Time’s cover this week is about the US Federal debt. The article is interesting if you’ve never read such an article on the Federal debt before, though it is not that interesting if you have (and there have been hundreds of opportunities over the past ten years (or more) to read such articles).
In the cover article “The United States of Insolvency”, one of my favorite ideas for tax reform is given at the end of the article. This is the idea that rather than having employers automatically withhold various taxes, everybody would better understand their civic fiduciary responsibility if they received 100% of their paychecks and then explicitly and individually paid to various government agencies the taxes owed in whatever the contemporary tax climate happens to be.
From the article:
Picking up where Kellems left off, I propose a slight alteration in payday policy. Let each wage-earning citizen hold the whole of his or her untaxed earnings–actually touch them. Then let the government pluck its taxes.
“Such a payroll policy,” wrote Kellems in her memoir, Taxes, Toil and Trouble, “is entirely legal and if it were universally adopted, in six months we would have either a tax revolution or a startling contraction of the budget!”
So, for example, if you look at your paycheck today, and you see something like:
Federal withholding: -$100
State withholding: -$50
Rather than observing that you get $750 deposited into you bank account, it would be far better for everybody’s understanding of Federal and State spending if you actually got $1000 in your bank account and then had to write three checks ($100, $100, and $50) to the appropriate agencies.
I do indeed think that this would result in a ta revolution and I think that would be a very good thing.