I love progress. I believe it is God's plan to reform, redeem and renovate this fallen world. Imagine a world that is ruled by a perfectly just and merciful King. Imagine a place where there is no sin. This world awaits the Christian when God's kingdom comes to earth as it is in heaven. I recently read a book that made some predictions about the years ahead- Future Files by Richard Watson. A lot of thought provoking ideas in the book. Here are two that caught my attention in regards to structuring a better economy.
Elimination of paper and coin currency
This idea could gain some traction in a difficult economic environment. Here are some reasons that paper and coin currency could become an antiquated idea going forward:
1. There is an estimated $2- $2.5 trillion in unreported income in the United States each year. Much of this income comes in the form of cash payments which are hard to track. With $500 billion plus in tax revenues each year not being collected due to tax fraud, the government has a large incentive to eliminate cash and set up a system that is more transparent.
2. Cash is dirty. CNN recently reported that 90% of cash had traces of cocaine on it. With fears of global pandemics like the swine flu, cash and coins may be voted out of existence for "health" reasons.
3. Counterfeit problem: I recently took a trip to San Diego and bought a soda at a convenience store. I only had a $100 bill. The clerk scanned the bill to verify its authenticity. I asked him if he only did that for $100? He said that he does it for all bills over $20. He told me that he had received over 5 counterfeit bills in the last 30 days. Right now, it is a small problem with less than $100 million of counterfeit money in circulation. But as computer printing continues to advance, it becomes easier for criminals to circulate fake money.
4. Cost of printing money and producing coins would be saved. This is probably a low figure in the grand scheme of things- under $100 million per year. But that $100 million could be allocated towards grid and internet security.
Reform the tax system with a flat tax
1. The cost to run and regulate the tax system according to Watson is 10-20% of total revenue received. The federal government takes in around in around $2.5 trillion in revenues. $1.1 trillion of that is federal income tax. The other $1.4 trillion is corporate, fica and excise taxes. This does not include all of the state and local taxes that we pay. A flat (or fair) tax of around 20% would reduce a large amount of expense (around $250-$500 billion annually) that is inefficiently spent on managing a complex tax system.
2. The idea that lower tax rates leads to more tax revenue and stronger economic growth is controversial in academic circles. But the evidence historically supports tax cuts producing higher tax revenue/growth. Arthur Laffer presented a theory that there is an optimal tax rate for an economy. If you cut taxes too much, you don't have enough money to fund the things that citizens view important- national defense, social service programs, etc... If you raise taxes too much, you disincentivize earning profit and therefore tax revenues fall.
3. Make all government worker income tax-free. It makes no sense at all for the government to pay workers and declare the income as taxable. And then take back a percentage of it in taxes which just adds to the costs of maintaining our tax system. 8% of all jobs are government jobs. Why not just pay these people in tax-free income at a lower rate than require them to give a portion back to the government that they work for?
God has made us simple. We have sought out our own complexity. I'm sure there are some holes in these ideas. But I am prayerful that common sense will prevail and that the economic difficulties of today will lead to better policies and ideas for tomorrow.
Watson had a great quote at the end of his book, "It is safer and lazier to be pessimist. Optimism takes work. It requires commitment, energy and ideas."
Excited about the future because I know Who controls the future,
Ashley Hodge
