Taxes, axes, and blackjacks

The flat tax payroll tax is actually a pretty good idea, if it can be said that any time a government forces you to pay them so they can give your money to someone else, is good. In that scenario, everyone pays the same percentage and that seems pretty fair. The only thing I can think of that is more fair is to have everyone pay the same amount. That would be truly fair.

Here is a better idea than a flat tax and much better than the system we have now, which penalizes each taxpayer for being productive. I’ll call this new system an “Equal Payment Tax” for want of a better name (economists may have a name for this idea already, but if so, I don’t know what it is). In this system the higher a person’s salary, the lower the percentage of tax they pay, but the amount they pay is the same as everyone else. Now what could be for fair than that? (BTW regressive/progressive are socialist descriptions of a tax, not a name for a particular type of tax). We should ask Ed Stephens about the name, he’ll know.

The system we now use is inherently unfair because it penalizes ability instead of rewarding it. Consider this: A judge earns (or at least is paid) $120,000 (One Hundred Twenty Thousand Dollars) per year. Currently he pays tax at a 9-percent rate for a total paid to the CNMI government of $10,800. Under the new flat tax proposal at 10 percent his new tax bill would be $12,000. Now look at a worker making $12,000 (Twelve Thousand Dollars) per year. His tax bill at 4 percent is only $480 and under a flat tax his payment would be $1,200. My question is…does the worker use the public roads only 10 percent as much as the judge? The library? The police or fire departments? The airport? The hospital? Obviously not. So why does the judge have to pay so much more than the worker for the same service? Socialism is the answer. Socialist principals of the able being enslaved and forced to care for the less able have crept into our tax system. More on that in a later column.

Let’s just have an objective third party determine how much the CNMI needs in annual income to provide essential services. Lets say that number is 250 million (250,000,000). Frankly I think it should be closer to 50 million (50,000,000) but lets use the higher number as an example. Of the 250M about 16 percent needs to come from the payroll tax so the government needs to collect $40 million from all workers combined. Now we just divide the restaurant bill by the number of eaters at the trough. Let’s say there are 35,000 workers; each would be billed $1,143 as their fair share of the tab. A case could be made that extremely low incomes should be exempted or maybe pay only a small fixed amount like $500, but why? If a guest worker can send thousands of dollars back the Philippines or China, why can’t they contribute a fair, equal share of the infrastructure and public services bill right here in the CNMI?

In the above example, the judge pays the same as the garbage collector who pays the same as the millionaire who pays the same as the policeman who pays the same as the garment worker and the government department secretary, etc. One man, one need, one use, one equal tax burden to pay the costs. Sure sounds simple and fair to me.

I’m going to take a wild guess and say that those making $11,430 and more in the above example are going to like the idea while it won’t be too popular with those earning less. But hey, popularity when it comes to taxes is not the defining factor. If you could all vote on it, there would be no taxes at all…a very good idea indeed.

In summary, a flat tax is better than what we have now. An Equal Payment Tax is better yet.

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Remember though, this is only a temporary measure. Temporary taxes are like partial pregnancies…very rare. Remember the temporary U.S. Income Tax of 1913 as an example. Not to worry, it will all be over before you can say “root canal.” If you are holding your breath, take my advice and call 911.

Frankly, I think it’s better to ante up with a known, precalculated tax that is the same percentage for all, than to have the specter of governmental insolvency hanging over our heads every day. Also frankly, we could get along without any of these taxes if we would just take a budgetary meat axe to the CNMI government and whack about 50 percent off (A case could be made for 85 percent) or legalize casino gambling.

Speaking of axes

Lets look at across the board pay reductions. Gov. Benigno R. Fitial is doing a great job recognizing our financial plight. His heart is in the right place, knowing he must reduce cost of government to a manageable, affordable level. But political expediency is causing him to not go far enough down the road to responsible spending and solvency.

As an example he could, with the wave of the executive pen, simply get rid of several non-necessary departments lock stock and barrel. This would save many millions more than the 10-percent pay cuts without the loss of motivation and moral that payroll cuts will cause. I won’t be so blasé as to mention directly which departments, divisions, and diversions could use the axe, but I bet each of you readers has a pretty good idea of what “essential services” really are. If I delineated them now I would aggravate women, youth, adults, men, students, various ethnicities, and just about everybody else. What is needed is to take a big blue pencil to the LONG list of government departments and other public agencies and just eliminate a lot them. It’s like amputating an arm that has gangrene. Better to lose the arm, than to die bloated like a beached whale. (I think I mixed that metaphor). Bad mental vision, but I think you get the idea.

As a matter of SOP most outfits (like Ford Motor Company) facing a monetary crisis would not cut wages across the board, they would cut deadwood from its organization instead. Goodness knows there is a lot of it in the CNMI government. We have 6,000 people on the payroll to administer governance to 70,000 people (including themselves)! That is the population size of a small town. We could do the job well with say 200 people leaving 5,800 as unnecessary. But if we just cut out 2,000 unessential hangers on and left 4,000 to carry on the good fight, we would still have plenty of largesse to spread around and the government’s finances would return to solvency pretty darned quick.

Now what to do with those 2,000 ex government workers? We could 1. Good—Export them to the uninhabited Northern Islands to act as pioneers and homesteaders. 2. Better—We could retrain all as miners and fishermen and begin reaping the natural harvest of our unused natural resources. 3. Best—We could retrain them all as casino workers for the upcoming new casinos on Tinian, or better yet pass the legislation to open full-blown casinos right here on Saipan. What a great use for the Fiesta Mall. A casino workers school…people could come from all over the world to learn to deal, manage and service casino customers. We could put our indigenous population to work at high paying, upwardly mobile jobs in an industry that pays enough taxes out of petty cash to free the rest of us from paying any taxes at all. Luckily, that sounds like a subject for another time. Okay, all for now.

Quote of the week: “One of the annoying things about believing in free will and individual responsibility is the difficulty of finding somebody to blame your problems on. And when you do find somebody, it’s remarkable how often his picture turns up on your driver’s license.” – P.J. O’Rourke.

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Bruce A. Bateman writes Sour Grapes when the moon is full and the mood strikes. Stay tuned for each exciting episode of: Sour Grapes. Yes, he is opinionated. email to: bbateman@pticom.com