found on its website at www.riseupamerica.us. The reasons why the poor get wealthy and the growth of the economy explodes are all addressed there and in the free e-book offered on the site.
As an example of how Rise Up works take your average American householder that makes $40,000 a year and annually pays $6,000 in payroll taxes (15%). Assuming that he never gets a raise he pays payroll taxes of $240,000 over his 40-year working life. If he is still under existing law he will receive a $1,122 monthly retirement check and have no nest to show for his “investment” of $240,000. Not one red cent.
Under Rise Up his weekly payroll taxes will be placed in his solely-owned personal account and immediately invested in indexed stock funds. To believe this you will have to see the year-by-year schedule on our website as that investment of $240,000 grows to $3.2 million over 40 years (without wage inflation).
We applied an annual 10% rate of return to achieve a $3.2 million nest egg. The 10% rate is 2 ½% less than the S&P 500 stock index has averaged over the last 30 years.
The $3.2 million nest egg is the personal property of the taxpayer and the income off that nest egg would generate a monthly retirement check of $27,000 – more than enough to fund an affluent retirement and get the best medical coverage on the planet. As the nest egg is the property of the taxpayer he can will the entire $3.2 million to his kids.
Replacing existing entitlement programs with personal accounts under the Rise Up plan has a number of benefits. Those benefits are not limited to insuring a financially independent retirement but to many other areas of social concern.
The national budget is nearing $3 trillion a year and can be cut in half by switching to personal accounts. By eliminating “mandated entitlements” most of the non-discretionary budget items are automatically eliminated as is the political argument that politicians make that they have little discretion in reducing the budget. Simple.
By knocking $1.5 trillion off the budget, the taxpayers get a deferred tax break of equal amount through retaining ownership to those funds heretofore sent to the government as payroll taxes. Simple.
Establishing personal accounts at the rate of 15.3% of personal income will make both individual Americans and in turn the country substantially wealthier than under the present entitlement structure. By switching from a pay-as-you-go consumption-type program to an investment and growth fund-type program should Make the Poor Rich and America Wealthier without costing the taxpayer one dime more than he presently spends. Simple.
Unfunded Debt Extinguished
The September 30, 2007 financial statements of the US Government revealed that Congress has made promises of $45 trillion to future participants in the Social Security and Medicare programs that it can not keep, When you deduct expected receipts from projected expenditures you come up $45 trillion short or $150,000 for every man, woman and child in the country.. By adopting Rise Up, those unfunded debts are immediately extinguished and the $45 trillion deficit disappears. Simple.
Government Guarantee of Benefits
Under Rise Up’s plan all benefits payable under the old Social Security and Medicare plans will be honored and frozen at their current levels (with annual upward inflation adjustments). Congress will be unable to reduce those benefits in the future. Simple
Funding the Transition to Rise Up
As the money to pay benefits under the old plans were the currently collected payroll taxes now being put into personal accounts under Rise Up the question arises where does the money come from to pay benefits to existing and future participants? From time to time the Treasury solves financial problems such as this off-budget. Off-budget means expenditures don’t go through the normal budget process where Congress has to find something to tax to get expenditures authorized. Solving the Savings and Loan crisis in the early 90’s and the recent interest rate reductions were problems solved off-budget. OSI figures that a Rise Up-type plan will cost $6 trillion to effect the transition. That is a small price to pay for the hundreds of trillions the Rise Up plan will generate over the years and is small by comparison to the recent cost of reducing interest rates. Simple.
Over the years business has supplemented small Social Security checks with pensions for their retired workers. With the advent of globalization, foreign competitors have had a price advantage over domestic manufacturers because they don’t pay these pension costs. By instituting Rise Up domestic manufacturers will not be saddled with those costs and can compete more effectively. Simple.
Simplifying Retirement Funding
Millions of public and private sector old-age retirement and medical care plans can be eliminated in favor of one simple personal account. An account that allows the taxpayer to purchase his own goods and services and let the market compete for his dollars. Simple.
Women, Demographics and the Family
Under Rise up, personal accounts are shared by spouses. That will enable a couple to decide to raise a family. The woman can stay home, raise a family, not work a day in her life and retire a millionaire. This will enable couples to have more than two kids and improve our national birth rate and counter the demographic disaster that a declining domestic population is doing in Europe. This feature financially emancipates women. Simple.
The establishment of personal accounts will eliminate poverty as we know it. There are those disabled, retarded or otherwise afflicted that will be taken care of under the extension of existing programs but those capable of working will all have affluent retirements. Nothing could be more American than free market capitalism solving poverty. Simple.
Nothing will restore the belief of ordinary Americans in themselves faster than the government returning the ownership of $1.3 trillion of their annual payroll taxes. That will signal the end of a form of socialism that prefers collective taxation and the rebirth of the self-reliant individual. Simple
Crime, Stress and Hardship
Crime and hardship are generally financial in origin. As Rise Up makes the poor rich it follows that crime and hardship will eventually subside. The mental stress caused by financial concerns should also be alleviated by wealth. Having the cost of incarceration paid out of a criminal’s personal account would be a effective deterrent to stop him from committing a crime in the first place. Simple
Rise Up was designed to enable those who for whatever reason cannot compete for the big bucks to achieve financial independence merely by being stable and industrious. It will be unnecessary for him or her to be highly educated. Simple
There are many other benefits from adopting Rise Up. They can be reviewed on the Mission Statement on the Rise Up America website along with a free e-book available there.
Elections are about new ideas and change. Rise Up America is both a change for the better and a completely new idea that every American will support. OSI hopes to raise the “Rise Up America” flag for the people to march under. Will you help us fund the effort to get the word out.
We will need substantial funds to staff our effort and saturate the newspapers, schools, radio, TV, institutions, women’s groups, and the new media tools like the internet, DVD’s, YouTube, IPods and MySpace with provocative and interesting videos, papers and informative materials. We plan to utilize these new communication channels to effect a change to Rise Up that would otherwise be impossible using conventional media.
We are offering the following levels of contribution. They will be fully deductible as charitable contributions under Section 501(c)(3) of the Internal Revenue Code. We hope you feel the same way we do about the Rise Up America plan and will help us with a significant contribution. If you wish to talk personally to our Managing Director, please call Richard McDonald at 818-998-6800.
( ) Charter Member - $10,000 and up
( ) Gold Member - $ 5,000 to $9,999
( ) Silver Member - $ 1,000 to $4999
( ) Preferred Member $ 100 and up
Make you checks payable to the Ownership Society Institute and mail it to OSI, c/o Richard McDonald, Managing Director, OSI at 9662 Jumilla Avenue, Chatsworth, CA 91311-5610.
You can also make a credit card donation directly on OSI’s website at www.riseupamerica.us at the donation button.
Any help you can offer will be appreciated and we will keep you advised of our progress. We believe we have the right program for America and Americans.