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Skeleton Government
Definition
A skeleton government is one that consists of the bare minimum that is necessary to govern the nation. Government spending is greatly reduced and federal programs exist only for the sake of conducting the essential duties and responsibilities of the nation.
Structure
The structure of a skeleton government consists of the various federal 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 quality and efficiency of the nation.
A skeleton government will replace its current bond system with a project-oriented, or P-series, bond system. Instead of having an open-ended general fund for all governmental programs, a project-oriented bond system enables federal programs to be privately managed from each other. The importance of this is that it allows federal programs to become better encapsulated that achieves greater efficiency than if grouped together with other programs (e.g., no more dipping into a general fund that hides cost overruns, or siphoning funds meant for other projects).
For example, voters may approve of a project for renewable energy (e.g., wind power) to replace fossil fuel consumption. A new P-numbered bond will be assigned to the project which will be funded entirely through private investment. The role of the government would be to initiate the project, facilitate public funding, and assist with general management if necessary. Redemption of the P-series bond will be provided when the project becomes fully operational (e.g., it pays for itself). So, only a minimal amount of federal tax dollars will be given to the project which would make it self-sufficient and independent from the other projects.
Advantages
The primary advantage of a skeleton government is its extremely low federal tax rate. On average, a flat 5% federal tax rate would be the norm although an even lower 1% or 2% federal tax rate may be possible.
Reducing the tax rate for individuals from 25-33% to just 5% would greatly improve personal wealth by a significant amount. Reducing corporate taxes from 21% to 5% would allow businesses to hire additional workers and lower unemployment for the nation.
In addition, a skeleton government should only tax wages and all other forms of taxation will be eliminated. So, the gift tax, estate tax, capital gains tax, etc., would no longer exist. Gambling and lottery winnings become tax-free as well as receiving tips from customers (which should have been considered as a gift anyway). Retirement plans also become tax-free though pretax contributions will no longer be permitted.
Since only wages will be taxed (or revenue for businesses), there won't be a need to file taxes at the end of the year with the IRS. 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 to the tax code since a skeleton government treats all citizens 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 federal tax rate of 5% or less 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 to maintain special/elite forces with a limited amount allocated for Minuteman training camps.
State and local city (municipal) governments will likewise be reduced to their skeleton equivalents. Which means that state sales tax and local property tax will be eliminated in most cases since only wages/revenue will be taxed.
By design, to achieve optimal efficiency, a skeleton government should have a maximum of 15% total tax for federal, state, and city combined. Voters can decide how the maximum limit of 15% may be divided (e.g., 4% federal, 5% state, 6% city).
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