Even Fairer Than the Fair Tax . . .

. . . I'm basically for a properly implemented Fair Tax. The cost of compliance, both in terms of dollars and in stress, with the current byzantine code is substantial. Simplification alone, could help pay for a much lower overall tax burden. On top of that, any tax code that doesn't require reporting of income, and taxes all people within the borders of the United States equally, distributes the burden of paying for government services more equitably, and would create incentives for increased consumption at the high end, and increased savings at the low end of the economic spectrum.

But I think the technology is here, or at least possible to develop, to take a national consumption tax one step further. With a sales tax, you only capture all legal sales, but there is a lot of economic activity that doesn't count as a 'sale'. On top of that, a national consumption tax would encourage the growth of a hidden cash based economy as the tax rate to equal the current revenue would need to be around 17%.

I'd like to see that burden drop to no more than 5-7%, and here's the way to do it, tax all TRANSACTIONS, not just sales. Any time funds are transferred from one entity to another, the gov't would 'skim' off five cents for every dollar spent. The total economy is $13 Trillion a year, but I've never been able to find the total transactions in dollars annually. That's not a statistic that's kept, or even guessed at by economists as far as I can tell. I would imagine for each dollar that eventually adds to the total GDP, that dollar gets passed around at least 3 or 4 times. I could be way off, it might be half that, or it might be five times that, I really don't know. But if 3 times is the right number, then you could tax transactions at 5% and still get to the approx $2 Trillion in annual revenue that our gov't seems to believe it requires to function (I bet if they went on a diet they could get by with only $1.5T).

The first step to making this happen would be to change currency so that it could only be stored electronically through bank accounts, or on debit cards with the ability to communicate with each other, and a tracking system that records transactions as they are made (without recording who the individual parties are as the transaction happens). The technology is available, it would just require a few small innovations that are already technically feasible and would be less expensive to implement, monitor, and deploy than the current process of printing paper money and minting coins. For this to work as an acceptable currency, the ability for parties to remain anonymous and invisible to the government, even while their transactions are taxed the appropriate amount, would be crucial. People would have to trust that this isn't a trick to increase surveillance, and the government would have to prove that the transactions are taxed fairly, accurately, and anonymously. The system would have to be hacker proof, while also having built in safeguards to make it impossible to use the tracking of transactions to turn into the tracking of people (whether by the gov't itself, or by others).

The advantages for this kind of system are worth the risk. All transfers of dollars, anywhere in the world would add to the US government's revenue. It wouldn't matter if the trade is illicit, or licit, the US government would get a cut. The total underground economy has wildly varying estimates as to its size, but it's not a crazy assumption to make that it's at least a tenth the size of the total economy within the United States alone. Building in a system that's blind to the kind of transaction being made would tap that resource. Plus an anonymous debit card system, backed by the US government, and guaranteed to be untraceable, would become the de facto currency of black marketeers and other reprobates worldwide. Instead of a briefcase full of 500 Euro notes, two smugglers wanting to swap $1,000,000, could do so electronically and anonymously. That could be worth a Trillion annually in revenue for the US government, alone. Bad people are going to want to do bad things, and get paid for it, might as well take a cut of the action. Having been the de facto reserve currency for bad guys around the world has helped bolster the US economy, and the rise of the Euro as a reserve currency for the black market is one of the things driving the rising Euro v the Dollar (having a 500 euro note really helps, you can stack a lot more value in a single briefcase full of euro than dollars right now). This would take away one of the tools our government uses in the War on Terror (and the War on Drugs), but the benefits would outweigh this loss.

All transactions (other than bartering) would add to the government's coffers, whether you're giving allowance to your kid, your boss is paying you for two weeks worth of work, you're showing your appreciation for a very talented stripper, or you run out to the store to buy some bananas. Interest income from savings in banks would be the only thing exempt from this transaction fee, otherwise the fee itself would cause inflationary pressure.

It's a pie in the sky concept, possibly completely impractical, but if it is practical at all, it might be worth a look at. Simplifying the way the federal government collects revenue, anonymizing the process, and speeding and streamlining the ability of people to move small or large amounts would have many economic benefits.

A Five State Solution for Dividing California (and Increasing the Political Influence of Each Region)

After seeing the idea kicked around in this Althouse thread, thought I'd attack the idea with an illustrated map. Above is a map of a five state solution for dividing up California. It respects current county boundaries, and I think it does a good job of acknowledging the demographic similarities of each region. The maroon lines are my proposed new state boundaries, with the new names of each state floating near them.

California is by far the largest state, yet our influence nationally is marginalized by that size. Division of the state would multiply our collective influence.

A breakdown of each of the five states (in order of new population, smallest to largest, based on this chart of 2006 estimates):

Lower Cascadia, State Capital Sacramento, postal code LC, current population of the 22 counties included 3,287,069 with a plurality of those people (1,385,607) in Sacramento county. It would be the smallest of the new states in population. This mountainous heavily forested state would be much more similar to its Mountain West neighbors if separated from the rest of California. It'd be somewhere half way between Oregon and Idaho demographically and politically. In the new 54 state United States (state pop numbers via this wiki page) would slot in between Connecticut (3,504,809) and Iowa (2,982,085) as the 34th most populous state. As far as national politics goes, this could be a purple state, as the rural population about balances the urban population and its (projected) 7 electoral votes would be fought over.

Hill and Dale, State Capital Merced, postal code HD, current population of the 16 counties included 3,715,757 mostly concentrated in the agriculturally rich San Joaquin Valley. This state would be dominated by agro-business and agro-business concerns. Hill and Dale (the name reference to the mountains of the eastern and coastal sections of this state, and the valley in the center) would have many of the natural wonders that have made California famous, so conservation and attracting tourism would also be major concerns. In terms of the 54 states, it would be between Kentucky (4,206,074) and Oregon (3,700,758) and rank 30th. Politically it would have more in common with the farm belt states in the midwest than it does with its neighboring former California states, but with a more hispanic twist. Most likely a solidly 'blue' state, but a moderate Republican could put this state in play. With 7 electoral votes it would be another potential battleground state in close elections.

Groovy, State Capital San Francisco, postal code GR, this would be a ring of 10 counties surrounding the Bay Area totalling 7,379,635 in population. This would be the 'fruit and nut' central (hence the name "Groovy"), but it would also be home to the Silicon Valley. As a separate state this would become a perfect test bed for every whacked out progressive idea they could come up with. Let them screw up that geographically small, but fairly substantial numbers-wise area first before solving the problems for the rest of the country. It fits in between Virginia (7,642,884) and Massachusetts (6,437,193) and would rank 15th in the new 54 state scheme. About as solidly blue as a state could be. This would be a permanent 13 electoral votes for the Dems (unless some more 'progressive' party comes around challenging the Dems nationally).

Reagan, State Capital Riverside, postal code RE, this would be five large counties, totalling 10,250,900 people, comprised of the Inland Empire, Orange County and San Diego (+ Imperial). It would be the most conservative of the new states (hence the name Reagan, and if any other president deserves a state named after him other than Washington, it would be Reagan). It would have large military bases, and would be diverse ethnically, topographically, and economically. Riverside is more centrally located which is why it would make a good capital, and besides I attended college there. It fits between Ohio (11,478,006) and Michigan (10,095,643), giving it a rank of 9th in the new 54 state union, but the area is growing rapidly, so by 2030 it would likely leap frog Ohio, Pennyslvania and Illinois and rank 5th with a population between 13 to 15M. Most likely a solidly red state, similar to Nevada, Utah or Arizona in temperament. Not impossible for a Dem to win here, but it would take a special Dem to win this state's 18 electors and a particularly bad GOP candidate to lose them.

Lotus Land, State Capital Santa Barbara, postal code LL, this would be Los Angeles, plus four other counties with the bad luck of being thrown together with that behemoth, totalling 12,527,654 people. It would be the heart of the entertainment world, one of the powerhouses on the Pacific Rim, with a major world port, a major world airport, and be the financial capital of the Western United States (but still devoid of even a single NFL team). Santa Barbara is a beautiful town, with many great municipal buildings as a county seat already, so it wouldn't be that hard to picture it as a quaint, but bustling State Capital of a major state. The political clout of this new entity would not be dilluted, most likely it would be strengthened by this division. It fits between Illinois (12,831,970) and Pennsylvania (12,440,621) and would be already the 5th most populous state all on its own, but would most likely pass Illinois by the end of this decade and sit alone only behind Texas, New York and Florida in terms of population. By 2030 Reagan and Lotus Land would be neck and neck as Reagan is growing much faster than Lotus Land, making for some interesting local rivalries. Home to 21 electoral votes, this would be fairly solidly 'blue' and would be a major source of money for the national party. This state wouldn't be as 'blue' as Groovy, but it'd only consider GOP candidates in the Schwarzenegger and Giuliani mold.

I think this is a pretty good solution (the names may a bit jokey, but fitting), one that won't ever happen, one that has little support, but the idea of California being divied up into smaller parts does get kicked around from time to time, so might as well put some thought into what the outcome might look like. Currently California gets 55 electors and 2 Senators, these new states should get either 65 or 66 electors and 10 Senators (I added one, based on a bonus congressional district for Reagan). 66 looks a lot better than 55 (but the overall number of electors would also increase by 8 with the addition of 8 new Senators).



UPDATE: Responding to good suggestions added here and at Althouse (much thanks go to Prof. Althouse for linking this directly in a post), here's a SIX STATE SOLUTION.

Renamed all the States after famous Americans people (forgot to change American to people after changing Steinbeck to Serra) to make this sound slightly less crazed and a touch more serious.

Jefferson has remained unchanged (other than the name, which was changed to reflect the Jefferson State movement local to that region).

Hill and Dale becomes Muir in honor of the conservationist who was instrumental in establishing the many National Parks within this proposed state. Also Muir absorbs Kern county which belongs more with them, and cedes San Benito and Monterey to the newly formed central coast state of Serra. The new population figure for this state surpasses 4 million, and as pointed out, those farmers tend to be a pretty conservative bunch, so let's call this a more or less red state with serious agro-business concerns.

Groovy remains unchanged, other than renaming it after the poet Allen Ginsburg. He may have been a native of New Jersey, but he spent a lot of years in SF, and I would have named the state after the local poet Ferlinghetti, but A), nobody would be able to spell the name of the state, and B), he's not dead yet (I know, I'm surprised, too). In comments to this post Hey suggested that Silicon Valley probably wouldn't enjoy being lumped in with the other Bay Area counties, but I think San Jose would serve as a good internal counterbalance to the nuttiness sure to originate in San Francisco if they were their own state.

Serra (named after the founder of the many missions that dot these coastal counties) would be comprised of the central coast counties and would have a small population of only about 1.5 million, but would be center for tourism, have many major colleges, and have an abundance of natural beauty. Thought about naming it Steinbeck for that fella born in Salinas, but I thought Serra (despite the controversy around him) would be a better way to go.

Los Angeles would be all by its lonesome, the state would be called Pickford, rather than Los Angeles, seems appropriate to name this state after the first Hollywood starlet (her or Gish, take your pick). Plus she was business savvy, and did help found United Artists, so she works on a couple levels. Los Angeles county alone has over 10 million people so would be neck and neck with Reagan as largest state carved out of what used to be California.

Also mentioned in comments are the potential water fights a division would cause, but Serra, Pickford and Reagan have plenty of water, they just have to desalinate it. Nuclear power is the way to go, the designs for desalinating nuclear power plants that can be sited near population centers are being used (or are in the planning stages) in many countries. I think Serra, Pickford and Reagan should be happy to join that list and free each of those states from the water neediness that plagues the region. The Pacific Ocean is in no danger of being drained, it's just a bit too salty to drink, and that's easy enough to fix (and once the power plants are operational, cheap, too).

But then, I've thought that's the way to go for some time now.

A Scheme Designed to Enhance the Quality of Those That Serve Us in Federal Politics

(this isn't quite a "proposal" and I wouldn't call this either modest or immodest, hence "scheme")

One of the odd vexations regarding American politics is the seeming contradiction in the constant low rating for Congress as a body, but generally warm regard folks feel towards the representative in their district. I don't think that's something that will ever change, we see all the shenanigans in DC and know that which is being done in our name is often wasteful, venal, and counter to good governance, yet when we look at the representative we elected, we see that our personal Congressperson has done good things and brought home projects that help the community, so we forgive them their sins while damning all those around them.

I say harness this as a force for change. My scheme would require all congressional districts nationwide to be grouped as a series of triads. In each triad, you would not be allowed to elect the representative in your district, but you would elect the representative in two neighboring districts. Voters would no longer have a vested interest in keeping an incumbent in office for decade after decade simply to bring pork home. Instead they would be forced to think about their neighbors' needs along with their own, and consider how their choice for their two neighbors would effect the choices their two neighbors would make for them. Candidates wouldn't be able to run on pork, instead they'd have to run on regional issues as well as the rationality and workability of the ideas they represent. State legislatures, in states with multiple districts, would find the complexity and problems associated with gerrymandering increased exponentially. Hopefully, they'd have little choice but to create districts that make more sense geographically and demographically. States with only one representative would find themselves grouped when prudent, and state boundaries would be respected when possible. Also, reapportionment would have to be modified so that the number of districts was always divisible by three, but that wouldn't be a difficult change to enact.

I don't think voters would be too vindictive in saddling a neighboring district with an unacceptable candidate, as the threat of payback in the next election would loom. It would make it easier to argue against lengthy incumbency, however, and those in Congress would have to consider the greater good for their own district as well as those that actually elected them. The more voters these folks feel beholden to, the better. It can only force them to act and vote in a manner where their record shows clear benefit for all, and not just their home district, or else they won't have an easy campaign the following year.

I'd work the Senate slightly differently, and a little more radically. I think the direct election of Senators has been an unmitigated disaster. Repeal the 17th Amendment (I agree with former Gov. and Sen. Zell Miller on this one), immediately. I have no problem returning to the days when the Senate was elected by each state's legislature. Popularly elected Senators are too powerful, too secure in their position and serve incumbency more than they serve their constituents. So besides repealing the direct election of Senators, the other major change would be a random lottery in which states are paired with each other and the opposite legislature of each pair gets to pick the Senators for their partnered state, selected from a pool of candidates recommended by the state legislature of the state which the Senator would serve (a minimum of three candidates per party, to give the other state's legislature a wider choice in the manner). Just as in the House, this reform would force Senators who want to stay in the Senate to work for all the people, not just their own state, plus changing the pairings on a random basis every 4 years would shake up the process. The particulars could get messy, and occasionally there might be hard feelings between states, but politics is already messy, at least the new mess would be a fun mess. For example, imagine all the ink spilled in anticipation of the Alabama State Legislature getting to choose the representatives for New York, and vice versa. The quaking, shaking, and rabid editorials in the New York media would be a sight to behold and would be worth any problems this scheme might cause.

Unfortunately, there's no political will to enact such a radical, though sensible, change. Some ideas are just too good for the real world.