Until we can transition to Self-Governance systems that create revenue streams without billing the citizens we should have strive for taxes that are simple, fair to individuals, and penalize toxic behavior rather than discourage behavior that is positive for society.
1.) Tax reform should simplify.
2.) Tax reform should not offer the discount opportunities we call deductions. These are loopholes and they discriminate one version of life over another. They become versions of welfare to the citizens that use them.
3.) Tax reform should gradually take advantage of better ways to measure economic activity. If it does certain taxes don’t necessarily have to be permanent. Income taxes could possibly be levied only in years we didn’t meet our overall economic goals. More on that below. If we set things up correctly, every citizen could become a part of the national team cheering our economy’s overall performance.
4.) Other taxes could eventually become better than the Income Tax. Income tax is emphasized now because it was one of the only reliable measures we could make annually in 1913.
My first suggestion for a transition to a simple and fair system is a file-on-the-back-of-a-postcard 18/18 plan for income from individuals and corporations that is temporary until government spending sinks below 18% of Gross Domestic Product. When it’s lower the next year everyone pays the percentage of the spend.
While income taxes remain the primary funding source, I would treat most all income the same. Interest, dividends, wages, corporate profits, social security, pension and rental income would all have the same rate of 18% until our government spending reaches 18% of GDP. At that time we can begin further lowering income taxes for everyone and every business as a reward.
Obama wants to lower corporate taxes to 28 percent and Romney has decided to take 20% off all six tiers of his traditional plan. I’ve been thinking of a couple of minor edits that will help my tax plan too. I will temporarily tax the lucky who become very rich at a higher percentage for amounts over one million at 50% until government spend is down to 18% of GDP. Also, I’m increasing the amounts required to qualify for the alternative Society Tax Obligation option.
Society Tax Obligation
After computing the due obligation a taxpayer, individual or corporate, can elect to pay half as much to the federal government’s Internal Revenue Service if the taxpayer also decides to contribute the same calculated obligation to an organization on an approved list of other private organizations not affiliated with the government or to a city, county, state, tribal, or territorial government affiliated with the United States. This amount due to another group serving our needs is an increase over my previous discussion of the plan.
The plan creates a competitive market for society tax revenues encouraging all governments and benefit organizations to become better stewards of our dollars. As well, this plan both takes away the need for itemizing charitable deductions and will likely provide more stable revenue for charitable organizations and local governments which, in return for this opportunity, will very likely enhance their long term health and planning ability while also reducing the amount of their dollars used to market their other donation and revenue-seeking.
Example: If your calculated Society Tax Obligation is $10,000 you now have choice to vote with your money:
1.) give $10,000 to the Federal Government
2.) give only $5,000 to the Federal Government, but also give $10,000 to groups on the approved Society Benefit List which will automatically include any city, county, state, tribal, or territorial government affiliated with the United States.
How do we determine Society Tax Obligation due?
My calculator remains simple with no deductions (including homeowner interest, I don’t want to discriminate against renters). There are also only two tax rates, the higher rate is for the ultra-rich for that portion of their income more than one million each year. In general, I don’t like to penalize income, but the ultra-rich likely have this extremely high income in large part from some lucky windfall or superhuman talent coming into play. Therefore, a higher rate will not discourage those making extremely high income.
Income up to one million will continue to be taxed at 18% until federal government spending compared to Gross Domestic Product (GDP) comes below 18%. At that time everyone will enjoy sharing the rate the previous year’s managers of our government held our federal government’s spending to. At that time taxes will feel more like a bill and not a loan for future government spending. If the economy is strong with everyone working their best for the sake of their neighbors the GDP will grow higher and make government spending appear lower as a percentage. Motivation will thrive on both sides of the government equation and we’ll get performance from citizens and elected managers.
(Income over one million taxed at 50% also qualifies to the same Society Tax Obligation beneficiary options. This motivates a government to stay well-managed from year-to-year and for citizens to stay motivated to keep them accountable. If government spend goes above 18% of GDP the income over 1 million returns to 50%. Corporate taxes are exempt from the higher tier to encourage money to stay in this country. The Earned Income Credit can stay for now.)
In this plan everyone shares the pain of getting our nation back on track (very poor people who work could still qualify for the Earned Income Tax Credit, but some changes could be helpful to that perk as I even qualified one year when I simply chose to work minimal hours for wages and live off savings as I was building my freelance and investment portfolios).
To promote the development of the new strides in the collaborative consumption economy (airbnb, vrbo, and carshare programs, for example) earnings accrued by sharing a person’s first three cars or homes is not taxable. I have found it is very easy to maintain partial residency at up to three places in our beloved United States, renting one place while I’m at another to meet my expenses shouldn’t be a taxable event. Same for idle cars, shovels, bikes, boats, swing sets, or home cinemas – go dream up your peer-sharing, neighbor-knowing business of choice.
I also hope we will all share the responsibility for advocating for even leaner, stronger government in the future; therefore, I suggest we incorporate longer term targets for government spending tied both to the country’s GDP and unemployment level (as well as targeting our legislators’ pension plans to their performance in compromising on these targets). I’d like to see a grand plan for developing an eighteen year tax plan by June 2013 that would gradually help us get rid of income tax both for people and corporations by the end of year 2030. Earning income is a positive thing for society; we should work to focus our tax receipts on the many activities that do not necessarily produce benefit for society and often harm and limit the freedoms of others living in the midst of the activity. If you or your business likes to engage in activity that burdens society or limits our freedom to move through life unencumbered by your freedoms to engage in these activities we should maximize revenue from you, not penalize people earning money.
Would such bold revision in the way things are done not unfairly benefit millionaires and billionaires and Chamillionaire? No. Our country could still have ‘progressive’ tax structure by taxing luxury sales, property greater than a certain square footage per resident, and the many negative externalities directly tied to smoking, alcohol, sugar, salt, trans fat, and other pollution causing activities such as high volume automated security trading on Wall Street. Auto-trading promotes so much volatility (good for daily players, but bad for a small, individual investor) that they destroy the predictability of a safe exit times, that’s why the computers are set up to watch for the changes. Wall Street will claim investment firms will move abroad. Unlikely, but we could petition the UN to seek it’s funding from a similar tax across all financial exchanges. That way, they don’t have to bill member countries individually.
What follows is more description, if you’re not already convince, of why I want the Society Tax Obligation as a general charge for living in a structured civilized society rather than allowing a government to have monopoly access to our revenues for that purpose.
I love giving money to solve problems, but I generally hate paying taxes. I decided if we had tax beneficiary choice I’d be much happier on April 15th. As a bonus, such a plan has the potential to stimulate dramatic job growth in the non-profit sector. This is our country, can we change things or is this system already to calcified? If feels like Congress has been mummified for years, but help me spread the word for this idea.
I think our annual tax obligations should more broadly benefit all organizations efficiently tackle our society problems – goverment and non-government organizations alike. If your group has proven effective and efficient at serving society and solving problems I want to give you my money. And it doesn’t necessarily have to be as a charitable contribution that partially offsets the amount we owed our federally entitled workers who, not all of course, spend their days without performance as a motivation.
I call to eventually end the federal government’s direct entitlement to 100% of our income tax revenues. I would like to introduce competition to the market for providing service to communities by letting non-government organizations also earn a right to a share of our income tax revenues.
What are ‘taxes’? Essentially they’re just dues we pay to keep society running smoothly. Currently, we make these payments to governments. Can we broaden beyond that with a generalized plan that brings more direct competition to the market of serving society? I want legislation that allows non-governmental organizations the ability to earn our tax dollars. If we call our annual tax requirement the “Society Tax Obligation (STO)” rather than the federal income tax I’ll feel more patriotic straight away.
We all know that most charities strive for public good. They often attract generous people intrinsically interested in solving problems and serving others. But, charities usually spend an inordinate amount of their resources simply raising more money to operate. And they usually get pounded during recessions when donations dry up. Rather than deducting donations from taxable income we could flip the scenario and offer Income Tax Beneficiary Choice through this idea for a more generalized yearly tax system – not strictly a federal tax funding government, but a society tax obligation funding all forms of organizations proven effective to serve. Proper administration and quality control over such a system would almost certainly encourage more money going to charitable organizations and could bring dramatic job growth in the non-profit sector. Meanwhile, our government workers would begin to work more like public servants and less like entitled welfare losers.
Eventually, I can imagine for-profit companies might, yes might, even qualify to earn these ‘revenues’. More and more companies are finding that doing good for society is smart marketing; who is to say we can’t make the incentives for any organization to do good work more directly obvious.
I don’t care which group makes our communities more civil and more successful. Do you? Let’s make sport of it. A little competition is good clean fun.