A Radical Tax Idea I Love

I’m reading a book called More Sex Is Safer Sex: The Unconventional Wisdom of Economics [aff] that presents a really radical tax idea that I think would be great.

The idea is that the government should stop taking taxes (payroll and income) out of your paycheck. Then at the end of the year, the IRS mails everybody an itemized tax bill.

This would accomplish two things, in my estimation. First, it would force most Americans to get out their checkbooks and write a big, fat check to the government every year. I don’t know about you, but if I had to write a check for my tax liability, I’m not sure I could get my hand to do it. And that’s the idea. It would make people realize just how much they’re paying the federal government in taxes. I’d reckon the pressure to cut taxes would soon be overwhelming.

The second thing this plan would accomplish is it would force Americans to look at how their taxes are actually being spent. It’s one thing to know (and most Americans don’t) how the government spends your money. It’s quite another to have a bill staring you in the face that looks something like this:

Your $14,500 dollar tax bill goes to fund these things* –

$2,900 Social Security (20%)
$2,900 Defense (20%)
$2,755 Medicare & Medicaid (19%)
$1,305 Interest on national debt (9%)
$1,105 Income security (7%)
$870 Other entitlements (6%)
$580 Education (4%)
$290 Environment (2%)
$145 International Affairs (1%)
$1,740 Non-defense discretionary (i.e. everything else) (12%)

*Figures are actual percentages for fiscal year 2006 courtesy the Concord Coalition

I wonder how long it would take to align the bill with Americans’ true values. Or maybe these reflect Americans’ true values already. Now that would be depressing.