We Interrupt Our Regularly Scheduled Rant For A Brilliant Idea

In conversation with lab-mates Mike, Reid, and Shawn, someone (we cannot reconstruct who) proposed a brilliant and counterintuitive solution to the problem of redistribution of wealth.  It requires no wellfare, and is implemented entirely through the application of a tax break.  I believe that, in the biz, this is considered a WIN.  Here's the idea:

Make all domestic purchases tax deductible.
Only tax wealth (as opposed to income).

Bam! Let's break down the consequences of this.
1. We have effectively incentivized spending, use it or lose it (though not more of it than you do already)
2. The wealthy are the most motivated to spend (but it's still good to be wealthy cause you can get more and cooler stuff!)
3. Making the purchases you need to improve your life or expand your business helps you save money on your tax return
4. In the worst case it degenerates to the current situation: say no one spends anything for a year (awful for the economy and insanely unlikely, but hey) then everyone pays taxes in the tax bracket they are in without any spending deductions and the government gets the same amount of tax income it does now
5. In the hilarious case, everyone wants to be minimally taxed so they distribute income equally among all people and everyone pays the tax bracket of the mean amount wealth in the government.  The government makes the least money when it's the needed the least - in the egalitarian utopia the people created in order to evade taxation.

The basic economic intuition behind why this would be good is that spending stimulates the economy.  This is relatively well understood, and the government is constantly doing things like tweaking interest rates in order to incentivize spending and keep businesses rolling.  A common problem in economic models is that while poor people spend just about all their money on account of needing to be alive and that costing money, rich people end up saving most of their money, which essentially removes it from the economy.  Money that sits around doesn't do anything to increase demand for products, provide jobs, or any such goodness.  So more money actually cycling in the economy is definitely good, and this suggestion does that without any (discernible to me thus far) negative consequences.  Please tell me why I am wrong, otherwise I am running for some major political office tomorrow, on the platform of "Everything is tax deductible and incidentally watch your economy become a perfect fountain of efficiency productivity and wealth redistribution".

Entitlement (edited for improvement)

EDIT: This post is badly written and reasoned.  I have other better opinions about this that I will one day expound upon.  I'm leaving this up as a sort of "history of Rory's thoughts" post, but it no longer reflects my views on this subject.

Today we will settle once and for all the argument about entitlement programs.  People hate these for all sorts of reasons.  Commonly cited:

1. We can't afford them
2. Big Government is bad
3. Government shouldn't enforce redistribution of wealth (related to 2); leave charity to the choice of individuals
4. Moral Hazard (Perverse incentive encouraging them what are poor not to do work)

In brief, my responses to 1-4 are as follows:

1. As they are now, agree
2. what does that even mean?
3. I am too angry to briefly address this, but it is stupid and I can prove it with Science and also Reason (related to 2)
4. Sure, there is moral hazard, but you know what else is morally hazardous? allowing innocent people to suffer and/or die when you could have given up money to stop it (related to 3, and 2)

Later, when I am less angry, I will write some stuff about how misguided beliefs 2 through 4 are.  For now, I will content myself with my proposal to remove the legitimate objection (that's number 1 for those of you who werent counting, or can't)

Once again, I propose a rights based approach.  Here's the deal: the thing I care about most is that people who are poor don't die or get sick or get injured on account of being poor.  I think that when that happens it is bad and also not good.  That's my primary concern.  So I figure, we should do with other entitlement programs what we've done with our most successful entitlement programs to date (education and the post), give them to everyone, everywhere, and make everyone, everywhere, pay for them.

In practice, I think it would look something like this:

1. Mail everyone a multi-vitamin with the stuff that peeps actually need in it (as much as medical science can anyway)
2. Mail everyone food stamps or maybe even actual food to the point where every person has the means of acquiring enough calories to be healthy
3. Guarantee FREE emergency and routine medical care (though only for bottom shelf medicines, treatments, &c)
4. Provide some baseline housing allowance to all people, payed directly from the government to the provider of housing (so the money can't be redirected to, you know, drugs or the like)

Please note that this system would apply equally to everyone.  Any purchases you made above and beyond this would of course be up to you, but there would be no reason for (for instance) health insurance companies to provide a basic coverage package, though there's still plenty of incentive to buy health insurance if you want to benefit from the pinacle of medical science and have the money to do so.  Furthermore, the government would be paying hospitals for all of their procedures, rather than forcing them to eat the cost of emergency medical care for the uninsured (as they currently do).  Likewise, the rich could put their housing allowance towards their second or third home, and would benefit as much (monetarily) as the poorest people.  The rich would also get their vitamins and food stamps, but would have the opportunity to go out and pay the premium on top of those food stamps to get nicer food or eat at restaurants and the like.

How would we pay for this? Taxes! and yes, stepped taxes, that means that the rich will pay out more in taxes than they take in in government living support.  On the upside, they will never ever ever have to feel guilty when they don't want to give a beggar money, on account of they KNOW BEYOND A SHADOW OF A DOUBT that that person has enough food, nutrients, shelter, and medical care. 

Incidentally, if we do this we can get rid of social security, medicare and medicade, which would be nice.  Since we're not providing any income or luxuries, people would still be motivated to find work, but if they didn't find work, no one's health would be at risk.  As a bonus, no one would ever die from neglect-by-society which, you know, could be cool.  Let me know what you think, and feel free to point out how I might be an idiot and am also almost certainly a communist.

EDIT: How does this save us money on entitlements?

This saves us money in a few key ways.  First of all, it lets us get rid of social security.  Secondly, it dramatically reduces the benefits provided to people (no cell phones, no cash-per-kid).  Thirdly, it eliminates the possibility of fraud and all of the resources that attempting to combat that would take up.  Fourthly, it simplifies the system, greatly reducing the administrative cost of running it.  The administration required to support such a system would basically be post office infrastructure, and maybe a way to connect landlords and their client's housing allowance.