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Tax Policy à la MichaelW
Posted by: MichaelW on Wednesday, October 15, 2008

OK, so during the debate tonight I mentioned that I had a tax policy idea. This is something that I came up with on the spur-of-the-moment a few nights ago, while discussing the general ideas espoused by the candidates with a friend. In a nutshell, I would turn America into a true stakeholder society by (A) having cumulative voting, and (B) providing that everyone who is eligible to vote, has the same number of votes as the percentage of income he/she pays in taxes. Let that sink in.

The idea germinated in the fecund valley of the present debate over just how much the "greedy" should be forced to pay for the current state of financial affairs. If the "greedy" is generally defined as those who earn more money than 95% of the populace, and that 95% already pays something like 60% of the taxes, then should those 5% have something akin to 60% of the say in how their money is spent? In essence, this is a corporate model that I'm proposing, in which the voters (shareholders) have the same say as their share of taxes per income (investment) paid to the country (corporation).

First off, one of the known deficiencies with one-man-one-vote is that the tally loses any sense of intensity. By that I mean, if Voter A feels really strongly about a candidate, while Voter B feels rather ambivalent about the whole affair, and yet they have the same amount of influence on who's elected, then there is a mismatch between who is elected and who people are most excited about being elected.

Of course, there are good reasons why we would want to dampen the intensity of a vote (e.g. fairness, parity, balance), but that doesn't necessarily lead to better candidates being elected, and may actually result in worse candidates achieving office. The other side of the coin is that we don't necessarily want the most fanatical having more say-so over our collective (ugh, hate that word) future than those who employ their vote more judiciously. In short, there was genius in our Founders' method of spreading the franchise as broadly as possible (although, historically, it was only spread to land-holders), in that the vagaries of heart-felt fervor would be tempered by the sober reflections of less power hungry citizens.

Yet, when ambivalent voters are permitted the same voting power as the fanatical partisans, we seem to end up with a menagerie of candidates who are nothing more than differing variations of vote-buyers. They will promise voters the moon, and brazenly declare that the cost of the moon will be taken from the hide of just a small percentage of the electorate, as if that minority will either sit by passively or realistically be the one's paying for Luna.

So, how do we balance the competing interests? By giving each voter the same stake in an election as he/she has in the tax base. In combination with this proposal, I would also eliminate each and every tax credit, deduction, and offset. In this way, every taxpayer would have not only an incentive to maximize their taxable income (to an extent), they would also have an incentive to vote for politicians who lessen, or at least equalize, the tax burden of the entire electorate. By my estimation, the impetus would be towards a flatter tax that draws the electorate in to supporting fewer goodies and more fiscal responsibility on the part of government.

Certain objections to my plan are predictable. Some will ask whether or not my proposed system simply empowers those who already have the most power. Questions in this vein ignore the fact that a ridiculously small minority of the population pays a majority of the taxes. There are way more people paying 15% tax rates than those paying 35% rates, and those numbers drown out any perceived advantage that the upper-income brackets may be perceived to have (i.e. 50 Million voters paying 15% tax rate have much more power than 5 Million paying 35%, because it's percentage of income I'm proposing, not percentage of total taxes paid).

Another objection that will inevitably arise is that those who pay no income tax will be disenfranchised. My response: So? If you have no stake in our society, then why should you have a say in how it's governed? If you are effectively or actually a ward of the of the state, then what exactly entitles you to command how everyone else who pays for your existence is governed? There really are no good arguments in favor of non-payers having any say, other than vague and conclusory perorations about "fairness" that conveniently ignore the incongruity of expecting workers to support slackers.

However, despite my confidence in the efficacy of my proposal, I am certain there are holes in the theory that have yet to be exposed. So, take your best and worst shots, and tell me why I'm crazy. I'll respond until the idea is no longer defensible.
 
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So a low ranking member in the US Armed Forces or Coast Guard who almost no income would have almost no or in fact no say in how the country he is putting his life on the line to defend should be run? Same with police, and other young members of society who haven’t established an earnings base? How about 16 year olds who pay taxes - they now get a say?
The proposal in the post is almost indefensible...
How about instead of money it’s veterans only... wait Heinlien proposed that years ago.
so maybe it’s years of armed or community service (and those who have done community service get to define community service...) Then there are the truly passionate those working with a campaign which would provide a direct credit - those doing volunteer work in campaigns who are obviously passionate would get voting credits instead of pay - right? after all they would be turning 100% of the equivalent income based effort over on behalf of the government....
 
Written By: BillS
URL: http://bills-opinions.blogspot.com/
You could set up an equation:

1 vote per person + 0.1/year served in the military + 0.01 vote for every 10,000 dollars in taxes you pay.

I doubt that would even really swing many elections though. Even people who pay a million dollars per year in taxes after 20 years in the USMC would only have 10,000 votes. I guess they could elect themselves mayor of a small town!

But then teachers would want more, doctors firemen, policemen, etc. would ask for votes too.

Maybe a better way would be to allow people with lots of money to spend freely in political campaigns rather than limit their contributions.

Or how about minting coins each year with the previous year’s individual who paid the most income tax.

 
Written By: Harun
URL: http://
Speaking as a low ranking member of the Army, the truth is that we’re, overall, probably more wards of the state than anyone. If you want an example of what cradle to grave socialism in America would look like, enlist in the military. There is a Three Letter Agency for your every need, and a regulation to tell you what to do in every conceivable situation.

That said, because it’s generally extremely difficult if not impossible to increase one’s income while serving in the military, some servicemembers are sacrificing, so I think Bill’s argument has some merit. But from my observations, I’d say at a *minimum*, half of the military are free riders, big time.

What he really does, though, is open up another way of describing "contribution to society." But we could define lots of ways to contribute to society, paying taxes is just one. Bill has added national defense and public service. I’d add creating jobs, creating wealth, building communities, scientific achievement and artistic achievement.

The problem is that only taxes paid can be readily quantified. Every other measure is either hopelessly subjective or could be manipulated. After all, what is the value to society of a poem? And I can "create" a billion dollars by simply writing an IOU on a napkin, so creating wealth is a little fishy.

I think Mike’s basic premise is at fault. The idea is that the vote depends on your contribution to society. But what about the vote as your limit on society’s infringement of your rights? Basic ethics says that each person’s life, and thus their freedom to do what they want with it, no matter how trivial it might seem to others, is infinitely valuable. And government, by design, is going to tell you that you *can’t* do what you want.

So I think the one-man one-vote concept is sound because your vote is your ability to tell the government "no," not the ability to use your wealth amplified by the power of law to suppress your neighbor’s dreams.
 
Written By: ben
URL: http://
"In this way, every taxpayer would have not only an incentive to maximize their taxable income (to an extent), they would also have an incentive to vote for politicians who lessen, or at least equalize, the tax burden of the entire electorate."

Why, if under your plan I get more control over things if I pay more of my income in taxes, would I want to vote for someone that will take away that power? We already know that governments hate giving up power they’ve accumulated for themselves, so why assume the people governed are much different? Unless you’re counting on people paying more of their income in taxes to want to stick it to the other guy, that is.

Also, given the reality that a "ridiculously small" minority of the voting public pays the bulk of the collected income tax in the US, how would the availability of increased voting shares once every two years be considered fair compensation for having additional taxable income? It doesn’t seem like a desirable trade, IMHO.
 
Written By: Greg
URL: http://
If the "greedy" is generally defined as those who earn more money than 95% of the populace, and that 95% already pays something like 60% of the taxes, then should those 5% have something akin to 60% of the say in how their money is spent?
In a word, no.
In essence, this is a corporate model that I’m proposing, in which the voters (shareholders) have the same say as their share of taxes per income (investment) paid to the country (corporation).
That’s exactly the reason for my "no". If the board holds the majority of the shares, other shareholders can only go along for the ride.
 
Written By: Arcs
URL: http://
I disagree with the extremity of this issue. The ’wealthy’ would have a means by staying the wealthy and thereby having control over the rest. Given that option, many would pick power over what might be best for the economy or standard of living.

However, I wouldn’t mind people losing their vote to the House if they receive a net pay from the government.

So yes, if you take Obama’s tax refund or you’re a government worker/contractor you lose your House vote. If you receive social security that outstrips an investment amount that you paid into it, you lose your vote.

P.S. I guess the military can get 3/5 of a vote. j/k.

Anyway looks like we’re on the "once a majority realizes they can vote themselves money from the national treasury..." death spiral. I can appreciate suggestions that we should put a mechanism in place to prevent that. But it just won’t happen. Shame is the only tool here. And since being Judgmental is now the number one sin an American can commit today, that tool is out of reach.
 
Written By: jpm100
URL: http://
Why not go back to the idea that the Federal Government should spend on those items enumerated in the Constitution, and no others? Voting isn’t the problem.
 
Written By: MarkD
URL: http://
So a low ranking member in the US Armed Forces or Coast Guard who almost no income would have almost no or in fact no say in how the country he is putting his life on the line to defend should be run? Same with police, and other young members of society who haven’t established an earnings base?
No. They would have the same amount of say as individuals paying the same percentage of their income in taxes, and combined they would have a lot more say than those paying higher percentages (based on current numbers).
How about 16 year olds who pay taxes - they now get a say?
I wouldn’t advise that (although I don’t think 16 year olds actually do pay any taxes), any more than I would advise that corporations (who pay a heck of a lot in taxes) be allowed to vote.
You could set up an equation:

1 vote per person + 0.1/year served in the military + 0.01 vote for every 10,000 dollars in taxes you pay.

I doubt that would even really swing many elections though. Even people who pay a million dollars per year in taxes after 20 years in the USMC would only have 10,000 votes. I guess they could elect themselves mayor of a small town!

But then teachers would want more, doctors firemen, policemen, etc. would ask for votes too.
Hmm. That’s an interesting idea. I think you’ve identified the central problem with it too, but it still might be workable.
Speaking as a low ranking member of the Army, the truth is that we’re, overall, probably more wards of the state than anyone.
While I understand where you’re coming from, I disagree vehemently. Troops aren’t a net drain on the society, and actually work (quite hard in fact) for their pay and amenities. Many would probably even argue that they’re highly underpaid, to which I would be inclined to agree. I don’t see how troops are in any way similar to people who pay no taxes and receive a check from the federal government.
I think Mike’s basic premise is at fault. The idea is that the vote depends on your contribution to society. But what about the vote as your limit on society’s infringement of your rights? Basic ethics says that each person’s life, and thus their freedom to do what they want with it, no matter how trivial it might seem to others, is infinitely valuable. And government, by design, is going to tell you that you *can’t* do what you want.
This is exactly what my proposal is addressing — i.e. "society" in the form of elected officials are infringing on my rights all the time, voting themselves increasing portions of my wallet, telling me what I can and can’t do, and making me pay for most of it. That’s a serious infringement, don’t you think?
That’s exactly the reason for my "no". If the board holds the majority of the shares, other shareholders can only go along for the ride.
They wouldn’t hold a majority of the shares, but their voting power would be increased. No matter how you cut it, there a far more people who pay 15% of their income in taxes, than those who pay 35% (and, yes, I know those are marginal rates; they are simply being used for simplicity).
I disagree with the extremity of this issue. The ’wealthy’ would have a means by staying the wealthy and thereby having control over the rest. Given that option, many would pick power over what might be best for the economy or standard of living.
Isn’t that what happens now?

And let’s not forget that, in general, the "wealthy" don’t pay much in taxes. Yeah they pay a lot in tax DOLLARS, but as a percentage of income it’s not terribly high. It’s the hard-working middle class who gets tapped the most, and it they who would have more say in elections, not the "wealthy". Think Joe Plumber and not Bill Gates.
Why not go back to the idea that the Federal Government should spend on those items enumerated in the Constitution, and no others? Voting isn’t the problem.
Because we already do operate under those terms, but there is a giant Congressional-spending (and regulating) loophole in the Commerce Clause. That one clause, essentially introduced to cure one of the biggest problems with the Articles of Confederation (i.e. state tariffs), has been the floodgate through which the federal government has drowned any sense of federalism. It’s why national elections are so much more important nowadays than local and state ones. And it’s why voting is the problem since the federal government has sold so much of the electorate on free goodies paid for by the "wealthy", convincing people that they can tax themselves rich.
 
Written By: MichaelW
URL: http://qando.net
I’ll have more to say later on today, but:
(although I don’t think 16 year olds actually do pay any taxes)
I beg to differ. I certainly started paying taxes when I was 16 and had my first job. Not only in weekly withholding, but some extra in April.
 
Written By: Bryan Pick
URL: http://www.qando.net
I certainly started paying taxes when I was 16 and had my first job. Not only in weekly withholding, but some extra in April.
I didn’t think about W/H, but EITC and 0% bracket probably encompasses most, if not all, 16yo today.
 
Written By: MichaelW
URL: http://qando.net
The ’wealthy’ would have a means by staying the wealthy and thereby having control over the rest.
They already have a means, income redistribution. Which is what Obama is really talking about when speaks of "spreading the wealth". Do you really see anything in Democrat policies that’s going to affect the net worth of say Warren Buffet, Oprah , the Clintons, etc?
 
Written By: huh
URL: http://
...turn America into a true stakeholder society by (A) having cumulative voting, and (B) providing that everyone who is eligible to vote, has the same number of votes as the percentage of income he/she pays in taxes.
Biggest objection is that it is even easier to game your proposal than the current set up of one vote per person.

If maximum power is provided to those who pay the highest proportion of income in taxes, then all a cynical politician needs to do is offer subsidy to group of loyal taxpayers who provide all of their income back to the state. Set tax rate of 100%* on all government employees whilst giving access to a free car, free health care, free housing, free holidays, free big screen TV, free everything to government employees. All government employees become wards of the state, but live in subsidised luxury and have triple* the voting rights of everybodyelse.

* Technically a government which instituted sympathetic enough bankruptcy laws could make the tax rate anything at all - a million or a billion or a trillion percent tax would be possible. This would be even "better", because any dissenting employee of the government would face absolute ruin if they were to ever risk being fired.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
I should note one of the advantages of this system is that you could catch people who shelter all their income. A simple ranking of income to votes would show you who walks the walk, and who talks the talk.
 
Written By: Harun
URL: http://
Deal-breaking (for me) problem with the proposal: if you give most of the vote to people who already have the high incomes, they’ll be able to wield the power mainly to legislate competition (efficient trade as well as the next generation of "new money") out of existence, or out of the country at least. We already have a lot of that, but the proposal sounds like a shortcut to a true anti-production aristocracy in the United States.

In my opinion, the problem at present is the wide scope of things on which people (including legislators) can vote, and the limits on the precision of the signal. Hopefully, I can write up a post on that over the weekend.
 
Written By: Bryan Pick
URL: http://www.qando.net
As a side note it’s always seemed unfair to me that we have a progressive tax system. Why is it okay for the government to discriminate on the basis of income? Obviously they can’t discriminate on the basis of race, sex, or religion, why income? Even religion is something that is a personal choice, so there’s no argument that they can’t discriminate on inherent characteristics. It always seemed to me that the Supreme Court dropped the ball on that one.
 
Written By: Eric
URL: http://
I see that I read things wrong the first time; my apologies, it was about 2 a.m. My previous comment has a lot less force now that I read that it’s not about total tax paid, but percentage of tax.

That makes unaha-closp’s argument even more cogent than mine. It encourages people to ask for more benefits, enough to offset higher taxation.
 
Written By: Bryan Pick
URL: http://www.qando.net

 
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