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By Jeff Brewer



        Why not enact this formula today?  Why not levy an across the board tax of 10% on inelastic foodstuffs of every variety?  Why not impose a 15% tax on more elastic luxury items like automobiles?  This luxury tax could apply to other items as well, the likes of which still need to be thought out.  To pacify the anti-tobacco or anti-alcohol crowds, the government might levy a 50% “sin tax” on cigarettes or alcohol to discourage irresponsible behavior.  Perhaps a sin tax would succeed in cutting down on unhealthy behaviors without explicitly ordering citizen compliance to the government. That isn’t, after all, the role of government.

    I envision a system in which state governments would initially collect sales tax revenues spilling in from the state’s consumers.  Every year, the federal government would then take a percentage of a state’s revenues, which would no doubt be billions (or even trillions) of dollars in the more populous and productive states, and use those hundreds of billions of dollars to pay for Constitutionally permitted programs like national defense and the upkeep of roads and highways, printing money and naturalization of immigrants to name a few items of importance.  The Congressionally agreed upon percentage received from each state would be predicated on the particular state’s GDP.  States with higher GDP would give more to the U.S. Treasury, up to a certain percentage around 35-40% and no more.  That would still leave at least 60% of the revenues to be used by the states for their own purposes.

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Obviously, this scheme demonstrates a very dual federalist philosophy, with states holding a good deal of the primacy in this federation.  The federal government would still reign as protector and enabler of interstate commerce and other aforementioned powers.  But republican capitalism would rule the day.  States would take up and debate the issues of regulation, of commerce and of anything else pertaining to production.  Competition would drive states to create commercial havens most conducive to buying and selling of goods and services; likewise, it would therefore be very incumbent upon producers to make quality products attractive to more empowered consumers who wield much more disposable income.

    What would hopefully ensue would be a much more market driven, republican federalist nation with the citizenry keeping the vast majority of their earnings.  Meanwhile, the states would garner their revenues from coffers running over from citizen consumption, and would share a mandated percentage of their revenues, based on their gross domestic product, with the federal government.  Most importantly, though, Americans would keep more of their earnings, and then pay taxes on goods and services that they consume.  Indeed, the new system would be driven by the moral imperative that says workers keep what they earn.

    It seems to be highly idealistic, but I venture to say a national sales tax would still fund both states and the fed at a responsible and sensible level.  People have to eat, they have to wear clothes, drive cars, buy insurance, build houses, buy houses, vacation, furnish their house with furniture and…you get the idea.  Think about it. 

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© Jeff Brewer, 2001

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