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Tuesday, 13 June 2006 20:00 |
 | Carl S. Milsted, Jr.
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Illegal immigration, job outsourcing, trade deficits, budget deficits, workers in poverty, the welfare trap, an insanely complicated tax code ... What do all these problems have in common?
The answer: They could all be substantially fixed by implementing a citizen??s dividend.
Today, the seriously poor get welfare checks and public housing. The working poor get the Earned Income Credit. Old people get Social Security checks based on their income history.
The
temporarily unemployed get unemployment insurance. The middle class
gets the personal exemption, the mortgage interest deduction, and a
host of other tax loopholes.
Everyone is getting money [back] from the government, but they are
receiving that money through dozens, if not hundreds, of different
mechanisms. The result is a bureaucratic nightmare that makes our
businesses less competitive, weakens our moral fiber and makes life
less pleasant generally.
Why don??t we
just give every citizen a chunk of money each month and be done with
it? This is the idea behind the citizen??s dividend. The Fair Tax people
are proposing such a dividend to make a large national sales tax to
replace the income and employment taxes. Followers of Henry George
advocate a citizens?? dividend based on ground rents. I personally
prefer replacing income and labor taxes with a mix of excise, property
(including copyright and corporate value), and possibly sales taxes,
combined with a citizens?? dividend.
The common thread in these ideas is to replace our current complicated
tax code, which requires having an extensive government dossier on
everyone, with simpler, more anonymous taxes coupled with giving
everyone the same sized rebate check. (Or a larger check for those with
easily measured disabilities such as old age, blindness, etc.)
If you are paying significant amounts of taxes, then the dividend
constitutes a tax rebate. If you are not paying much in taxes, then
the dividend constitutes a no-questions-asked welfare check. The
government does not need to know which.
Such a change in the tax code would make U.S. citizens?? labor much more
competitive with foreign competition and illegal immigrants. With the
dividend, low-skilled laborers could take home more money without
pricing themselves out of a job. They get a living wage without the
unemployment that results from jacking up the legal minimum wage.
Potential illegal immigrants would have less incentive to cross the
border. They wouldn??t get the citizens?? dividend. The government could
save the money and diplomatic embarrassment that would go into building
a giant wall.
To the degree that we use sales taxes to replace income and labor
taxes, we implicitly raise the tax on foreign goods ?? tariffs are no
longer needed. (And illegal aliens would pay these sales taxes, without
benefit of rebate.)
Such a huge simplification in the tax code would reduce the economies
of scale of doing business. We could become more of a free-agent
society. The anti-block store Luddites would have much to cheer.
We could even
use the citizens?? dividend as a tool to discipline our big-spending
congresscritters. We could make part of the dividend proportional to
the budget surplus. For example, for each dollar that tax receipts
exceed spending, we could use $.25 to pay down the debt and $.75 to
increase the dividend. The progressive members of Congress would have a
strong incentive to reign in spending.
There is one major downside to this plan. For it to work, the federal
government would need to know who the citizens are and where to send
their checks. This is a concern for privacy nuts like me. But perhaps
this is a sunk cost. We already need to give over our Social Security
number to get a job or open a bank account and any alternative plan to
reduce illegal immigration would require everyone to produce their
papers to prove they have a right to be here. With a citizens??
dividend, those concerned about their privacy could legally refuse
national identification ?? at the expense of forgoing their dividend
check.
?ÿ
Carl S. Milsted Jr. is chairman of the Libertarian Party of Buncombe County.
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