Date: 14 Feb 2016
Byline: Megan McArdle
Headline: Sweet Political Treat for Valentine’s Day
I don’t usually read academic journals or academic working papers, but a colleague forwarded a link to a working paper with the laborious title “Alternative Government Revenue Methods Under Conditions of Relative Equity”. The Paper was written by Martha Graziano, an associate professor of business and finance at the University of Bellingham, Washington. If Professor Graziano was a journalist or political activist she might have chosen “End Tax Collections” as her title.
I don’t recommend that you read the 87 pages of academic jargon and equations that she has written, nor the abstract to the paper; a simple summary will suffice. Professor Graziano says that the government does not need to tax income, nor sales, nor estates, or anything else. Instead, the Federal Reserve Bank could simply write a check to the Treasury for a specified percentage of Gross Domestic Product (GDP).
This political season has produced amazing, perhaps numbing, analyses of the Republican candidates who are competing for the presidential nomination. Hillary and her staff are complaining that she is being ignored on the path her coronation in August. Perhaps she should encourage some competition. All of the Republicans, and perhaps Hillary or her competitors, should take the opportunity to present their opinions of “Martha’s Plan”.
Professor Graziano extends her analysis to states and municipalities. She suggests that if a state forego all others forms of taxation, the Fed could write a check to that state’s Treasury as a percentage of that state’s GDP. She presents a similar analysis between states and their cities, counties, and school districts.
My first thought was “way to go, girl”. Further contemplation led to interesting questions such as “What happens to the Republican coalition if they lose their tax reduction plan”? How will civil service unions, progressives, and other Democratic constituencies react to the plan”? Martha says that the plan can be revenue neutral as the Congress would decide what percentage of GDP would be used. She cautions that it might be necessary to backstop the plan with a Constitutional amendment that eliminates income, sales, and estate tax, to prevent future politicians from seeking additional tax revenue.
I hope that my colleagues in the media will question candidates about their opinions about ending tax collections. NOW!!