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Skeleton Government
Structure
A skeleton government consists of the various 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.
Instead of the current government bond system, a skeleton government will adopt a project-oriented, or P-series, bond structure. In other words, rather than an open-ended fund for all government projects, every project will have its own P-numbered bond that will enable better encapsulation among federal programs (e.g., no more dipping into a general fund that hides cost overruns, or siphoning funds meant for other projects). The public will also have greater discretion on deciding which projects should be funded compared to others.
For example, voters may approve 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 be to initiate the project, facilitate public funding, and assist with general management if necessary. 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, if any.
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 would be eliminated. The gift tax, estate tax, capital gains tax, etc., would no longer exist. Gambling and lottery winnings become tax-free as well as tips from customers. All retirement plans become tax-free though pretax contributions would no longer be offered.
Since only wages are taxed (and revenue for businesses), the need to file taxes at the end of the year 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 low 5% 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 smaller portion is used for training camps. Taxes may be temporarily raised for weapon procurement in a given year if needed.
State and local governments will likewise be reduced to their skeleton equivalents. The state sales tax and local property tax would be eliminated in most cases since only wages/revenue will be taxed.
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., 3% federal, 4% state, 8% city).
Government spending would have to be reduced to accommodate the nation's decision. For example, the primary expenditures in America all have cheaper alternatives to allow for a skeleton government's low tax rate (listed on this website). Government pension plans (c.f. Social Security), health care costs (c.f. Medical Insurance), national debt interest (c.f. National Debt), military spending (as noted above), even government purchases of goods/services may be reduced (c.f. Inflationary Tax).
For state/city budgets, further reductions will be necessary such as replacing the failed incarceration/prison system that hasn't deterred crime for centuries at both the federal/state level with a more effective punitive system (c.f. Eye-For-An-Eye Justice System). Or, impose an exile measure since criminals have failed to uphold the laws of the country (c.f. True Citizenship).
Local/city tax should be the highest ratio of the three since everyday needs are at the local level (e.g., police, fire, schools, water/sewer, road repair, garbage collection, etc.). Education both at the collegiate and K-12 grades may no longer need government funding (c.f. Free College). However, eliminating property taxes and workplace city taxes (the latter reflecting taxation without representation) will require federal/state taxes to be under their 5% maximums to allow for a greater portion to local tax rates.
Overall, there will be a multitude of spending reductions across the board for all branches of government to accommodate a skeleton government's 15% total tax rate.
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