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Skeleton Government
Structure
A skeleton government consists of the nation's departments that are scaled-down versions of themselves (or "bare bones") when considering the minimal services that they provide.
Advantages
The primary advantage of a skeleton government is that it allows for an extremely low federal tax rate. On average, a flat 5% 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 as well.
A skeleton government will only tax wages and nearly all other forms of taxation will be eliminated. The gift tax, estate tax, capital gains tax, etc. will no longer occur. Gambling and lottery winnings become tax-free as well as any tip income received from customers. All retirement plans become tax-free though pretax contributions will no longer be permitted to ensure a steady flow of income for the government.
Since only wages will be taxed (or revenue for businesses), the need to file taxes at the end of the year will no longer be necessary. 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 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.). Equal rights is an important principle for every nation and it should be reflected in their tax code as well.
Further Considerations
A skeleton government will also adopt a project-oriented, or P-series, government bond system. Rather than an open-ended fund that encompasses all government programs, every project will have its own separate 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). A project-oriented bond will also allow the general public to have greater discretion on deciding which projects should be funded compared to others regarding their ethics considerations.
For example, voters may approve of a new project for renewable energy (e.g., wind or solar power) to replace fossil fuel dependency. A new P-numbered bond will be assigned to the project that will be funded entirely by private investment. The role of government will only be to initiate the project, facilitate public funding, and assist with its 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 if any.
In order to achieve a skeleton government's minimal taxation policy, government spending would have to be reduced in all areas. A low 5% tax rate may also require the active military force to be replaced with a volunteer-based civilian force (much like Minutemen of colonial times). In this case, the defense budget would primarily be used for maintaining special/elite forces while a smaller portion used for volunteer training camps. In any given year, however, taxes may be temporarily raised for weapon procurement whenever needed.
State and local-city governments will be reduced to their skeleton equivalents as well. State sales taxes and local property taxes would be eliminated in most cases since only wages/revenue will be taxed by the government.
By design, a skeleton government should have a maximum 15% total tax rate for federal, state, and city combined. Voters will decide how the maximum limit may be divided (e.g., 3% federal, 4% state, 8% city).
In order to accommodate this, government spending would have to be greatly reduced with some programs/services replaced with better alternatives. Listed on this website are examples on how to resolve government pension plans (c.f. Social Security), health care costs (c.f. Medical Insurance), outstanding debt issues (c.f. National Debt), costs on goods and services (c.f. Inflationary Tax), among others.
Entire programs may even be eliminated such as replacing the failed incarceration system that hasn't deterred crime for years 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).
For municipal cities, taxes need to be adjusted appropriately since everyday concerns are at the local level (e.g., police, fire, schools, road repair, garbage collection, etc.). Improvements may also be made for education both at the collegiate and K-12 grades which may no longer require government spending (c.f. Free College). Eliminating property taxes and workplace city taxes (the latter reflecting taxation without representation) may require federal/state taxes to be under their 5% maximums to allow for a greater portion of the total to be used for municipal city taxes.
Overall, there will be spending cuts across the board in order to accommodate a skeleton government's 15% maximum tax rate.
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