Anyone who believes the American tax system is a sound efficient system, has never had to fill out their taxes in America and pay American taxes. We subsidize things that aren't productive, we subsidize things that are doing very well and don't need subsidy's. We have so many tax loopholes that some people end up paying such a low effective tax rate. That they end up paying lower percentage of their income in taxes. Than people making a lot less money than them.
So we end up having higher tax rates then we would have to have otherwise to fund our Federal Government. To make up the difference in lost tax revenue from the people who would otherwise be paying higher taxes. But can afford to hire a smart accountant to get them off in paying those higher taxes than they would otherwise have to pay. Because of all of the tax loopholes in our tax system. I'm not arguing for high taxes on anyone in America because I don't believe in that, but what I am arguing is for system that eliminates most if not all of our tax loopholes. And then in exchange we could bring down our overall tax rates on everyone.
But where no one would be able to escape what they owe in taxes because we would eliminate most if not all of our tax loopholes. We need to develop a tax system like this in the short-term to help get our debt and deficit under control. But also in the long-term for our economy, to encourage more private investment in America that we need. For economic and job growth and also so we have a tax system that most of the country if not all of it that has to deal with our tax system. Including the people who write our tax laws, which is Congress and the people who have to enforce them the Administration, can understand.
Before we reform our tax system we should reform our Federal Government to make it smaller and more efficient and where one program is no longer wasting 100B$ a year with your money. Once we do that, than our Federal budget would be much smaller and we could afford to eliminate most of these tax deductions. As well as lower our tax rates, because our Federal Government wouldn't need as much tax revenue to fund themselves. And this starts in national defense by bringing our troops home from Afghanistan and Iraq, but also in developed nations like Europe, Saudi Arabia, Japan and Korea.
But also reforming our social insurance programs, our entitlements programs, but also our anti-poverty programs. To make them more cost-effective. And I would do this by reforming Social Security, Medicare and Medicaid. So they are saved going forward, but also reforming our other social insurance programs like Unemployment Insurance, Welfare Insurance, Agriculture Insurance, Disaster Insurance, etc. By giving all of them their own funding source and then taking them off of the Federal budget all together as well as state budgets. And turning them into independent state-run, instead of Federally-run government services. That would be regulated to the extent that they would have to serve anyone whose qualified, but would operate on their own.
Once the Federal Government is reformed, then we could move to permanent tax reform that's based on consumption rather than on income. Both private and public consumption pay for the private and public services, that you use by when you use them and then paying a tax on them. Paying taxes when you by a car or a home to use as examples. And then having a consumption tax that's based on how much you spend not how much you make. So grocery's would be taxed lower than luxury cars to use as an example. But also pay for the public services you use when you use them by paying a fee for when you use them.
Like the Border Control would be financed by the people who leave and enter the country. People who travel would pay for the Transportation Security Administration with a fee on their ticket, to use as examples. And the consumption tax wouldn't replace the payroll taxes, just the income tax. Tax Reform as well as government reform, is essential if we want to have a strong economy in the future, want to get our debt and deficit under control. And want to have a cost-effective and efficient Federal Government going forward in the future to make us more competitive with our foreign competitors.