Tax questions

It is rare that I agree with the right wing Fraser Institute. However, I do believe that a simplified tax code would be better for the average citizen. In Star Island, my fictional country, each citizen who earns money via a job, or who receives social assistance benefits, would get a simple questionnaire to fill out at the end of the year with regard to their income.

The questions would be as follows.

1. How many people are in your household?

2. Are any people in your household, other than yourself, supported financially by you? If so, please indicate the number of dependents.

3. Please indicate whether you or any of your dependents receive social assistance, and indicate which assistance packages they receive.

3a. If you are a new resident to Star Island, and would like information about social supports, please indicate which social supports you are interested in receiving. All programs for support are listed on the attached pages.

4. Did you receive any income (liquid cash) from inheritance in the last twelve months? If so, please indicate the amount. Inheritance tax is calculated at a graduated rate of 1% per $100,000.00, up to a maximum 10% level at the $1 million level.

5. Did you receive any income from stocks, bonds, dividends, or other corporate sources in the past 12 months? Please indicate all amounts and sources.

6. Are you a small business owner/part owner? A 10% tax on profits applies to all business owners who net $20,000.00 or more. Please indicate all income earned from any businesses in which you are an owner, in whole or in part, and the income received from the ownership in the past 12 months.

7. Did you receive any income from other sources in the past 12 months? (Sale of real estate or other property).

8. How much income did you receive from paid work in the past 12 months? Please indicate all sources.

9. Please list any other sources of income not mentioned.

Thank you for filling out your income questionnaire. It will be processed electronically and verified by Star Island's staff for accuracy.

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Some people might be concerned that the implementation of resource taxes instead of a graduated income tax might lead to a tremendous benefit for the wealthy, and punishment for everyone else. This is why I believe that the switch to resource taxes is not punitive:

In charging for what resources we use, a family of five, living on *I*20,000 per year might end up spending *I*2,400 per year on resource taxes. However, the percent of that income is not necessarily punishingly large.

If, for example, one minimum wage earner receives *I*14,400.00 annually from a regular income, as well as receiving *I*4,492.00 from income supports, that family would have a total of *I*18,892.00 in total income for the year; however, they would only be taxed on the *I*14,400.00 earned through the regular income. Social assistance funds would not be taxed at all – that defeats their entire purpose.
*I* 2,400 per year in taxes on *I*14,400 makes it the equivalent of a 16% income tax rate; however, if compared to the *I* 18,892.00 that the family receives in total (including income supports), that would be the equivalent of about 12.7% in income taxes. The more of a family's total income that is received in social assistance benefits, the less it will be effectively taxed. Many social assistance benefits would be available to low-income individuals in order to raise their standard of living in Star Island to a level expected of a developed country.

This may lead some detractors of the system to question “What incentive do people have to work at all if they can simply live on social assistance? This is going to turn into a nation of welfare queens!” It is an oft-used talking point among fear-mongering fiscal conservatives. 

Here is my response.

If you are a person who is satisfied with what you get from the basic income supports, perhaps you will not seek work. However, the basic income supports actually do only cover the most basic essentials needed to sustain life: Food, water, shelter, transit, and basic phone service. This would allow someone to live, but there wouldn't be much in their home to enable them to enjoy leisure time - of which an unemployed person will have a considerable amount. People will not want to sit around their house all day doing nothing. That would lead to boredom, which may lead to other negative consequences. People will naturally seek out other activities to fill their leisure time. Leisure activities, more than likely, will end up costing money, unless they are paid for by a charitable or government organization. In order to access some of these activities, people will need spending money. People will be motivated to work, because a life of sitting around a home, eating and sleeping, is not fulfilling in the slightest. Doing something with your life will give people a sense of purpose.

“But, welfare queens! Women will just get pregnant over and over and claim more and more baby bonuses, and wring the system dry of MY tax dollars!”

No, they won't. This is a futile argument, considering that all entrants to Star Island will first be screened to ensure that their initial entrance to Star Island as a citizen will not unfairly drain the economy of resources. Single parent families with multiple dependents may be let in, but records of all dependents will also be taken, and the parent(s) will be consulted about the size of their families, including all their medical necessities and requirements. They will also be provided with free (tax-funded) birth control options in order to prevent further unexpected children from increasing this parent's amount of dependents.

As well, social assistance funds will be administered in a separate payment account to any funds that an individual earns from employment. All currency in Star Island will be digital, so all transactions will be traceable to their source. This means that the theoretical “welfare queen” of conservative myth will not be able to spend assistance funds meant for food or shelter on frivolous luxuries. The system simply won't allow for those transactions to take place. Sure, someone could attempt to barter for a tattoo with baby food, but I highly doubt that any self-respecting adult would even attempt something that desperate. If they do, social services will be called in.

Star Island is a project that is intended to look after the well-being of all of its citizens. Taxes are low to attract business people, but social programs are in place to allow all people to not be left behind. This is something that people who are afraid of taxes often forget. We live in a community. The word community, as frightening as it may be to think about, is similar to communism, is it not?

Don't be scared of the words communism or socialism. Both of these elements have been a part of society for a long time.