Tuesday, August 25, 2009

A Tax Coupon System

I must admit to an overenthusiastic preference towards Tax Coupons yesterday, which I entered into with malice, but without aforethought. It starts with the proposition that every economic activity does possess a proportionate Cost within an economy, and there are periodic alterations in that proportion; a Market being the best vehicle to determine the magnitude of such variations in the premium. This is the theory, and does not explain the distortion in market pricing by human intervention. I do not want to write a book here, so let us get back to the subject at hand.

The Basic Thesis behind Tax Coupons:
Tax Coupons are a form of registered money for the specific purpose of paying Taxes. They would be an artificial Paper instrument, which Some would argue remain nothing but a sequestered form of Currency which can be used for nothing but paying Taxes. This is the argument utilized by Those that feel Tax Coupons could not inflict the intended effect. This is the elimination of Public Debt in most forms; substituting a market system of financial allocation for the Debt. It is much easier to explain the components of the proposition than advance a coherent theory, so let’s opt out for discussion of the elements of Tax Coupons.

1) Congress finally determine a Tax allotment by Percentage based upon whatever form of progressivity of Tax is found both desirable and practical.
2) All forms of Public Debt is forbidden, except for potentially short-term instruments of perhaps 90-Day duration.
3) The U.S. Treasury be instructed to issue Tax Coupons of face value denominations, which are to be sold at whatever Price the market will accept.
4) The IRS will determine whatever premium or Cost market flux had created, and Add or Subtract this Cost from the Tax allotment, determine the appraised allotment, and divide by the number of Taxpayers.
5) This amount is assigned to each Taxpayer without resort to any Tax benefit, other than the original decision of progressiveness.
6) The Enactment authorizing Tax Coupons will have limited Tax payment to the turning in such Tax Coupons which must be purchased, so We have a market system which varies according to the number of Tax Coupons issued and the period of Time til Tax payment is mandated.
7) The final point of the Enactment is to insist that the Treasury issue Tax Coupons of face value equal to the expenses of the Government in each previous Month.

The Federal Reserve will be allowed to actively purchase in the market for Tax Coupons, so as to maintain an active monetary and fiscal policy. Congress will learn to set Tax rates of relevance and progressivity, so Taxpayers are required to pay the full amount of Government expenses, especially if these Tax Coupons are limited to a 3-year Duration; they being valueless beyond the established period, or the obvious Tax payment date beyond their end. We are on a Pay-as-You-Go system which cannot be avoided, so there will be real lobbied sentiment to curtail Government Expenditures. It may or may not work! lgl

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