When President George W. Bush just tried to partially privatize Social Security in 2004 and 2005 the CEO of the Prosperity Commission, Dick McDonald, a life-long tax man, knew Bush’s attempt would fail. He knew it would fail because it wasn’t the type of comprehensive plan that the people would buy into. He began to formulate such a comprehensive plan that is presented to you here as The USA Plan. McDonald called his theory “The Rise Up Theory of Economics” because it turned the tables on the trickle-down theory and made the poor rich using the rich-man’s tax shelter.
In the beginning, McDonald relied on his tax experience and asked himself how can I do my job and make the rich richer and at the same time the country wealthier. The answer was self-evident – make the poor and middle class richer, so they become well-heeled customers for the rich job creators.
The poor and middle-class have so little it was necessary to find a source of income that could be used to create their wealth. That was easy. Bush had broached the subject. Use the payroll taxes withheld in a worker’s paycheck, and place them in each taxpayer’s personally-owned “USA” or Universal Savings Account.
Knowing that long-term investments of 40-year duration in indexed stock funds have delivered an annual return of almost 10% per year since 1871, he calculated that the average American working for forty years and making $50,000 per year would pay $300,000 in payroll taxes and that money put into the stock market weekly would accumulate, grow and compound into a $4 million nest egg at retirement.
Now Bush didn’t try to sell even his toe-in-the-water plan as a strategy to make the poor rich, the country wealthier or the many benefits of The USA Plan provides. Therefore stock market detractors and pundits destroyed his attempt. That won’t happen again, as there aren’t any ways to improve on the political and social mess politicians have thrown the country into except a self-financed plan that will enable workers to pay for their own retirement and decide at the end of life to spend $200,000 to $1,000,000 to extend their life for a month.
The USA Plan uses the same tax shelter for the poor and middle-class that made Warren Buffet and Bill Gates multi-billionaires. That is, the increase in the value of a stock is never taxed until the stock is sold. So as the $300,000 investment grows and compounds into a $4 million-dollar nest egg, there is no income tax to pay on the $3.7 million-dollar increase in value.
We recognize that a worker living on a $50,000 a year salary will go into culture shock getting $400,000 a year in retirement, and that is without taking down even a part of the $4 million nest egg. Many won’t even touch the nest egg and will it to their kids or a favorite charity. Those who want to take down a part of their nest egg must leave enough in the USA to support their lifestyle to avoid going back on Social Security and Medicare.
Many other questions arise on how to implement The USA Plan. You can find the answers here on the site or e-mail us at Dick@theusaplan.com.
Remember that poverty is a grave worldwide deterrent to peace and prosperity. If America can show the way to have workers invest in themselves through a USA Plan and prosper, we may make the utopian dream of “world peace” a reality.