A Better Way to Tax

Friends,

Boy! Yesterday’s posting caused quite a discussion today. One of my coworkers had had a long lonely drive the day before and had a lot of time to think. Needless to say, he came into the conversation with his ruminations. He brought a very intriguing idea on how to collect taxes.

Bottom line up front; the IRS goes away and the admin section of the treasury department shrinks down to about 100 people. Of course with the fed’s propensity to manufacture money the mints would have to keep running as well as the secret service.

First the setup; remember that there are 435 representatives in the House. Each representative elected represents approximately the same number of US citizens.

OK, here’s the plan. Each year, Congress would determine the
budget for the next year, just like they are supposed to do now. The figure Congress decides is required for running the federal government is divided by 435, the number of representatives. That number is multiplied by the number of representatives in each state. That final figure is entered on a bill that the greatly reduced treasury admin section will send to the governor of the state as what the state owes for the next year.

Let’s put some numbers to it for an example. Let’s say Congress decides it will take $2T to run the government for the next year. $2T / 435 = $4,597,701,149. This represents the prorated amount due from each representative district. Let’s say a state has 10 representatives. $4,597,701,149 X 10 = $45,977,011,490. This represents the amount that state would owe the federal government for the next year’s expenses.

The state is free to determine the method of collecting that money. It could be all income tax, property tax, sales tax, or any combination of taxes. This takes the federal government out of the tax collecting business and gives more control to the states where it belongs.

This is where my contribution to the plan comes in. One thing that needs to happen is to repeal the 17th amendment. This is the amendment that put the election of senators in the hands of the voters. I believe that senators should be directly answerable to the state legislatures and the governor as originally intended. The reason is coming below. Now back to my friend’s plan.

When the governor of the State of Confused receives his bill from the federal government and looks at this enormous figure, he will have someone who is accountable to him to call home and have stand tall on the carpet in front of his desk and tell, “this bill is too much, take it back and get it reduced!” Since the Senator works for the governor and legislature, he has to comply with his bosses’ wishes and goes back to DC to say that he is getting too much heat and that the budget needs to be reduced. As it stands right now, senators have a very high plausible deniability factor in that they can always point to someone in the state and say that they are doing what the voters wanted. In this way we may have some hope of reining in the profligate spending that is a constant in DC.

This is obviously a very simple description of what would have to happen for this plan to work but I thought it was brilliant in its simplicity. I have long been a fan of the Fair Tax (as long as it comes with a repeal of the 16th amendment) but this one makes more sense than any plan I have seen to date.

As always, I welcome your comments and discussion.

Dan

Government Responsibilities

Friends,

Well, we now have an agreement to saddle our great grandchildren with even more debt that they will not be able to pay. Neither the Republicans nor the Democrats seem to have a clue to what it takes to manage a budget. It’s not that tough. You determine what you have coming in and adjust your spending to fit into that parameter.  Of course it has not been done since 1957.

We all know that it is not the goal of government to operate on the same basis as we mere citizens have to operate our own households. Something happens to politicians when they go to Washington to “govern” us. Over the past couple of weeks I have learned that our government borrows 40% of everything they spend. I guess that has never been a secret, but it finally sunk into my thought process.

As I have written on numerous occasions there is a way to balance the budget and pay off the debt that has been accumulated over the past couple of hundred years.

What is the most effective and efficient way for government to raise revenue? Increase the number of taxpayers. In April of this year the Congressional Research Service published “Analysis of an Estimate of the Total Costs of Federal Regulations.” They determined the cost of federal regulations for 2008 was $1.75 trillion. That is an enormous burden on the backs of American business. Imagine how many new employees businesses could hire; imagine the growth of those businesses if they did not have the regulations and the associated financial burden hanging over them.

Now imagine the new employees and growth if corporate taxes were reduced to a manageable level. I could envision a maximum of 15%. Just these two areas would spur such a growth in economic activity that businesses and government would have trouble keeping track of it.

Just today, the Secretary of Homeland Defense, Janet Napolitano, announced initiatives to draw foreign investors and businesses to come to the United States to set up shop. Is that because all of the regulations have driven the wage payers out of business? Is it because US businesses cannot pay new employees because of the onerous taxes and cost of regulation compliance?

But that is only the first part of the cure. As someone recently said, we don’t have a budget deficit problem, we have a spending problem. This has to be stopped. The best guideline to use to curb the spending is the Constitution.

No place in that revered document does it mention that it is the responsibility of the federal government to regulate education; nowhere does it say that the federal government is to take the side of labor to bring business to its knees; and in a more recent issue, the government has absolutely no business getting into citizens’ health issues.

These are only a very few areas that the federal government has no business. Conversely, Article I, Section 8 of the Constitution expressly states the responsibilities and powers of the Congress. Paragraph 15 states that “Congress shall have the power….To provide for the calling forth the Militia to execute the Laws of the Union, suppress insurrections and repel Invasions” (emphasis added). When is Congress going to take this responsibility seriously? In fact, looking over Section 8, it looks like the only responsibility Congress has decided to execute is paragraph 2, “To borrow Money on the credit of the United States.” They really have gotten this one down.

Challenging this Congress and Administration to curb spending and vote to keep the United States of America off welfare is like asking Hitler to be nice to Jews. So I will end by saying that it is time for all of us Americans to tell Congress and this Administration that they have diddled around with our wallets for the last time. They have been riding rough shod over us for years, now it is our turn.

As always, I welcome your comments and discussion.

Dan

PS: On a personal note, I am really rising in the polls, so far, three people have promised to vote for me for president, only 200,000,000 to go.