By Ryan ChristianoMy proposal is stunning in its simplicity, yet radical in its result. Abolishing taxation has always been a romanticised, if not entirely realistic, ideal for some Americans who believe in their hearts that the income tax is immoral, contracts economic growth, and expands the government far beyond the constitutional boundaries intended by the Framing Generation.
What if the answer to ridding our nation of the income tax, and most other federal taxes, could be found in something known as a Sovereign Wealth Fund (SWF)? A Sovereign Wealth Fund, according to Wikipedia, is:
"a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments."
A Sovereign Wealth Fund already allows Alaskan citizens to be liberated from the burden of state income taxation. So I ask, why not create a national SWF, and use it as the major source of revenue for the federal government? Look at the estimated value of some of the world's Sovereign Wealth Fund's:
United Arab Emirates (Abu Dhabi Emirate)
ADIA
Abu Dhabi Investment Authority
$875 billion
Norway
GPF
Government Pension Fund of Norway
$391 billion
Government of Singapore Investment Corporation
$330 billion
Kuwait
Kuwait Investment Authority
$264.4 billion
Australia's is a non-commodity SWF (most likely the form a U.S. SWF would take) and it is worth an estimated $159.2 billion. Australia's SWF was only started several years ago, and continues to grow, diversified sufficiently enough to ensure a continuous revenue flow through good, and bad, global economic times alike.
The United States government could enjoy astounding and stable revenue through: excise taxes, corporate taxes, the federal government returning to its constitutional boundaries, cutting redundant federal spending, and, most importantly, through the creation of a federal Sovereign Wealth Fund. All without taking the hard earned income of the American citizen.
UPDATE Since the recent U.S. economic crisis, I have come to believe that this proposal is no longer viable. In recent months, SWF's globally have taken tremendous loses resulting from the worst economic collapse since The Great Depression.
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3 comments:
I like the idea...I would like to know more about it. I wonder if you have researched the downsides of such a plan? Could such a fund sustain our military? Would we also need to privatize social security? What about "untouchable" government blackholes like medicare?
Excellent points, Erik. One should always evaluate the downsides of any policy proposal. I've been studying this over the summer, by no means and economist, but social security would not necessarily have to be privatized. Congress could mandate that a certain percentage of the overall SWF earnings be set aside for government blackholes like Social Security, medicare etc.
I think you would agree that the privatization of social security is almsot inevitable in the yaers ahead anyway.
Defense spending could easily be mantained at current wartime levels if the government cut unecessary and redundant programs across the board, returning the government to within its constitutional boundaries, rather tan the enormous, bloated Leviathan we have today. One could also imagine a constitutional balanced budget amendment to ensure responsible fiscal discipline.
Lastly, I wouldn't propose abolishing all taxation. A single annual defense tax could be required, and of course excise taxes, state, local, and corporate taxation as I stated in the article would continue.
Is it even possible with our current national debt? How do we transition from income tax to this wealth fund? Does our massive debt make this more difficult?
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