Tuesday, April 10, 2012

Where Should Your Tax Dollars Go?

So, we're eating at the tequila bar five minutes away from our house and we get to talking about Obama phones. Apparently, Obama phones are a government subsidized program that helps pay for cell phones for low income individuals. I checked out a few blogs and sites on the topic, and honestly still can't tell if they are for real or not.

Most of the comments were from angry people that didn't like how the government was spending their tax dollars. Some were for these phones, some were against. The opinions were as polarized as most political debates. That isn't suprising given that most of our presidents in the recent past have been elected by relatively small margins. Basically the person that runs the country at any given moment is liked by half the population and disliked by the other half.

Not quite so. Just because the winner gets a slight margin on the popular vote, doesn't mean that the guy who voted for him (or her) agrees with the politicians entire platform. All it means is that on the average they agreed with more of "that guys" political platform than the "other guys" political platform.

Being that tax day is around the corner and this is an election year, this got me thinking about how to shake things up in this country, so I came up with the following.

When submitting your taxes, you get to choose where your tax dollars go. Think of it as an investment portfolio with a number of categories that you can allocate your taxes to. Take the following breakdown.


This allocation would be appropriated for the coming tax year. So just like you declare your withholdings, you would also declare your allocations. So in my example (which does not reflect my views by the way), one could say, use 5% of my money for medicare, 5% for medicaid, 10% for space exploration and so on and so forth. Essentially, you are declaring what is important to you.

What does this give you? This gives you a voice beyond the one voice you had when you voted for that guy you didn't quite like but you liked better than the other guy you didn't quite like. It is a mandatory survey of sorts that helps gauge the pulse of the tax paying public.

My cursory search of the internet shows that there are roughly 130 million tax paying Americans. That's like conducting a yearly survey of America asking them what they think is important. Do the guys on capitol hill have to listen beyond that of an election year? Yeah, cause you're telling them where to spend your money.

This "survey" will only work if the money that Joe public is allocating is actually allocated. It isn't good enough to just include a survey with our tax return asking people where they "think" their money should be spent. People have to believe that their money is being spent in the way they asked it to be spent. If this was simply a survey, people would ignore it, but if they felt that they had a choice in the matter, they might actually start thinking about more global issues. Not only is this a way to engage the masses, but it is also a kick in the pants to the politicians.

I know what some of you are thinking. This would lead to complete anarchy. Maybe. Clearly there would be a right way to do this and a wrong way. The wrong way would be to make too many categories to "invest" in or to let Joe public invest the full amount of their tax dollars or too much of any amount in any one category. There need to be some kind of constraints applied.

Budgets must be more or less stable from year to year. Any budget cuts must be gradual. For example, what if Joe public said that in 2012 we should blow all our money on military spending and then in 2013, we should blow it all on agriculture with nothing on military spending. That isn't going to fly. You have to maintain the navy vessels and jet fighters you created with the 2012 budget, and you can't just cut off the troops abroad from their supplies cause you now want to invest in agriculture.

A better way of doing this might be to let us choose where a small portion of our tax dollars go. Let's say 2%. The politicians could still blow most of our money how they see fit. However, they would be bound by this small committment. I think that as long that people have some skin in the game, their allocations will be sincere and we can still gain many of the benefits of this new tax approach without inducing total anarchy.

According to Wikipedia, in 2011 the federal government collected 2.3 trillion dollars in taxes. Two percent of that would be 46 billion dollars whose fate would be decided by the public. That's quite a voice. Some might say it is not a voice. Let me ask you this, during election year most people's voice goes as far as a binary decision for this guy or that guy with no additional granularity.Why not give it a shot?

I'd love to hear any and all opinions on this matter. I'm not much into politics, but I am into shaking things up and I'd love to hear what everyone thinks would and would not work here.

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