Your second last para attempts to solve the problem that employers have an incentive to keep people employed long term at a negligible cost to themselves, which robs the taxpayer. Your solution is for employers to fund the whole scheme. Problem with this is that the incentive for each INDIVIDUAL employer to take advantage of the system is still there (and to almost exactly the same extent).

I solve that problem by limiting the time that any individual subsidised employee can stay with a given employer. That calls the employer’s bluff: if the employee really is productive, the employer will stop claiming the subsidy and keep the employee and foot the bill for the entire wage. Alternatively, the employer will let the employee go.

That results in a bit of a jobs merry-go-round, but that doesn’t particularly matter because the unemployed are by definition a bunch of people who TEMPORARILY cannot find a job other than very unproductive jobs. If the employer cannot find a replacement to fill the above relatively unproductive vacancy, not much is lost.

If you read about “modern monetary theory” which describes the operation of modern fiat currency, it seems that taxes serve to redistribute wealth, but they don’t have anything to do with repayment of debt; and your taxes do not actually fund the government in the way that you think.

Do a search for “billy blog” or “modern monetary theory”. I am starting to read about it, and I’m not sure that I agree with it on moral grounds, but I am learning more about it and it at least helps describe how the current system works, regardless of whether it is good or bad.
.-= Kevin@InvestItWisely´s last blog ..What to do… what to do? =-.

I think the biggest thing is to create more efficiency in government welfare programs. It should be easy to get on welfare (the most needy need it the quickest). And streamlined so that you can get everything at one stop.

Some mixture of shifting taxes and changing minimum wage is a great way to think of it. Also, every american that works full time should pay something in taxes. A minimum tax would pay for a whole lot of government debt. I heard something like 40% of americans paid 0 in taxes.

Thanks for sharing!
.-= Ted´s last blog ..Life =-.

“End the minimum wage”

You’d have to roll back plenty of other programs as well. Even without a minimum wage, there are still liability issues, firing issues, discriminatory issues, immigration issues, payroll taxes, etc…. which place barriers to entry.

“End current federal welfare programs”

Welfare spending isn’t really the biggest problem. The biggest problem is the way that money is created and the way it goes to the favored interests first, at the expense of everyone else. Paying bums to sit at home isn’t so great, but paying corporate bums to divert real resources from everyone else is even worse.

“Change the poverty line”

Or perhaps get rid of it entirely? A poverty line is useless because all you are measuring is envy; people will be envious if they are at the bottom 10% whatever their absolute wealth. The only measure of poverty that should matter is real poverty: being unable to afford shelter, food, or clothing.

“Create a new benefits system”

I’ve read elsewhere that the federal government should just pay minimum wage and offer a job to *anyone* willing to work. As a form of welfare, it might be better than paying people to sit at home. At least something will be exchanged and some work will be done.

“Encourage work”

Agree with you, see above

Good to see that someone is thinking deeply about these issues; however, I feel that so long as there are thousands of lines in the tax code (which is kind of pointless because the government doesn’t actually need to tax to spend; it has a printing press, remember?) and so long as currency is held in trust by a select few people who control the circus the rest of us live in, that the poor will continue to get poorer and the rich will continue to get richer.

I honestly don’t know what would work better; a gold system would be one of continuing deflation which would mean lowering prices; great for people who already have wealth but not great for debtors. But maybe that is a good thing…

What I would really like to see is a system of free currencies, that are not tied to central fiat but are tied to the physical world. Nobody has “god mode” access to the universe, so the amount of gold, oil, etc…. are what they are. I think in the future we will see a shift back to real stores of value and transactions might be done in units of energy, or other real units of work of value that cannot be manipulated or debased. We will see!
.-= Kevin@InvestItWisely´s last blog ..Why Should I Buy a Used Car? =-.

I think each one of your proposals is a good starting point to have an interesting discussion on the topic. My only problem is the minimum wage which I don’t think should be abolished. The current minimum wage is not a living wage in many parts of the country as it is.
.-= ctreit´s last blog ..Early retirement is a double whammy! =-.

The ideas are bold, and that is a huge step in the right direction. The thing that would prevent bold measures is that whichever party tried to implement your plan would receive huge lashback. At first because these changes would take a while to phase in properly so there would be disparity throughout some groups.

You hit the nail on the head with minimum wage. If they got rid of minimum wage (which would be hugely unpopular) then you would fix a lot of problems, but there would be a period of turmoil. People think that if you get rid of minimum wage, then they won’t be able to purchase things because of their new, lower income. This would be true for a short while, but because they can’t afford things, one of two things would happen:

1.) Demand would evaporate, and prices would come down because no one can afford anything.

2.) People, realizing they can’t afford anything, would choose not to work, and a shortage in labor supply would cause wages to rise.

People don’t tend to look that far into it, they just think prices will remain high, and their income will remain low. That can’t happen because commerce would freeze up. The reason we won’t see this happen is because neither party in power wants to be the people blamed during the period while that disparity is working itself out.

The market can fix itself, but intervention prevents this from happening.

Thanks,
Timothy
Wealth Artisan Team Member
http://WealthArtisan.com
.-= The Wealth Artisan´s last blog ..Creating Space Series: Retirement =-.

Just to point out one thing, wages are by no means all the cost of employing someone. There’s all kinds of Government-related costs, health and safety costs, and also supervisory costs.

There’s also the cost of acquisition. It might be better to pay someone more and not have them flee!

Regarding your simplified benefits system, my own simple solution would be to mail everyone in the country a ‘citizens wage’ – regardless of whether they work or not! You simply don’t check. Everyone gets it.

You then clawback money in the tax system. At a stroke you remove about 1 million bureacrats, tax wheezes, welfare frauds, etc etc.