Thursday, April 14, 2011

Government Budget Solution

There are certain taxes that are raised for a specific purpose. Examples are Medicare, Social Security, Disability, Unemployment, 911 system, Transportation etc. Each of these classes of taxes are to be kept in separate accounts and budgets, accounted for separately and only used for their intended purposes. What is not to be spent in one year would be carried over to future years. Food safety should have its own separate tax as should such other functions as the SEC. All regulatory functions would have its own separate industry tax budgets and accounts. Some of these areas are not the function of government and should be phased out, such as Medicare and Social Security. Others are not the realm of the federal government and should be managed at the state and local level. Other things that the governments do should be phased out and picked up by private organizations or not done at all. 

All other spending would be as follows:
Since we need a lead time for the 2012 spending year we start with 2010 actual general revenues.
An example using round numbers;
2010 actual tax revenues                          $100
10% reduction due to excessive past spending      $ 10*
Redeem debt                                       $ 10
2012 Budget                                       $ 80

* This adjustment can be removed if and when this spending is well under control maybe at 5% of GDP.

This remaining $80 would be the budget and allocated in the following priority;
National Defense, War activity, Violent crime defense. 
Non Violent crime defense - 
Support for the truly needy.
Support for other legitimate government function from list described below.
Support for the Judicial branch of government.
Support for Congress.
Support for the Executive branch of government.

These general revenues would be collect via a 5% tax on what goes into the making of the GDP. I suppose that is basically a VAT. Initially this tax may be higher than 5% and in-time could be lower as spending and government function is brought under control. The income and all other taxes not described above would be repealed.

For this to work maintain a publicized list of all past, current and possible government functions. This list would reference the Constitution and legal authority, is it a federal state or local government function or not a government function at all, source of funding, is it a specific industry tax or from the general revenue tax. All of the functions assigned as a government function would have an 8 year life and would then need to be reauthorized by congress.

There would no longer be any activity where the federal government would use federal tax revenues and give it to states to carry out a function dictated by the federal government. If it is a state function the state will tax locally and management the activity.

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