A New Idea – Tax the “Poor!”

A number of years ago, the manager of energy trading at a major electric utility taught me a lesson he called “thinking through the bottom of the box (TTBB).” We have all heard of “thinking outside the box (TOB),” but TTBB offered a whole new way of thinking about the world around us and creating possible solutions to the problems we face.

I was intrigued, so I asked him how it worked. He illustrated TTBB with a story. “Suppose,” he said, “that you and I were contenders for the world heavyweight boxing title. To improve my chances of winning, I hired a world-renowned trainer and asked him for his advice. He stated that, after some reflection, you and I were the same weight, had the same reach, and had the same record. Despondent, I asked how I could possibly beat you. He quickly responded, "Hit him below the belt." Appalled, I retorted, "But that is illegal!" To which he responded, "Contact is illegal. Fake a punch to the groin with your left, he will try to protect himself with his right, which will allow you to use your left hook, which is your best punch."

So what does this have to do with my idea of taxing the poor? Well, we all know that traditional wisdom would say this proposition is ridiculous on its face: the poor need money. They do not have money. However, if you apply TTBB and relax all constraints, evaluate all possibilities, put together a plausible alternative, and then re-evaluate the constraints, you can devise creative, plausible alternatives where none initially appear to exist. In this case, what the poor have is time, not money.

So the thinking goes like this. The revenue to the federal treasury is estimated to be $2.7 trillion dollars per year in 2008. In 2006, the population was estimated to be almost 300 million, with approximately 75% over the age of 18, or about 225 million. Approximately 37 million of these are over 65. Approximately 50% of all taxpayers’ pay 100% of all tax, which means 50% of the people pay nothing but receive their pro rata share of the benefits, at a minimum. So, if one assumes all persons over the age of 18 are beneficiaries of this wonderful system, then the “benefit” [50% of $2.7 trillion] to the 50% not paying taxes [50% of 188 million (225 million over age 18 less the 37 million over age 65], represents $14,361 per person not paying tax. Imputing to these individuals a median income of $38,387 [2006, Heritage Foundation, which really represents a "raise" for their time, because they are in the lower 50% of the income pool] and a work year of 1,928 hours [2,080 hours per year, less 2 weeks vacation, and 9 holidays), this equates to 721 hours per year to pay for their benefits.

So, here is my proposal. Require those over the age of 18 and less than 65, who pay no taxes whatsoever, to contribute only 416 hours per year (one day per week, not the 721 they “owe”) to the rest of us, who are paying the taxes. This time can be “donated” in a variety of ways. Several come to mind immediately: participating in rehab; working on their GED; serving in the military reserves; picking up trash. I am open to any activity which has the following features: (1) the work must contribute to the betterment of the individual, the community, and the country (responsibility); (2) the work must be performed EVERY week at a standard time (discipline); (2) the work must be supervised (accountability); (3) the work must be performed until either mutually agreed goals are achieved or the individual becomes a tax payer (results). Maybe, just maybe, some of these folks will be so successful, they will end up owning their own business and experience first hand the “privilege” of making payroll, week in and week out, and reducing the tax burden on the rest of us.