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Skeleton Government

Structure

   A skeleton government consists of executive departments that are scaled-down versions of themselves (or "bare bones") when considering the minimal services that they provide. This allows for an extremely low federal tax rate that will result in improving the overall economy of the nation.

   A skeleton government will also replace the current government bond system with a project-oriented, or P-series, bond structure. So, instead of an open-ended fund for government projects, every project will have a separate P-bond that will enable better encapsulation among the federal programs (e.g., no more dipping into a general fund that hides cost overruns, or siphoning funds meant for other projects). Also, P-series bonds will allow the public to have greater discretion on which projects should be funded compared to others.

   For example, voters may approve of a project for renewable energy (e.g., wind power) to replace fossil fuel dependency. A new P-numbered bond will be assigned to the project that will be funded entirely through private investment. The role of government will only be to initiate the project, facilitate public funding, and assist with general management. Redemption of the P-series bond will be provided after the project is completed (e.g., it pays for itself after becoming fully operational), so only a minimal amount of federal tax dollars will be given to the project.
Advantages
 
   The primary advantage of a skeleton government is that it will allow for an extremely low federal tax rate. On average, a flat 5% federal tax rate would be the norm though an even lower tax rate may be possible.

   In America, reducing the tax rate for individuals from 25-33% to just 5% would greatly improve personal welfare by a significant amount. Reducing corporate taxes from 21% to 5% would allow businesses to hire additional workers and offer greater incentives to their employees.

   Also, a skeleton government will only tax wages and all other forms of taxation will be eliminated. The gift tax, estate tax, capital gains tax, etc., will no longer exist. Gambling and lottery winnings become tax-free as well as tips from customers. Retirement plans become entirely tax-free though pretax contributions will no longer be offered since the minimalized nature of a skeleton government requires the flow of steady funds.

   Since only wages will be taxed (and revenue for businesses), the need to file taxes at the end of the year with the IRS will be eliminated. Employers will simply withhold the appropriate amount of tax from an employee's paycheck, and it's done. There are no deductions, credits, or other adjustments since the federal government should treat everyone in an equal and fair manner regarding their individual life decisions (e.g., single or married, rent or own home, children or none, etc.).
Further Considerations

   A skeleton government with a 5% federal tax rate may require the active military force to be replaced with a volunteer-based civilian force (much like the Minutemen of colonial times). In this case, the defense budget would primarily be used for maintaining special forces, while a portion used for setting up Minuteman training camps. Taxes may be temporarily raised for a few years for weapon procurement if necessary.

   Not only the federal government will be changed, but also state and local governments will likewise be reduced to their skeleton equivalents. Which means that the state sales tax and local property tax would be eliminated in most cases since only wages/revenue will be taxed.

  To achieve optimal efficiency, a skeleton government should have a maximum 15% total tax rate for federal, state, and city combined. Voters may decide how the maximum limit of 15% may be divided (e.g., 4% federal, 5% state, 6% city).
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