The Simplest Fix

Greg Ordy, June 1999

When considering the solution to a complex problem, it's often insightful to look for the simplest and smallest change that will make the largest improvement. In another essay (Institutional Imbalance), I have put forth my position that our government institutions have grown out of control while at the same time other important institutions are shrinking. In order to achieve a better balance, the government institutions must give up power while at the same time other institutions must claim the job that they do best.

The fuel that government uses to make problems worse is money, money collected through taxes. Taxes are not some voluntary contribution we make to fund our utopia. They are demanded of us, and we will go to jail unless we pay what is due. High taxes have a second consequence. In addition to what government does wrong with our money, we are denied the opportunity to do what is right with it. A dollar spent one way cannot be spent in another.

The government has been able to get away with the current situation because it has been successful at hiding tax collection. Through automatic deduction, and the involvement of the employer in a number of aspects of taxation, it is all to easy to view taxes as a once a year event, every April 15th. Worse than that, if a taxpayer receives a refund, they feel as if they are somehow ahead. This is such a hollow victory, given what is taken out every other day of the year.

If I could change only one thing, whatever a thing is, I would remove all forms of automatic tax withholding. Workers would be paid the full face amount of their work. It would be the worker's responsibility to make payments to the various agencies on a monthly or quarterly basis. This would include federal tax, state tax,  local tax, Social Security tax, Medicare, and whatever other taxes/fees are generated as a result of working. This probably includes Worker's Compensation, health insurance premiums, and Unemployment Insurance premiums.

This fix could be extended to include as many taxes as possible. Sales taxes come to mind. Rather than automatically collecting taxes at the point of sale, accumulate a tab which is paid periodically.

I would predict that after only a few months of this change, there would be quite a revolution in government.


While I am on this subject, let me suggest another institutional rebalancing that is entirely within the government sector, and related to income taxes.

Not only are the current income tax rates too high, but the distribution across the levels of government is inverted. Income taxes are usually paid to the local, state, and federal branches of government. While rates vary, and there are exceptions, I believe that rates tend to be highest at the federal level, and descend through state, down to local. Please note that I am talking about incomes taxes. Other taxes, such as property tax, may influence the ranking if one were to consider total taxes paid. Blending in Social Security taxes and sales taxes may shift the government branch that takes the most amount of dollars. All we know for sure is that the number of tax dollars goes up and up.

Many middle class families have federal tax rates around 25 percent, state rates around 5 percent, and local rates around 2 percent.

Let me propose that we do not change the amount of dollars taken as income tax. In other words, keep the total income tax revenue constant. For those concerned that the government cannot function with one less dollar, let's keep the dollars constant. I am suggesting, however, that we shift the balance towards local, and away from federal.

Let's bring as many of the existing functions of government as close to the people paying the bills as possible.This is in keeping with the spirit of the Tenth Amendment to the U.S. Constitution. It would also allow states and local areas to experiment with government variations that would serve as examples for the rest of the country. Liberal/socialist areas can increase taxes until they have enough money to fund their vision of utopia. Perhaps some areas will slash taxes, and adopt a more conservative approach. I suspect that it would not take many years for the strengths of each approach to emerge. Citizens in large disagreement with their local policies can simply move to a better location. If the federal government is removed from areas such as education, health care, retirement, and everything but essential federal functions, the shift in taxes will follow the shift in responsibility from federal down to state and local.


Finally, let me suggest one more simple fix. Currently, the president is elected by receiving a majority of votes in the Electoral College. This is not the same as the popular vote. It is a state by state winner take all artifact that some have proposed scrapping. Fortunately, we have avoided the strange case of having a president elected who did not receive a plurality of the popular vote.

But we have had, in the case of President Clinton, a person elected president who did not receive a majority of the popular vote. To be very clear about it, President Clinton clearly won the 1992 election only because the more conservative vote was split between Mr. Bush and Mr. Perot. This case is not unique to the presidential elections of the 90's. For example, the elections of 1960 and 1968 had such a non-majority vote distribution.

In this suggested fix, I would adopt a popular vote/run-off system where a candidate must receive a majority of the popular vote in order to be elected president. Clearly, it is impossible to receive less than a majority of the popular vote unless there are more than two candidates. So, the real question becomes what should be the impact of a third party candidate on the outcome of a presidential election?

First of all, the current system discourages the formation of new parties. I find that in and of itself to be a negative. If a new party is close to but yet different from an existing party, a vote for the new party will splinter the vote, opening the election door for candidates whose only strength is that their party is held together like glue. Frankly, this is a description of the current Democratic Party. Like the Communist Party of the former Soviet Union, their members tend to care far more for their party than for their country. They will deliver approximately 40 percent of the voters from now through the foreseeable future. But that is not a majority. In a democracy the majority should govern, not the plurality.

When a person is confronted with so-called splintering the vote, they are torn between voting their conscience and voting in order to prevent an undesirable candidate from taking office - a candidate who has a plurality, but not a majority. I see no reason to force such a conflict on the voter.  A citizen should vote for the candidate that supports their position, to the greatest extent that the running candidates support their position. Should they not be in the top two candidates, then the candidate is clearly not even close to a majority. Yet, the citizen voted their conscience. Then a second election between the top two candidates will allow the voter to again ask themselves which candidate best supports their position. This suggested type of system is based upon voters always selecting their preferred choice. It is less vulnerable to manipulation by political parties.

Much time is spent discussing the negative impact of so-called special interests. It's time to realize that some of the most harmful and powerful special interests are political parties.Consider this: the political parties are not defined or recognized by the Constitution. They are private enterprises. Yet the machinery of government is pulled out to run primary elections for these private groups. What other special interests have so effectively molded government to their needs?

Copyright (c) 1999, Greg Ordy

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