President Obama is running around the country talking about people paying their “fair share”. I think we all know what he means: He wants to take money from the rich and give it to the poor.
But let’s think for a moment: What is the most truly fair system of taxes we can imagine?
If we consider that in our country, no person is above another, then we could conclude that every person should pay the same amount. It doesn’t matter, rich or poor, you are equal in the eyes of the government. The government doesn’t protect the rich more than the poor, or vice-versa, or at least it shouldn’t.
This is a per-capita tax. It’s a very rare tax in the United States but it is the first tax recorded in the nation of Israel. In order to raise funds to build the tabernacle, Moses was ordered to collect the same amount of money from every child of Israel. The rich were not allowed to pay for the poor.
Imagine what such a system would look like. Anything you earned beyond a certain minimum amount was yours to keep. There is no reason why a smart or talented person shouldn’t go on to earn millions, billions, or trillions. Of course, we know that in order to make a buck, a businessman needs to help the people he helps make at least a buck back, if not more. Consider what it took Bill Gates to convince millions of people to give him billions of dollars: he had to give them back something worth much more than the money they paid. So when Bill Gates goes home at night, with billions left over after paying all of the costs it took to make that money in the first place, what he actually kept was a fraction of the wealth he created for other people.
The surplus from these enormous wealth earners ends up in the hands of the laborers. No money goes into Mother Nature or into any other piece of the economic puzzle. Every dollar spent is a dollar earned by someone, whether it is the lumberjack who cut the tree down or the technician who keeps his chainsaw running, or the man working the mining equipment that was used to extract the ore and fuel needed to make the chainsaw in the first place.
Of course, we feel bad because no matter how small of a sum we set for the per capita tax, there are going to be a lot of people who, today, cannot make enough money to pay it. Well, there’s a rather simple solution to the problem. Disregarding those who have no economic worth to our society (and who are usually under the care and supervision of someone who is competent to provide for themselves), there are a great number of people who could work in the most menial job and make some degree of earning. Even in their case, a per capita tax would be inspiration to work a little extra hard for a few dollars extra at the end of the day. They would have a dramatic invitation to make much more of themselves than they currently do. It could be argued that those people who cannot make even a small amount of net profit in a year probably don’t belong as an independent and equal citizen in our ranks, and like those who are physically and mentally incapable of work, should be put under the care of someone who is responsible.
A per capita tax is the most fair tax system imaginable. It reinforces the concept that no person in our society is better or more important than another, and no one is more or less deserving of their one share of ownership of our government.
Of course, the likelihood of implementing such a tax in my lifetime are nil. I propose, instead, the negative tax policy.
The way it works is as follows. Congress retains for itself the power to issue currency and coin. Then congress look at the economic growth of America and issue just enough currency to ensure that the total money available is roughly stable, so that there is no inflation or deflation. They should err on the side of caution, and perhaps program in a 1% or 1/10% inflation year-to-year as a baseline. This leaves Congress with vast sums of money.
How much money? I would imagine that with no taxes whatsoever, the United States would grow anywhere from 5% in a year to 20% in a year. With our current GDP at about $15 trillion, that equates to about $750 billion to $3 trillion in new cash that Congress must issue into general circulation. This is enough to cover the cost of government if you completely eliminate all entitlement and retirement programs, and work on a cash-only basis, that is, never making a promise to spend in the future, but paying all balances in full immediately.
Of course, with the economy growing at such a rate, in 20 years time, we would have even more vast fortunes that must be spent, just to keep the currency stable. That means that $20 20 years from now would buy about as much labor as $20 today. It is foreseeable that congress simply runs out of things to spend the money on, and simply writes a check of the surplus to each American alive.
Would such a system work? Absolutely. It’s worked in the past, and it will work today. It sounds crazy, but that’s only because you’ve been programmed to live with debt as your constant companion. For most of our history, debt was an evil that no one dared court if they could avoid it. The only reason banks exist today is because they, not the government, are allowed to print money and spend it as they see fit. We call this “fractional reserve banking”, and it means that banks get to clone the money in their vaults and pretend it is theirs to loan out. What a stupid system we live under! Why not allow the government to benefit from the increases in the economy, and divide the spoils first on those things that benefit everyone equally, and then to reward all Americans for their hard work?
A good instance of this working is the issuance of Greenbacks in Lincoln’s day. Lincoln simply invented a currency, had Congress print it, and then bought what supplies he needed to fund the Civil War with it. That’s all it took—no borrowing of any sort required.
The trouble is that the rich tend to want to see deflation, since deflation drives coins and bills into the hands of the rich, who can wait out lean times. So the rich encourage congress not to print enough money to match economic growth. The solution is rather simply: Make the House of Representatives the people’s house by giving every 30,000 people their own representative. No rich person or group of rich people could ever hope to sway 10,000 congressional races, where every voter in the race either knew the candidate personally or knew someone who knew the candidate personally. Instead, they would have to focus their time and attention to buying up the senate and state legislatures, which is the way it was intended to be from the beginning: the rich oligarchs run the senate, while the people at large run the house, and never the twain should meet.
Anyway, these are radical ideas, ideas enshrined even today within our constitution, ideas that made America the greatest country on God’s earth long before the rest of the world realized how powerful America really was. America became a super-power long before World War I. World War II was simply America flexing its muscles for the first time the in its history, and the entire world shook at our might. It was not our rise to power, it was simply the rest of the world realizing what had already been true for over a hundred years.