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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.
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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Buy Books
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Ourselves: A Citizen's Guide to the Great Debate over Tax Reform
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