Chump Index

We are one nation. If a particular region is doing well we expect that region to help the rest of the nation. If oil & gas revenues are flowing in a particular region then we as a nation (partially) share in that bounty. Later when the oil & gas runs dry the rest of the nation reciprocates.

That’s the share-the-wealth concept behind municipal grants.

I earlier proposed a confederated tax scheme where states collect Federal taxes on behalf of their residents using alternate taxes. Individuals calculate their Federal taxes using the Federal tax code and the state pays the tax on behalf of their residents using, for example, a tax on oil & gas revenues.

Begs the question as to the appropriate Federal tax code under a confederated tax scheme. How should we collect Federal taxes so as to more equitably share-the-wealth, promoting the ‘one nation’ ideal?

The data may surprise you.

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Plug the Leaks

Politicians and academics complain that we pay fewer taxes in the U.S. than other developed nations.

Nah. We’re just really fast at spending. For every dollar we collect we immediately spend 33 cents in social engineering. Federal tax revenues in 2012 were $3 trillion minus tax breaks of $1 trillion.

Tax breaks aka “leave no lobbyist behind” is how the U.S. Congress spends one-third its tax revenues. As Annuities. Clandestinely. What voter has the time or skills to ferret out the merits of tax breaks in a ten million word tax code containing thousands of tax breaks?

I describe here a proposal that per se eliminates social engineering in the Federal tax code. You want to give money to your political supporters? Then first you have to collect it.

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Tax Fairness

What’s tax fairness? Everyone pays the same amount. A Capitation Tax. Ever notice how folks who come up with a different answer always have to wrap it in some overarching social theory?

Every citizen has access to the same Federal government services. So why should Bill Gates pay more than Joe the Plumber?

Show me a person using more than their share of government services and I’ll apply the appropriate surcharge. Show me a person in dire straits and I’ll apply the appropriate charity. Taxes are a burden to be shouldered equally by all who benefit from their use. Don’t give me that crap about the rich having bigger shoulders.

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Tax Reform

Look at the conversation Jesus had with the man who came to him trying to trip him up. He looked at Jesus and he said to him. “Is it all right to pay taxes to Caesar?” I wish so much Jesus had answered that question differently. It would be absolutely wonderful on April 15th to be godly and rebellious at the same time. – Ravi Zacarias (2012)

People really hate taxes and are open to any argument purporting to reduce their personal tax burden even if it cuts into their personal wealth (e.g., deductibility of home mortgages). Politicians exploit this. They spin the illusion of you paying less; yet government spending keeps growing. Guess who’s going to pay?

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No Free Lunch

Legislation has been passed and someone’s got to pay for it. Certainly not the politicians. What about a general tax increase? Unlikely. There would be voter retribution. Okay, let’s vilify a person or group and pass the cost on to them (tobacco companies, Corporate America, ‘the rich’). Politicians get a free lunch: braggin’ rights for the new legislation and no new taxes. Hooray for our guy!

The lunch gets paid for with a devaluation of our democracy.

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Soak the Rich

Consider the role of good deeds. Do we do what is best for our neighbors or do we funnel money to a central authority who decides what is best for our neighbors? Think about it. Decentralized or centralized. Can I watch more closely how my money is spent by a charity or should I pool my money and let others pick the charity and take responsibility for watching?

With a decentralized approach I’ll focus charity on immediate neighbors, my white flight companions, to the detriment of those left behind in Newark NJ. We tend to notice needs close at hand more than those far away. With a centralized approach there’s an intermediary. There’s leakage. When others decide how to donate my charity we see loss to waste and inefficiency.

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