A different proposal for handling taxes. Thoughts?

Question

Let's start with the premise that as a society, certain minimal benefits need to be provided by the government: roads, emergency services, law enforcement, defense. Those ensure that society keeps functioning. The rest are social and regulatory programs: public education, welfare, environmental protection, etc.

What if we changed the model. Everybody pays a flat property tax if they own property, and everybody pays a flat income tax. Those funds pay for the necessary minimum essential services listed above, but not for social programs. Anything left over goes into a pool, which every citizen gets to draw from in equal shares. You decide how to use the draw money.

No more free public education, but you can use your draw to pay for costs of school. No more welfare, but you can use your draw. Or you can pocket it. Whatever you want.

This model provides the same benefits as the current tax system, but people don't have to pay for any services they don't want.

Could the system work?

To CharlesD: Because just about everybody needs to get somewhere outside their home. Whether walking, driving, bus, whatever. Not everyone has children. So, not everyone whould use the schools.

To Mel T and Speel: I meant real property (real estate), not personal property. Most states already tax real property, and at a higher percentage rate that the above would require. And renters already pay their share of the property tax, which is passed on from the landlord as part of the rent. That doesn't change relative to the current system.

Just to clarify what is meant by "flat tax", it means a constant percentage, rather than a progressive (increasing) percentage. Large estates and large corporations and wealthy individuals would still pay a larger amount than others, but not a larger percentage. And if their choice is between a progressive 45% and a flat 15%, how many are going to complain.

I undertand all the arguments in favor of supporting education. I've got three undergrad degrees and two grad degrees. Education is vital. Essential. But also something the government has shown itself to be horrible at manageing. The average cost per student per year in public school is almost $10,000 dollars. That's $200,000 per class of 20 students. You don't think that money could be more efficiently spent on local schools, run by the local communities?

Answer 1

Could the system work? Yes. But it would require either lining all the current politicos against a wall or shipping them all off for "re-education". But since public eductaion is being eliminated that means blindfolds and cigarettes for the lot of them. You are talking about people who spend 12 million dollar for a job that pays 120 thousand a year. Those aren't people I want in charge of my tax dollars.

But it also assumes people are responsible enough to manage their draw funds. Too many people wouldn't use it to educate their own kids. That would raise generations of uneducated and unemployable children.

While I would tend to agree with most of what you said, investing in the education of its citizens is an investment in business and the future of a society. And while I believe in a lasseiz faire approach to business I believe that a business tax that goes for public education is not only possible, but would be almost insignificant investment on the part of businesses to help educate their future workers.

And what about all of the unemployed people who used to work doing a of those "necessary" government functions that are now unnecessary? And what about all of the polictial assistants, and political staff members. There would be a surplus of lawyers and just about every other type of worker that can be imagined doing government or related work.

After eliminating the social programs there is no means of helping them. The draw won't cover it, and being unemployed they wouldn't be contributing anything. We can't just march them off into Siberia... Stalin did that already... if we tried it, it would just come off as disingenuous.

Answer 2

I can agree with everyone paying a flat property tax if they own property, and everybody pays a flat income tax. Those funds pay for the necessary minimum essential services listed above, but not for social programs. Anything left over goes into a pool, which every citizen gets to draw from in equal shares. You decide how to use the draw money.

I’m not so sure about no more free public education, but you can use your draw to pay for costs of school. No more welfare, but you can use your draw. Or you can pocket it. Whatever you want. I’ve known a few politicians my day and they always seem to find a way to beat the system and redirect that extra money.

It is an interesting system but I’m not sure it will work. I do think it is a step in the right direction and you would have to try it then tweak it as you went along.

I always enjoy your answers as they are always well thought out. I was glad to see a question by you. We may not always agree but that’s the best part of democracy, we don’t have to.

Answer 3

No it couldn't work. Property is the essential thing of any society. The tax on property is one of the most immoral things to do. There are only two legal taxes that would work 1 excise taxes (tax you if you use it). The other is a flat fee to take from every individual. I live in Pennsylvania and we have a property tax and its a pain in the butt. You have to judge how much a property is worth in order to get the tax, which is part of the problem. Also most elderly don't want to leave their home so they will complain about the property tax.

Also an Income Tax is mostly an immoral tax. In fact, Marx was for a progressive income tax. I know it won't be progressive, but to me its like half marxism there (no offense). Also to take into account theres alot of crap with the present income tax. I know the present income tax is progressive, but even a flat one you still have to figure out how much everyone is making. Also I call upon the age old arguement that THERE IS NO LAW TO MAKE PEOPLE PAY FOR THE INCOME TAX. The constitutional amendment that was passed was passed improperly (Its Good to be King by Michael Badnarik).

Also I would argue as an Anarcho-Capitalist that the government is a non essential element and can be eliminated. Roads can be like toll roads and don't need the government. Law enforcement and emergency service can be Protection agencies. These agencies you would contract with to get the services you desire.

In conclussion even when the United States started just with the bare essentials we have ended up with a large government anyways. Also I would have to say though I would like that type of a system with the bare essentials of government over what we have now even with all the drowbacks that I have mentioned.

Answer 4

The problem with this system is simply the numbers. To be anything close to revenue neutral this would result in an absolutely enormous tax cut for the richest Americans, very little difference for the middle class, and a huge tax increase for the poorest.

So what the proposal would actually do is increase taxes on poor people, while at the same time reducing the services (such as education) that enable them to lift themselves out of poverty.

I think it's time we stopped looking at education as an expense, and started seeing it as the extremely good investment that it is. A high-school dropout will cost the country (on average) about $10,000 in services. A college graduate will produce a net profit for the country of about $90,000. Cutting funds for schools would be financial suicide for this nation.

*********************

To follow up - I'm also disagreeing with the notion that private eduction is more effective than public education, and I have a study recently released by the Bush administration (though they clearly didn't much publicize its release) to back that up.

To quote from a summary of the article: "WASHINGTON, July 14 — The Education Department reported on Friday that children in public schools generally performed as well or better in reading and mathematics than comparable children in private schools."

If you have the time, read the whole study - it's quite interesting. And before anyone complains about it being from the New York Times - it isn't. The link goes through the NYT, but it's the dept of Ed that completed the study.

Answer 5

The US GDP is 2-3 times more than that of the next richest nation. Its not so much what the taxes are but how we spend them. I agree there should be a flat tax for income as well as for property.

We spend more money in Foreign relief that if those monies were reinvested in our future we would have a Federal Health Care system, a better education system, a better retirement system (vs. Social Security) better roads, better law enforcement, better immigration control... better just about everything.

The problem is that Congress and other government officials spend our money in ways we do not want.

Social Security would be the easiest to fix. Not half as difficult as politicians would make you believe.

Here is the fix: Take away the retirement Congress has right now and put them on the very same Social Security the rest of the american Population is on. I bet they have plans on how to fix it before the end of this fiscal year. The only things our ex-office holders should get is some sort of security (dependant on the office they held) to protect them from people who might bring them harm for acts they performed while in office. No retirement, no extra allowances, no health care... Until the Average American is taken care of first, since that is why they are in office in the first place, to serve the American Public.

Until our elected officials are held accountable and treated the same as the pubilc nothing will ever change or get better. The lifestyle they have is too great for them to want change. It has to be forced upon them. All it would take is one Congressman to bring it up on the floor. Any other member that opposed it would be immediately committing political suicide since there is no rational reason as to why elected officials should be treated any better than the average citizen.

Answer 6

A social safety net(or social programs) are necessary in a democracy. Some of us have made bad decisions and need some help to get back on their feet. This country stated and raised on risks and when someone starts a business they are taking risk and if it don`t work out "We the People" should say thanks for trying to service American people and be willing to help them back up. The problem with a flat tax is the large corporations pay the same rate as Joe six pack, the problem? large corporations use more "essential" services like roads,courts,fire,police,etc. and should pay more because they use more. The bottom line is do you believe in every man for himself or we are all in this together. Yes, some people and corporations abuse the system and that is the real problem, how do we stop them?

Answer 7

Out side of the pay for you own education or not with your draw money is probably not a good idea. Education should be a part of the essential services. If Congress cut out all the pork projects you would be amazed how much extra money there would be for true essential services.

Given the choice, there is a huge segment of the population that wouldn't choose education and that would make things worse, not better because there would not be enough educated individuals to recharge the workforces and keep the economy stable.

Some aspects of your plan are interesting however.

Answer 8

Well, the tax is progressive in that by Property tax I assume you also mean Personal Property. I'm for privatization of the education system already. I think it has merit, but I'd need a long time to bounce it around.

Knee jerk is to be scared of this, because I own a house and it would of course result in a hike for me, as renters would cease paying taxes right?

I don't know. I'll go with it if Forbes agrees. LOL

One more thing: Wouldn't it result in a huge hike in unemployment and an initial severe economic downturn? As there is huge number of people employed by the government.

Answer 9

I would increase the tax for high income individuals somewhat to take the stress off of the middle class.

I think colleges would need to continue to be funded. I also think some things need public funding that people might not agree on, museums and whatnot.

I doubt that poor or middle class people would give to these things, so you end up with a higher rate for upperclass to pay for them. Then it's close to what we have.

You miss several other things as well.

You should not tax poor people; They spend all of their money.

You should give breaks for parents. You may think this is unfair, but it is the truth. They are posterity. It is vital, incredibly, that the public support middle and upper class parents. You need these people to have enough children to disperse their wealth. Good economics.

Alternatively you could tax equity.

Because of the differences in income the public education problem is complex. Are you going to cap the amount a person can pay for education? No. So now you are fueling a system where lower wage people go to crappier schools. In fact, you make it worse than it is now. I don't think education will get all that inexpensive just because you deregulate.

We differ considerably in our view on public education.

Equity taxing is promising in theory. By eroding the large piles of capital not used in the economy you boost things considerably. I wouldn't tax anyone without mountains of money. Interstingly this method is favored by the Qur'an and Bible. The problem is one of monies though. In order for it to work, there would have to be just one currency. This, of course, would alleviate poverty all around the world, but endanger the economies of economic superpowers. That is why it is currently applied as the "Death Tax." I disagree with the death tax as it is, only in that it taxes real estate, particularly farm property, which is already subject to yearly taxes.

Answer 10

A very interesting concept . The only problem I have with it is ,you collect tax from property owners , but not renters . There are many , many renters in this country and through they own no property , there should be some kind of payment from them also .
Would it be the same flat tax for a $50,000 property as a $10,000,000 property ? This could be tweaked here and there and made to worked

Now you know your going to get screaming and nutty answers from the Conservatives because this is a different idea and they don't handle change well . Especially if it takes away power from them and money out of their pockets

Answer 11

I think you would be asking everyone to use common sense. You might take a walk through the middle of Memphis and ask yourself what these people would be using their money for. I like the idea though. Property and income taxes are out of control. I'd like to see a huge increase in sales taxes and do away with property and income tax. At least then you could decide on how much you are willing to give and large families would finally have to carry their own load.