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The General Solution
Get a GRIP!
1. There is a way to pay for infrastructure projects, without raising taxes or the national debt. We need to "Get a GRIP", in all of the ways this means.
2. We could immediately raise a lot of funds for shovel-ready infrastructure projects, if we follow existing 12 U.S.C & 26 U.S.C. statutes, and make these P3 infrastructure notes tax-deductible and the interest earnings (tied to T-bill rates). Most infrastructure projects are financed privately, with about $416 billion in federal funds according to the CBO.
3. Companies have $4 Trillion of funds off-shore that if they repatriate these under Trump's Tax Law of 2017, the tax rate is 21%, but there is a way they would not be taxed but instead have tax-deductions and tax-exempt interest earnings.
a) This would save companies $840 billion in corporate taxes
b) When adding 3% tax-exempt earnings, this would be an additional $120 billion.
c) The total amount companies would generate would then be $960 billion.
d) With this investment, there would be an economic multiplier effect and stimulation of over an additional $1 Trillion.
4. In addition to the repatriation of $4 trillion that corporations can add to the funding pool; global pension funds, public pension funds ($4.33 trillion), private equity groups (many already financing infrastructure projects), mutual funds, and sovereign wealth funds are looking to invest hundreds of billions of dollars in high-quality, low-risk infrastructure projects. They should be given abundant incentives/encouragement to invest.
5. The average participating taxpayer can reduce their federal income taxes by 20% or more as these investments are currently tax-deductible and the interest earnings are tax-exempt, by simply having their income tax withholding going into a bank account to acquire Infrastructure Notes.
a) The average taxpayer has an income of $59,039 (according to US Census Bureau).
b) The average tax rate in the USA is approximately 14% according to the IRS
c) The average withholding is $31% or $18,302.09
d) Investment into infrastructure notes of 20% these with-holdings would reduce the gross income to $40,737 and 14% average taxes paid would be $5,073.06
e) This would save the average taxpayer $13,461.00
f) If payroll taxes (FICA) were exempt from deductions this amount would be at the average rate of 6.9% (Source IRS) this amount for SS and Medicare would be $5,073
g) Even adding the non-exempt FICA (6.2%), the savings for the average taxpayer would be $8,388, which in itself would prove to be an economic stimulus.
h) About thirty million (30M) taxpayers found out that instead of receiving the expected tax refunds they have enjoyed for years, they received less refunds and some owed thousands of dollars.
i) Added to this would be the tax-exempt interest earnings of 2% of $18,302 or $366.00 (based on a 10-year T-bill rate of about 3%, giving the issuing bank a 1% yield for profit. Currently the average savings account yields between .01% (Wells Fargo) and .06% (Bank of America)
j) When the Federal Reserve Bank raises rate to buffer inflation, this arrenagement would be a hedge to increased interest costs,
6. For other government services, such as military spending, federal law enforcement, and other federal government expenses and services, the 11% of the average with-holdings, based upon the average gross income of U.S. taxpayers, or an amount of $6,494 would still apply, as would all existing deductions/exemptions to adjust gross income.
7. Although not necessary due to existing statutes, the U.S. Code could have some modifications per 12 U.S.C. Ch. 47 and 26 U.S.C. notably §103 and §142. These can be and should be easily addressed by members of congress and the Trump Administration in a bi-parisan/non-partisan basis, for the needs for infrastructure maintenance, expansion and the financing of these knows no party or allegiance to any. The FICA issue could also be considered to be a non-exempt amount, based on the gross income of the taxpayer.
8. If there is any changes to the tax code, it should be to restore the deductions for State and Local Taxes (SALT) to the pre-2017 Trump Tax plan levels and then no need for the tax increases proposed by the Democrats to pre-2017 levels.
This would offset any increases in SALT which must be borne by the taxpayers for revenue generations at these political subdivision levels, as the result of the reductions in federal revenue sharing. This then would make the tax increases at the local level to be net neutral at the federal level for the taxpayers. Remember, this loss or cap on SALT was done to offset the $1.5 trillion in deductions given to corporations and the wealthiest 1% by Trump.
If the Democratic majority proposes this restoration of SALT deductions, it can be truthfully said it is a federal 'tax cut'. The G.O.P. champions tax cuts, therefore there is no way politically they can object, or instead of protestors amassing outside their offices, they would have something akin to the peasants with torches and pitchforks storming Capital Hill like it was Castle Frankenstein. Therefore, this would be bi-partisan and Trump not dare veto it.
9. There is no need to create a bureaucracy or an infrastructure to process infrastructure financing, for we could use the existing banking system to establish P3 type of notes (with SPE/SPV rentities) thus having a 'bank within a bank'. Currently, according to the CBO, the USA annually spends $416 billion on infrastructure, as most of these investments are already currently undertaken with private investments.
10. This infrastructure financing plan will help Americans to build savings. According to Bankrate and many other sources have reported that 44% of taxpayers have less than $500 available per emergency savings and 67% have less than $1,000. These infrastructure notes would then become their own form of currency, which then could be used to be sold, or hypothecated by the holder.
11. We could immediately begin on our most urgent element of infrastructure projects, namely energy (electric grid, grid enhancement, cyber-security of the electrical grid, renewable energy sources and products to compete with China). Without energy, no other projects are feasible.
12. We immediately would have enough money for the other major infrastructure needs (i.e. water, sewage, waste water, flooding control, roads & bridges, mass transit, schools, ports & airports, economic development, etc.)
13. The state, county and local communities could quickly see an increase in employment and subsequent tax revenues and economic development.
14. The increase in available financing will make many now shovel-ready projects an immediate reality, when they have been neglected for so long due to budgetary constraints.
15. With the creation of jobs at a minimum of $15/hr. with benefits (notably health care) this will increase the number of people with health insurance, thus by then spreading the risks to insurers, health care premium costs potentially could be significantly reduced.
16. If investors, notably foreign investors, exchanged their T-bills for corresponding “Infrastructure Notes”, to spread/lower their risks, then for each dollar exchanged, the National Debt would decrease $1 for $1. Thus, if foreign investors exchanged $5 Trillion of T-Bills, then the National Debt would be lowered by $5 Trillion, which potentially could re-establish the credit rating from Aaa back to AAA.
17. The plan for financing infrastructure projects, designed/proposed by William T. Griffin, can be put into immediate adoption and action.
18. Upon implementation of the Will Griffin Infrastructure Financing plan/method, shovel-ready and long needed infrastructure repairs and new projects could begin immediately.
19. All investors could realize the tax benefits immediately and these would be in full force and effect for 2018 taxes, using existing laws and the existing financial 'infrastructures' of USA banks.
20. As T-bills are effected by the interest rates set by the Federal Reserve Bank, as these rates increase, so should be the rates on Infrastructure Notes. When GRIP was first proposed 10/10/18 the rates on T-bills is 3.059% (5 years), 3.22% (10 years), 3.40 (30 years).
21. Unfortunately Treasuries began to decline when Russia dumped 84% of their Treasuries and as of 8/1/20 the 2-year is at .11% or a loss of 96% of value.
22. Therefore legislation is necessary to make GRIP as an attractive investment to induce investors to move their money, including $4 trillion of corporate off-shore and $4.33T of Public Retirement funds to this formula: (1) 13-week @ 1%, (2) 2-year @ 2%, (3) 5-yr. @ 2.5%, (4) 10-yr. 'benchmark' @ 3% and (5) 30-yr. @ 3.5%. These tax-exempt yields are more attractive to investors and are far higher than both Treasuries and savings accounts rates.
23. A comprehensive bi-partisan/non-partisan agreement/plan to finance infrastructure projects, using existing statutes in the United States Code Titles 12 & 26.
