So I've been thinking up some crazy/controversial/would never work in a million years improvements we could make to the government and tax code. And, like any out of this world idea, the more I think about it, the more I like it, and the more reasonable it becomes. So I've decided to share it - because it seems so ingenious, and also because I am trying to find flaws in it (other than the obvious, "People would never go for it!" and "It's too much change!")
First of all - the change I think is more realistic, which has to do with Congress. I would like to make each state pay for its own congressmen. Doesn't this make sense? All states are equal in senators, but why should a state like Kansas, with four representatives, also pay taxes in to support the salaries of the many many many California reps? Further, if states paid salaries, then the states could dictate how much the congressmen should make. Instead of allowing Congress to vote themselves pay raises, the state senate and state house could decide if a raise was in order. This wouldn't necessarily eliminate a, "You scratch my back, I'll scratch yours" situation, but it would be at least one additional control to, "Why, yes, thank you, I do think I deserve a raise!" Within the state, we could also add a control - the Senate votes for the House raises and vice versa. And salaries could be set a one level, say $50k, and then indexed for inflation using an unbiased index, to be re-evaluated only once every 10 years or so.
Now, as states start to see this cost coming out of their own budgets, they will naturally want to cut costs, which leads to the second phase - telecommuting congressmen. Honestly, of all the jobs in the world, this should be one that is acceptable to perform from home or the state capitol - unless you are emotionally attached to the U.S. Capitol building. I think this will make congress much more productive. Sure, filibusters would be easier, but you could also do online voting to break it. Imagine congressmen dealing in multi-tasking politicking - chat sessions while watching the video of a speaker and making phone calls to their peers. Work could be done around the clock. Controls would have to be made - such as a fingerprint or retina scan to vote - because a really good hacker or wife could easily override a password control. How much money do we waste flying congressmen back and forth? We could completely eliminate that. And congressmen would have to live at home like the rest of us. Finally, this would set an example by all the "Green" politicians for individuals and businesses to conserve energy and minimize commuting and travel.
My next idea is crazier.
I propose that the government evaluate its budget and create three categories - Necessary Infrastructure (such as roads, the Executive Branch, and revenue department), Military (including FBI and CIA), and Social Programs / Services. This last category would be a catch all for everything except Social Security and Medicare (which I will someday write about separately). Let's throw it all in there - schools, national parks, welfare, foodstamps, everything. (By the way, I think we could privatize much government - for instance, what if all interstates were toll roads? It is not reasonable to toll a city street, but an interstate is different. Then the cost of driving on it would be burdened by those who drive the most - a cost driver, or add a surtax to airplane tickets to pay for airport security). Let's say that the analysis comes out as such: Infrastructure 10%, Military 40%, Everything Else 50%.
I now suggest that, after a quick delousing of the tax code, a new tax structure is put in place. It will look a lot like the old one - with the brackets and all. (Although I generally favor a flat tax - let's make baby steps here). Citizens will now have only half the amount of taxes taken out of their paychecks as before. The other half will be calculated the same way, by the government and tax code, as a mandatory charitable contribution. Everyone will have to contribute to any charity of his or her choice, else pay a tax fine. For instance. Roy makes $100k. His tax rate is 30%. He now pays $15k in taxes to the Federal Government (I am only talking about the Federal government here at all) and is required to pay $15k to a charity or charities of his choosing. If he does not pay the $15k, then he must pay the entire amount plus an extra 5% ($5k) in additional taxes to the federal government.
Charities would continue to be defined as the not-for-profit organizations currently recognized by the government, and they would be expanded to include other groups, such as schools. (Local municipalities would be able to continue to support education with local taxes, but the federal funding would go away). All Federal Social programs would cease. They would have been replaced with charities.
The benefits of this idea are obvious. First of all, the free market and not special interest groups or the vocal few, would determine the value of a social program. (Think, the arts vs. food for the hungry - art is nice and all, but it should be able to sell on its own just like any product. I don't want my tax dollars paying for some of that sicko stuff). Second, charities are MUCH more efficient than the federal government and have less red tape to deal with. Even if "taxing" charitable contributions caused a decrease in the funding of these programs overall (compare the dollars spent before on Federal Programs + Charities to the monies spent afterwards on Charities alone), the efficiencies of the charities, which now have an influx of money, would overtake the decrease in dollars spent.
Another obvious benefit would be the economic impact. "Taxes" would go down for everyone, while we pay the same amount or less to help people. (There were always those who spent nothing, and there will always be those who spend more than is required). As charities get the funding they need, they can hire workers instead of relying on volunteers, they can buy the supplies they need, and they can execute large projects they had been putting off. All this will add money to the economy while still helping those in need.
There would be a psychological impact as well. People would get to take ownership of their money and help people. If you gave me $1,000 to give to charity, I would still feel good about it if I got to pick the charity, even though it was never my money. Consider the increased impact of giving my own money away, even if it is forced. Everyone has different passions, and each person can use their money towards the not-for-profit(s) he or she feels most strongly about. Parents can use all their contribution towards their local school. Animal lovers can give to the Humane Society. Bleeding hearts can donate to homeless shelters. All these diverse interests would simply help to buoy charities that are already successful and fill almost every need society can come up with. Further, people can start their own charities knowing that when they ask for donations, people might be more willing to give (in an effort to fulfill that tax requirement by the end of the year).
Now, the potential pitfalls of this plan should be addressed, and with the addressing of them, a little bit of beaureacracy - but I like to call it clarification.
First of all, if not-for-profits got an influx of money, would they not just hoard it? Or become "for-profit?" Well, we would have to start taxing them. The charity tax would be different than that on individuals and corporations - they would just have to pay 100% to other charities. So, if a church had an operating budget of $1 million but received $1.2 million in tithes, it could do one of several things. It could increase spending, perhaps by paying a higher salary to the staff (a higher salary which would, in turn, result in "tax" revenue for other charities), or it could set aside the money for a capital project (a reasonable amount, subject to audit), or it could donate a percentage of its operating surplus (like 25%) to yet another charity.
What about charities that are competing for public attention focusing too much on advertising? Well, for one, this is not entirely bad, because it will employ advertisers and raise awareness. But the tax law should not change for charitable events. For instance, if Yellowstone had a fundraiser where, for $5,000 you could go on a private tour of the park and stay there for a week in a fancy suite, you could only count, say, $4,000 towards your required yearly charitable contribution if the cost of a normal trip to Yellowstone was $1,000. If you pay $50 for a charity banquet, that won't count unless you fork up additional money once there (because you got a fancy meal).
And what about charity waste? What if schools start lining their hallways with gold? Well, so what? Already we donate to a lot of programs that can be eccentric or wasteful - many churches are oversized or over-glitterized. But the government creates a lot of waste, too. Anything the charity spends its money on also creates commerce.
Finally, what happens when charities start mixing their donations with services? Like, if you want to use your entire donation towards your child's private school, but then they waive the tuition? I'd say they shouldn't be able to do that. But that will even out as well. If a school charges $5k a year in tuition, but then concerned parents start donating like crazy to the school, the initial reaction will be to lower the tuition for all. But lower tuition will open the doors to private schooling to many who could not afford it before, and the rollbooks will swell beyond capacity. The school can then either add on (which will require capital expenditures and therefore once again raising tuition) or it can cut students. But now it is cutting the amount of students by a qualification other than money - test scores, locality, etc. When it does this, a new mix enters the private school - a mix of higher and lower income students all chosen for their academic abilities. Once some high earning parents choose to donate their money elsewhere (their son or daughter's new school), the school will once again need to raise funds. This cycle will repeat until a good medium ground is met. Tuition may settle down at $3k a year, and parents with school age children will choose to spend all or most of their required charitable contributions at the school.
In fact, I believe one of the greatest beneficiaries of my idea will be schools. Parents will begin taxing directly to schools, and will therefore hold those schools more accountable. School budgets will skyrocket. And as education gets better, our entire country will benefit.
Scams may be inevitable, but they are inevitable now.
As far as implementation, I recommend a one year phase-in. Instead of a charitable deduction, people will be allowed a charitable credit on their taxes up to 50% of their tax expense for the year. The government may collect a lot less money this way, but it can also start phasing out social programs. It can find those programs that can easily be assimilated into a successful local charity and facilitate that process (sending federal funds to the charity until the new tax code is phased in). It can then start to cut other, more wasteful programs, either cold turkey, or by phasing out the impact (for instance, if you qualify for foodstamps perhaps the monthly amount on your card would decrease throughout the year. In the mean time you would be sent information on local food kitchens and pantries - food kitchens and pantries that would theoretically be ramping up production).
One final benefit - and it has to do with the psychological impact. Some may choose one large donation a year. Others may set aside the required amount each paycheck. Still, everyone will be tested - we will all have to keep charitable programs near the top of our minds. We will look around for ways to help people and see ways we can and take ownership. Instead of pushing the task of taking care of our fellow man on to the government, the government will be pushing the task on to us. As we "fix" our country by improving schools, helping the homeless, and keeping the environment
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