Why Charity

''Setting aside one fifth of a nation's budget for charity should not be done lightly. This is what the Constitutional Limit on the Amount and Method of Public Internal Taxation (CLAMPIT) does. This gives the rationale for doing so. ''

In necessariis unitas, in dubiis libertas, in omnibus caritas - In necessary things unity, in doubtful things liberty, in all things charity

Initially, the idea of limiting taxation emerged from a frustration the author had with the constantly escalating charges from monopolies, particularly utilities and taxes. As a mortgage was retired over the years, the fixed costs of annual taxation, power, telephone and new charges grew to take its place. The "reasons" are many and we will discuss some of them, but it is most important to realize that there is not yet any effective control because the ratio of costs always rises. The proliferation of taxes and so-called "surcharges" from government created monopolies and private businesses became more than the basic and simple charges of the past. Water and telephone bills simply grew from a post card in the sixties to page after page of piggy-back charges that had little to do with the product or service purchased by the nineties. Sales tax went from two or three percent to seven percent and more. "911" charges appeared on everyone's telephone bill. Environmental fees proliferated on almost every invoice as more and more businesses jumped on the gobbledygook "pass-through" to add charges camouflaged to the public as taxes. Most people falsely believe that the "FCC charges" iterated on a telephone bill is a tax or that the "911" charges pay for the emergency response facilities. Basic tax grew from 1 or two percent of all national purchases in the year 1900 to over thirty-four percent by the year 2000.

The idea of a hard arithmetic limit on tax was Proposition 13 in California, but it still permitted their local government to expand it by one percent per year (perhaps as a compromise). It was a public initiative and did not originate in the California legislature.

Deductions, Credits, and other Follies
Most people believe they get something from tax credits and deductions despite hard evidence to the contrary. A three thousand dollar "deduction" sounds a lot more than the paltry amount of real money it truly represents. This silly complication of rebates even found its way into commercial enterprise, even though a grade school kid can figure out that these schemes are scams. They are motivated on the somewhat underhanded knowledge that most people won't jump through the hoop of the deliberate hassle introduced to obtain a rebate, thus an advertised price can be less than the real revenue received. This is very obvious in that if every purchaser turned in a rebate, it would result in the same revenue but with the added cost of processing the rebate. The price the consumer would pay would be higher if no other reason was used than that sales tax is paid on the larger, "pre-rebate" price. Nevertheless, the public bites. Absurd "cash back" accounts of credit cards and "special privilege" membership shopping make people feel they were getting a better deal by cutting coupons, mailing in "proof of purchase" to nondescript "fulfillment centers" and waiting three months (and in many cases forever) to get their rebate check. One could see a sharp-dealing marketing type making the internal pitch to use "funny money" instead of "real dough" in fixing advertised prices, no doubt citing that the average bloke won't bother to copy down a sixteen digit serial number and make a copy of all the forms, cutting it down to the quick by summing up that only ten cents on the dollar will ever have to be refunded. The simple question says it all: If everyone sent in for the rebate, wouldn't the company get less money per consumer dollar spent, plus have the added expense to the company to pay for the hassle of the rebate? Certainly. So it is a "legal" bait and switch.

This is the same "smoke and mirror" practice that was earlier pioneered and used by government in its management of taxation. Whether intentional or not, the net effect is that each member of the public thinks they've got an inside track and is getting a better deal due to their diligence while the complexity grows and grows. H&R Block and others metaphorically are the "fulfillment centers" and the IRS sorts through devices of their own making, punishing the public for lack of diligence.

No one benefits from this activity, because nothing worthwhile is produced by doing it.

But neither is anything produced by doing a crossword puzzle or playing solitaire. The difference, as Steve Forbes alluded when he cited that over six billion man-hours were expended annually in preparing federal income tax alone, is that the government makes this nonsense compulsory. Yet, there is a resistance to change that has been well-conditioned in the public at large: They don't want to lose a "deduction" or a perceived advantage of being an institution classified as a charity that has special status. I found that this perception was so entrenched since the awful 1913 amendment was passed, that they salivate with only the bell and no food present.

Creeping limits
At first, I thought a limit could be imposed by simply capping all taxing authorities with Adam Smith's truism that no tax should exceed ten percent (because it invited bootlegging and was otherwise too onerous). I toyed with the idea that we could let the local government set its own tax, likewise the state and federal government and leave the autonomy in place, capping the sum of all of them at ten percent. But it became obvious that what would happen is what has happened now, and that is the federal government would take it all, leaving the state and local with the dregs. So then I tried to fix the scheme that each would only get three percent, until it was pointed out in some forum years back that all of the greedy legislators would max it out very quickly, a phenomena known as "tax creep," which is both descriptive of the result and to each member of the body approving it.

"Sales" Taxes
What is a sales tax? The definition varies, but typically it is a limited gross receipts tax added on to the price of goods you buy at the retail level. Most states apply sales taxes to only new goods and exclude services. Nearly all states exempt middlemen by issuing an "exemption" certificate. Ostensibly, the reason for the exemption certificates for middlemen is to avoid "tax on tax" which is a spin fiction since any product that uses any labor that is taxed has that portion of the cost embedded in the goods that is again taxed, which is "tax on tax." Any product that you buy always has some component of compounded tax, whether or not it is identified.

Most sales taxes have historically been below ten percent, have a uniform rate, and are always computed on the gross value of the transaction. Because they are both low in rate and ubiquitous, they are easy to administer.

One drawback to a sales tax is it invites taxation without representation since those levying the tax often target so-called "transients" who do not have standing (cannot vote or petition) before those that impose the tax. By selectively applying sales taxes, some states have increased the load on visitors (hotel bed taxes, rental car taxes, etc.) since these are generally not used by their local residents. The folly in this strategy is that all local governments do it, thereby disenfranchising all voters from arguing the case against the tax.

Now, it's a funny thing about a transaction tax, or sales tax: It produces a lot more money than an income tax per percent of the levy. This is well known to city planners. In fact, Dartmouth cites a rule of thumb that a one percent sales tax produces the same amount of revenue as a five percent payroll income tax. The reasons are many, but the chief ones are that the sales tax is ubiquitous and escapes most deductions, it turns over multiple times per year and it is off gross receipts instead of "income" which is computed after expenses. This is not merely theory, it has been repeatedly empirically measured. Initially, sales taxes were only levied on retail sale of goods in the jurisdiction (state or local), but state bureaucrats have recently expanded it to include some services and even interstate purchases if the company had any brick and mortar "nexus" in the jurisdiction.

There are even proposals to increase the sales tax to replace property taxes at the state level. This is attractive to some because it shifts the burden to transient population; others argue that it destroys accountability. I've concluded that the only tax needed is the 1USATax. Read on and you'll see why this is so.

Though I thought a very simple add-on three element add on to whatever net price was being charged, it quickly became too complicated, because it looked like a three-tier national, state and local sales tax.

Why There Has to be a Limit to Taxes
It became clear that all taxes and all fees had to be limited if the concept of a tax limit was to work. Else, we would just exchange the word "tax" for the word "fee" and end up with the same bloated government charging "fees" instead of "taxes." This gelled down to the simple statement that abolished all taxing authority of all government authorities, except as provided in the amendment. It was obvious this would be a huge and very bitter pill for local and state governments to swallow, i. e., to give up their power to levy taxes. So it was important to educate them that in fact they already have. The federal government gets the first bite of the apple, and its bite is ten times larger than the state and local. So the idea came to me that it would be solved by just fixing the ratio of distribution such that only the federal government could set a tax rate (not because they are any better than any state, but because there was advantage in making the tax nationally uniform), but their ratio would be permanently set to one third of the revenue, with the state and local government each also getting one third. Since the ratio was constitutionally fixed, it prevented the federal government from taking all of the revenue. The scheme was to have taxation piggyback on commercial clearings and let the public determine the value and the government fix the rate, clamped to no more than ten percent and expanding the application to all of the economy (wholesale, jobber, producer, retail and consumer).

This solved the absolute limit of taxation, since it fixed the ratio of government size to the economy and patched the hole of "fees" replacing "taxes." But it wasn't enough (see below).

One Rate does not Fit All
At first, the 1USATax was envisioned to be a simple, fixed percentage for all goods and services, just like the overly-simplistic retail sales tax schemes advanced by others, but it differed in that it applied to all sales of any kind, thereby eliminating the need to violate Economics 101 and Adam's Smith's admonition not to have any tax higher than ten percent. It also was the only tax, combining federal, state and local taxes to a simple add on fee.

The fact is that a uniform transaction tax imposes a much heavier burden on commodities and necessaries than it does for luxuries, since it does not temper inventory turnover or markup. A jug of milk typically stays on the shelf a few days and has a very low markup; a diamond ring several months and has a relatively high markup. Though the concept of "income" (which, in reality is simply "change in wealth" as opposed to wealth) appears to be a solution that selectively taxes profit, it has evolved to such a practice that the working stiff pays well over 40 percent in taxes and the average Fortune 500 less than four to six percent of gross receipts. You can check this out yourself, just take any public corporation's "gross reserve for taxes" and divide it by the company's "gross sales"; compare this to the total tax bite of a salaried or hourly paid worker to the total taxes paid. The reasons, again, are many, but the chief reason is the 122,000 pages that modify what the word "income" means in the IRS code. Suffice it to say that the corporate income is taken from the bottom of the deck and the salaried income is take off the top of the deck.

Rates by Product
So, I considered the idea of making the tax percentage variable by product, particularly for necessaries, to avoid the hideous "to each according to need" rebate programs that always appeared in other transaction type tax plans. I had been convinced by an old friend and mentor Dr. Jack Pingrey much earlier that there were only three ways to separate responsibility for sales: By product (what), by market (who) or by territory (where) a sale occurred. Thus, the public could force the legislature to keep baby milk tax low and acquiesce to let them jack up taxes on sins. Though it would never satisfy those that profit from a sin tax levy, they could at least recognize that the cure would become worse than the disease if no limit was imposed and the camel had to be prevented from getting its nose under the tent. This would use public opinion to hold the greedy legislature accountable, but would it by itself stop tax creep?

See-Saw Tax Creep: Tax the Rich...Tax the Poor
Experience has shown otherwise. Sales taxes have escalated from about two or three percent forty years ago to more than double that amount and the Sixteenth amendment (the income tax), which was never envisioned to be even applied to more than one percent of the richest and no more than four percent of income, has steadily expanded to ridiculous levels. The income tax "fork lift filing" has been daisy-chained into most states as well as selective taxation for college tuition, burying the American public in a growing mass of nonsense paperwork. The public has suffered through this "divide and conquer" strategy of taxing Peter to reward Paul year after year, such that the only one that wins is government. Not only have the rates of taxation gone up, but far worse, the number of taxes have grown as well, fueled by perhaps well-meaning but naive academics and journalists who have never seen a new tax they didn't like.

A housewife in Georgia now pays over seven percent tax to buy a jug of milk. Yet the recent $69 billion dollar acquisition of BellSouth by AT&T was not a taxable transaction. Ironically, talk show zealots like Neal Boortz hawking the so-called FairTax bleat that the rich pay most of the taxes. (AT&T simultaneously announced that it would drop ten thousand jobs moving others to India.) The public thinks AT&T pays 34% taxes, so seven percent on milk seems like a deal. Of course, the reverse is true. But the point here is that the tax creep is achieved on the general public and public vigilance is not sufficient to keep if from occurring.

Cap the Creeps
I was not interested in increasing the tax rate on AT&T or General Electric. I was more concerned with controlling the tax rate for the average citizen, because robbing the rich would do nothing about lessening the burden on the mother paying too much tax on milk, or the young couple starting out with a house mortgage and college loans with more tax burden than any American in history and a bleak future of competing with a global labor pool that had no debt, no benefits and little or no taxes. The concept of the limit to protect the government bite on the poorest would do more to ensure that the former sacred cows would be reexamined by greedy legislatures when they couldn't levy any more on the little guys and it would take care of itself. I believed that any honest company could live with a cap of ten percent, provided that their competition had to do the same. But a ten percent gross receipts tax would leave the government with a whopping fifty percent of the GDNP, which would stifle the economy. Tax creep had to be prevented and it was obvious leaving the fox to look after the chickens would not work, even if the chickens were watching too.

Sunset on Changes
It is important to recognize that a tax exclusion is worth a lot of money, particularly with the present income tax system, thus it invited corruption from deep pockets. The bloated income tax code has lots of them and, because of it, most of them are rendered useless by additions that nullify them. Accountants and bureaucrats are the only winners.

So I was faced with making a modification that would center the tax at around five percent of gross receipts, yet guarantee that no citizen would ever pay more than ten percent on any transaction. This would yield a net government to GDNP of around twenty-five percent, admittedly higher than the growth rate idealized target of 20.9 percent. The idea of a progressive income tax was sold to an ignorant public, particularly labor, since it sounded like Robin Hood: Rob from the rich and give to the poor. The fact is that income tax does not tax wealth. It taxes change of wealth. By careful manipulation, a wealthy person can stay wealthy without "income" as Joe Sixpack knows it. Indeed, the progressive income tax works to keep poor people poor and rich people rich. The tax rate is made progressively higher to get rich, and the loss carry forwards make it easier to stay rich. This conforms to what Senator Simpson quipped as the real measure of those people responsible for this mess, that is that "The only thing they like better than how things are, is the way things were." This is a mathematical fact, not any opinion. For other reasons that others have covered well, the income tax needs to be thrown out, but the progressive damper seemed to have promise. So I hit upon the idea of combining the "sunset law" with the "progressive rate" to control tax creep. To work, it had to be applied to those creeps responsible for tax creep. What was devised is a center tax rate of five percent (which would yield a government percentage of about 25 percent of GDNP), though still too high for some, a healthy improvement from the last measured 34.6% it is now. Under very dire circumstances, it would be possible to expand the tax to ten percent, but it would require 60 percent of the members of both houses of Congress to annually approve it.

This wasn't much change. Though a bit complex, it only applied to 535 people, the Senate and House of Representatives. Only the federal legislature could approve a tax rate, and it would only take fifty percent plus one to approve a rate of five percent. For a rate that was lower (such as a favor to a deep pocket constituent) or a rate that was higher (such as a divide and conquer sin tax), an additional plurality had to be in favor to approve it. Since a constitutional amendment was already very high, I settled on a "two for one" plurality for each percent of difference. Then I added a sunset temporal provision, that the difference had to be re-approved annually. Else, the difference would decrement by one percent per year until it was again five percent. The actual words are in the amendment, but the intent was to prevent a lame duck congress from approving a perpetual loophole as was done in the 122,000 page IRS code. Still, this was not enough because lawyers and legislators are expert at marrying unnatural packages wrapped up in packages of the flag, motherhood and apple pie. But it was a good start, in that it would require a sixty percent majority of Congress to exempt anyone from taxes or to impose a ten percent tax on anything. A "do-nothing Congress" would have all taxes heading for the average of five percent.

As a final surety, the total tax rate had to average five percent though some product/services could be higher and others lower.

To Prevent Unfairness One Divide, the Other Choose
Our current tax structure is unfair. It exempts those earlier in the distribution process under the guise that doing so will keep prices low. It turns producers and distributors into "tax collectors" and consumers only into "tax payers." This "Divide and Conquer" tax strategy favors big business monopolies and penalizes local producers. So, merely limiting the average tax wasn't enough, because Congress could raise taxes and escape any immediate public wrath by levying higher taxes on the masses and exempting powerful businesses, hiding it under some guise of efficiency. So I hit on the idea of insisting that no tax could be defined by market (who), but only by product or service (what). Thus, if you sold pork, and the tax on pork was three percent, then every entity that sold pork paid the three percent tax. It was also important that Congress not be permitted to take a poison pill by bundling approvals in a complex "omnibus" change, thus forcing an "all or nothing" vote on taxes. Therefore, provisions were made that every tax category had to be approved separately, that only whole percentages could be declared, and that they could only be from zero to ten percent. To be absolutely sure that this was not adulterated, language was added that Congress could not exempt any territory, market, institution or government from any such tax declared. This meant if Jane Doe had to pay seven percent tax on milk, so did everyone else, including the dairy, the commodity market, the school, the church, the dairy, the super market and the qualified investor speculating in milk. I realized that the commodity market (which currently pays no transaction tax at all) and the securities market (which likewise pays no transaction tax of any significance) would not like paying any tax and would bleat loudly in a variety of ways. But they could be soothed by the fact that they would no longer have any other tax and would be protected with a healthy alliance with the consumer. Likewise, the consumer would be protected by forming powerful business alliances that wanted to keep taxes as low as possible for their products. This check and balance would tend to keep taxes low on necessaries and keep the public vigilant.

War Clauses?
In the event of a natural disaster or war, Congress could raise tax rates, but this could not escape public scrutiny and it would be only temporal. The federal government would only get one-fifth of the revenue. No entity could be taxed more than ten percent and all direct competitors would have to share the same burden, thus the public could elect to ignore congressional shenanigans if it wished.

Apportioned Taxes
Another feature of the 1USATax was added to make sure the local and state government got their share of the tax money its citizens earned. Since the transfer agent (bank, credit card company or other regulated transfer agent) had to know both the name and address of both the payee and the seller, this made it a snap to distribute the proceeds to each account as ten percent without requiring any additional information. To illustrate, if a purchase was made by a citizen in Kansas from another citizen in California, the state of California would get one half the state revenue allocation and the state of Kansas would get the other half; likewise for the local governments. The ratio was fixed, thus silly varying state sales taxes and such were eliminated. (It should be noted that there isn't any significant difference in the amount of sales tax; they are simply different, or could be different, thus a needless complexity).

This was to make sure that the tax revenue money did not flow first through the Federal government as it does now and could be tampered with by bureaucrats. The Constitutional amendment states that the payment must be "directly" paid to all funds. What this means is that the local, state, charity and individual funds are paid directly by the transfer agent. It is up to local citizens to hold their local government responsible to how their allocation of funds will be spent, but the ratio they receive of what their citizens are taxed is constant. This is far simpler than the current sales tax quagmire, which is perpetually ignored by other tax plans. This also simplifies auditing, because the fixed ratios must be kept in balance. It also puts the accounting in the hands of those that are good at accounting that are already continuously audited. Moreover, the state revenues must equal the local revenues which must equal the federal revenues, etc., so it is batch balanced.

It should be noted that the sales tax as now implemented cannot be properly handled by popular accounting software, merely because it has no means to determine the local taxing authority (they only resolve to the zip code). This problem is made moot for the ClampIt amendment, because all local tax rates are the same.

Charity Account
But people still love the idea of "deduction for charity," particularly those that are IRS-designated charities. There was the ongoing flap about marriage and gays and civil rights which smacked of yet another red herring introduced to keep the public distracted from the real stealing going on, that I didn't want to get into. So, at least at first, I added another category of "charity" for the sole purpose of satisfying what I believed to be an unneeded financial category just to satiate public ignorance. But this charity account, though intended initially to be just a concession to the brain-washed thinking of building in deductions, turned out to be even better than originally thought. First, it side-stepped the emotionally charged debate about whether or not the government should give special treatment to charities. The recent bidding war that measured political capital in terms of how much of the public treasury could be given away to convince the world that our heart were in the right place to help various disaster victims seemed to be on a collision course with fiscal responsibility. Too, foreign aid, funding for NASA, federal assistance to "faith-based charities" looked like another opportunity to add more government accounts to "manage" what they have never managed before. So, the charity account simply replaced these government financed boondoggles with a compulsory contribution that had to be spent. How it was to be spent had only one restriction, that a charity was a gift to anyone other than oneself.

Choose Your Own Charities
The scheme was simple: A citizen need only tell their transfer agent what percentage of their charity fund was to be paid to whom; by default, a government list was substituted if a citizen did not care as determined by their local, state and federal representatives. But a wife could give her charity fund to her husband, or children, or church. It was better than a "deduction," it was a checkoff. The charity fund could not ever be encumbered and was always an amount that could be changed at the citizen's election. This would still leave corporations with funds that could be farmed by fund-seekers and institutions like the Red Cross and Salvation Army with a hedge. The money must be distributed in one business day; it cannot be "saved."

Congress Donated my Money to What?
Thus the Charity fund replaces the Congress for giving money away. It makes sure that the fund is held proportional to the economy. It gives Congress an excuse to dodge foreign aid requests and yet be fiscally responsible. It makes sure that those countries and charities that receive the funds realize that the very public that is giving it can take it away in an instant. This further insures that the National Academy of the Arts would not likely support art the public despises, such the infamous Crucifix in a jar of urine. The Charity fund could be construed as a statement of the American people that says "we have committed to giving away one fifth of our tax revenues to those we feel are the most needy."

Crime and Punishment Should Not Enrich Governments
It also became a vehicle to stop abuse of government office to extract money from the public by imposing fines. For sure, crimes and misdemeanors need to be punished, but the funds shouldn't enrich the prosecutors. The CLAMPIT amendment requires that government be "exclusively" funded from the 1USATax, which means it cannot impose fees masquerading as taxes, nor fines as a source of revenue. Thus, all fines are assigned to the charity fund for national distribution to charities that each and every citizen has independently predeclared. This ensures that local, state and federal governments do not enrich themselves by imposing fines on the public. Thus, a two hundred dollar speeding fine will not go to paneling the local magistrate's office; instead, it will be Assigned National Distribution (the "AND" account). I've been the victim of speed traps and know too well the real economics behind traffic light cameras. If the local government didn't get to keep the money, do you think they would still hassle the public? We know the answer.

Power to the Person
The phrasing of the charity account in the CLAMPIT amendment leaves the determination of what a charity is to the people, not to the government. The reason is that the government is fickle about what is politically correct and has a tendency to throw obstacles toward any opposition.

Campaign Finance Reform
Then there was the political flap about campaign finance reform that surfaced. I then noted that this Charity account can also satisfy the public funding of elections, though I do not believe that it alone would cure the purchase of legislators by deep pockets. The CLAMPIT amendment would because it would go a long way to stop a singular focus of most tax money in Washington. Nevertheless, citizens can designate a portion of their charity to a political party, or a child, a friend, an institution, or even a foreign government, but they cannot give the money to themselves. The government does not otherwise make a designation of who a charity is.

Charity Reconstructed
This also solves the dilemma of excusing certain groups of people from tax.

This went a long way to psychologically replacing the void that would occur from removal of the "deduction" mentality of the income tax. It did not prevent anyone from giving more to charity or to "pledge" other money to charities or to "tithe" in other ways. It did not compel any religion, nor outlaw it. It treated all citizens equally under the law. Finally, it eliminated a knee-jerk "gift" from a legislative body ending up being a prime debt transferred to the back of a citizen that was just getting by.

Charity Watch
Another salient benefit of these "citizen FISCAL funds" was that a local government had to recognize its obligation to each citizen to get paid. Though this is not explicitly stated in the CLAMPIT amendment, it is likely that a citizen that cannot vote and is not registered will not contribute funds to their local government. This could put a refreshing change of thinking on who really benefits from a "get out to vote" campaign. It would remind local governments that citizens are financially valuable. It would make local governments vie for keeping their citizens and keeping them happy.

Individual Security Fund
We all know that health care and social security have been selectively loaded on the back of American domestic labor. This is wrong, because the economy has bypassed labor and left it with all of the expense. Yet, social security and health care is a fundamental responsibility of every member of society. To solve this problem, CLAMPIT designated a full one fifth of all tax revenues to an Individual fiscal account; this was exclusively set aside for social security retirement and essential health care. Admittedly, details of this fund still have to be worked out, but it is empirically known that the amount set aside is sufficient. New Zealand, for example, has financed their health care and retirement from a 1.5% gross receipts fund which is only levied on 70 percent of its economy, their financial community was left exempt. They barred civil tort actions on accidents to stop "jackpot justice" suits and furnish all essential health care, hospitals and emergency care for free to all New Zealanders. Elective medical care is still done privately and with private insurers. It has been financially solvent for the past six years. Thus, this amounts to about a 5% ratio of New Zealand's GDP, since it excludes gross receipts on the financial community.

No Exceptions
There is, in my opinion, no reason to exempt the financial community and very good reason to include them at the same tax level as anyone else. This, coupled with the one-fifth set aside, provides a more than adequate budget for essential individual heath care and social security. Social security is touted as "going broke" under current management, owing mainly to the fact that less than thirty percent of the economy (labor) pays for it. It is a regressive tax, currently capped so that the statistics state that more participate, but wealthy corporations have no set aside on a prorated basis, as does New Zealand, in the example given. So a foreign produced microwave oven bears no tax burden for social security, national defense, or health care, even though domestic jobs are displaced that are required by law to carry the burden when these items are imported. This is unfair and contributes to the imbalance of labor and domestic production. The CLAMPIT amendment greatly expands the base of social security to the total U. S. economy, not just the artificially capped single level on labor. This expansion of the base enables the percentage to be low. It pegs, generally speaking, health care and social security to roughly five percent of GDNP and it is supplemented by the Charity Fund. But it is not onerous, in that the tax on foreign imports is precisely the same as domestic.

Social Security and Health Care The Ant and the Grasshopper
Nemo dat quod non habet - No one gives what he does not have

Even though CLAMPIT provides social security and health care with an adequate budget, running social security and health care will be a tall order because it is rife with entrenched corruption. There are powerful lobbies of insurers, health providers, pharmaceutical companies, hospitals and academics that will resist putting health care on a budget. Some of these distrust any reform, however well-intentioned. Others are thoroughly corrupt and have manipulated capital and credential barriers to form obstacles to controlling costs. The first step is to establish a budget, else there is nothing to evaluate the management of this task against. We cannot establish a national budget for immortality for we don't know how to achieve it. Thus, it can't be "whatever it takes" because it will most certainly take all we have. This budget is very important to keep it from being commingled with other government functions. It is an individual budget because it is an obligation of each and every one of us to each of and every one of us. Social security is as old as the ant and the grasshopper and it is prudent that the proper amount be set aside. The near thirty percent tax (17.5 percent employee plus employer contribution) is absurd and nothing but "smoke and mirrors" and creative accounting. If the typical worker works for 45 years before retirement and pays nearly one fourth to one third of their income into the fund, yet receives only a third of their income for 15 years as benefit annually upon retirement, it doesn't take a rocket scientist to figure out that something is drastically wrong.

The United States does a rotten job of governing health care and the costs are out of control. Not only is most of the population now not covered with adequate health insurance, but what citizens that do have health insurance pay a steadily increasing ratio of the expense and the uncovered medical cost has been hidden in low ratio debt. American prices for medical care are among the highest in the world. Our doctors are paid more than any in the world. Their expenses are also the highest in the world. The cost of litigation is without any doubt the highest in the world. We have permitted our pharmaceuticals to price to market, making our drugs the highest priced in the world. This excessive expense inevitably finds its way in everything we produce, making our products non-competitive. We need to strike the balance that preserves the best through open competition, yet extends essential care to all. New Zealand may have hit on the solution or very close to it, because their method preserves elective competition. Thus, the CLAMPIT amendment takes the first step to tackle this problem by setting aside a demonstrated adequate budget and preserving social security. But there is further work to be done in implementing the solution.

Taxation of Interest
A common fiction in finance which was revealed in the formulation of the CLAMPIT amendment to be false is: that interest should be treated separately on all transactions. For some reason, we have been educated that some things should not be taxed else financial ruin will occur. One of these is the concept of interest and principal. We have been indoctrinated into thinking that these must be kept separate (even to the extent that we used to deduct sales tax from our federal income) and the further fiction that we should be able to deduct home mortgage expense.

Lose the Home Mortgage Deduction... Really
If you wanted to sound the death knoll on any politician, let him merely mention changing social security, or even mention "losing the home mortgage deduction." The home mortgage deduction, we are told, is the sole reason we have housing and a construction industry, and is as sacrosanct as the wisdom of the GI bill. Since it is so important, it almost follows that we have to have income tax, because else how else would we have any reason to have a home mortgage deduction? This is one of the reasons I came up with the Charity fund, as mentioned above, because most people just could not believe we could eliminate the dreaded federal income tax and their "deductions." But having convinced everyone that we don't need the income tax, the next challenge was to detoxify the home mortgage.

I suffered through the same "deduction" mentality as other would-be reformers until I finally realized that interest was just an expense. It was just like labor, just like material, just like taxes and it did not deserve any special treatment. Since the 1USATax taxed gross receipts of any kind, it really didn't care if it was interest or principal. So what if it was ignored? What would happen?

You can't mean that a mortgage payment is taxed just like groceries, I said to myself. Why not? So I put it through the paces. Let's take a purchase that is dear to all Americans, home owners or not, the purchase of a car. And, like most Americans, we were going to borrow the money. How could we make it simple?

Example - Buying A Car
To start with, the car sells for $20,000. Under the 1USATax, that means its advertised at $20,000 and that includes tax. So, if you were buying it for cash and the tax was six percent, how much would you pay? $20,000 is the answer because, under the 1USATax, no tax computation is ever required of the buyer. The seller would have six percent of the proceeds due him deducted for tax and the transfer agent (bank) would see that the federal, state, and local taxes as well as the charity and individual funds would get their share, both for the buyer and seller and the title transferred. No other charges at all, a done deal. No income taxes. No property taxes. No document stamps. No tag fees. No environmental fees. No license fees. The seller (the dealer) knows that 6% will be deducted when he deposits your check. He also knows the same will be done for any other dealer or anyone else (even a private citizen) selling a car.

But what if you financed it? The purchase would be the same, as above. But you also "bought" a loan, so you made two purchases: a car for $20,000 and a loan. Let's say you borrowed $20,000. Should the loan be taxed?

Loan Companies Exempt? No
Well, with no income tax, if we don't apply a tax, the bank or finance company will pay no taxes whatsoever, sort of like the brain-dead so-called "Fair" Tax. The simple answer is the loan is taxed like coed education was proposed: Exactly in the same way, exactly the same time, at whatever tax rate. Now let's say the tax on loans (due to a big lobby) is five percent. Five percent of what? Well, the bank would lobby that it should only be the interest, not the principal (because that would mean they would pay less tax). Tried it; way too complicated. Then I had my revelation: why not treat the loan financing just like the car? Turns out it was easy as pie. Each loan payment (for a five percent loan for five years with a five percent tax) was $407.01, which included five percent 1USATax and netted $386.66 to the finance company. There was no reason to treat it differently. The finance company need not have a separately calculated tax. Finance companies pay the same tax on gross receipts as anyone else.

And why not? They receive the same access to courts (if not more) and at the very least, the same government services.

But I bet they might not like it, because they don't pay much tax now. So they'll put the pressure on to be sure. But, they can get temporary relief from a lower tax rate for loans than cars. (Sounds like the discount rate, doesn't it?) Or, they can really go all out and lobby Congress for a tax of zero. Good luck.

What is Good for the Country is Good for Banking
But there are other goodies for banks that will make them want to support ClampIt. Among the most important, although not often appreciated by the ilk of accountants who never seem to grasp the supply/demand ratio, is that the higher rate of taxation results in a lower rate of growth for the United States and less government revenue. There will be opportunity to do more banking (administering citizen's accounts for ClampIt). What is good for the country is good for banking. Almost everyone knows that the usury ripoff of the ignorant and poor cannot continue unchecked without violent revolt. It is time to fix this, once and for all.

No Tax on Ownership
Another one of these is that there is no tax on ownership. That means anything you purchase after CLAMPIT is enacted cannot again be taxed until you sell it. This goes right back to the idea that citizens control the rate of taxation by what they buy. The more they buy, the more the government has to do. The less they buy, the less government has to do.