Automatic tax redistribution system

Although there is much debate whether a welfare state should exist, governments (especially democratic ones) have no choice but to provide some form of social redistribution if they wish to hold on to power. The fury of the masses over income inequalities cannot be underestimated.

Unfortunately, governments do not operate social welfare systems in both an efficient and sustainable manner. What if there is a way to do so easily? I hereby propose a plan, known as the 10-10 automatic redistribution tax solution.

 

A flat tax of 10% on consumption and 10% on income shall be imposed on all citizens. This tax shall be credited into a central account. At the end of the financial year, the revenue is tallied and every citizen be entitled an equal portion of the sum.

Each citizen shall be eligible to collect a small installment from the account everyday. In order to withdraw the money, a person must log-in to a specific government website and then type randomly generated sentences for a minute.

This daily inconvenience helps to ensure that the wealthy will not bother to withdraw the money while the poor will still take the trouble to do so. To prevent delegation of work, the system shall also grant access to all other government services accessible to this person, including income tax returns and criminal records.

Another advantage of a daily payout is to provide a small and steady stream of income instead of a lump sum payout which will help to cover daily needs. This prevents irresponsible people from splurging or gambling their payouts away.

Anyone fails to withdraw the money from his account at the end of each day shall forfeit it; the excess money shall go into a reserve fund to be used during economic recessions where the need for help is most acute.

 

Such a system shall be sustainable since it will only distribute what it taxes. Since it serves only the purpose of redistributing income, it will also be fully transparent and open for auditors to examine without the hassles of national security clearance.

Such a system can replace the inefficient social welfare systems in Western countries or politically unpopular compulsory savings systems (such as Singapore’s Central Provident Fund). When people can see the flow of money, they have no reason to accuse the government of redistributing too little money from tax revenues when it is the economic situation of the country and citizen population size which determines the payout amounts.

Although there are concerns that social welfare can encourage people to be lazy and unproductive, this system will most likely only provide enough for people to survive. Putting more money into the hands of the poor will cause the prices of basic necessities to rise, automatically correcting for any excess surplus from the payout. Unless they are physically unable to work or unable to find employment, most people would choose to earn more money create better lives for themselves and their families.