- The Washington Times - Wednesday, November 23, 2011

ANALYSIS/OPINION:

When I saw the supercommittee struggle with and, ultimately, fail at what should have been the easy task of reducing our $15 trillion debt by a measly $1 trillion over the next 10 years, 1 knew there has to be a better way (“Deficit supercommittee announces failure,” Web, Monday).

I propose for consideration that Congress, through the Internal Revenue Service, set up a procedure whereby taxpayers are invited to deposit a minimum of $10,000 (and a maximum of $10 million) annually in a special debt-reduction revolving account. The funds would be used immediately to reduce the national debt, and for no other purpose. Each of the annual contributions would generate a tax-free 3 percent to 5 percent annual rate of return, and the capital plus interest would be repayable on a straight line basis over a period of 10 years - as a tax-rebate offset against each taxpayer’s net federal income tax due.

One component of such an arrangement could be made revenue-neutral to the federal government, whereby the interest earned would be comparable to the reduction in interest payable yearly by the government on the portion of the debt that has been paid down. Return of the taxpayer contributors’ capital would, of course, not be revenue-neutral, but the revolving fund could be phased in over, say, five years and then held at a steady state for the following 10. At that point, the entire debt would have been paid down so as to facilitate the necessary progressive reductions in government spending.

One may ask how such a scheme differs from investing in Treasury bills. The answer is that the taxpayer would not be relying on the government to honor the bills by incurring more debt. The taxpayer, in effect, would be paying himself back through his individual work efforts and a reduction in his tax burden. This truly would be government of the people, by the people.

WILLIAM LINDQVIST

Tiburon, Calif.

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