I also made the green cells in Column K editable so you can run quick, side-by-side scenarios to see how your own ideas might work on paper.
The tool is a roll-up at a very high level, and I understand that it vastly simplifies a multitude of line-items and interactions, but I found it very useful to ground my thinking.
Here are a couple examples as a starter, and then you should try designing your own optimal government!
Example 1: Add CO2 tax, Reduce Corporate tax
Step 1: Decrease Corporate Taxes - U.S. corporate taxes are very high compared to other countries, and multinational corporations have developed all kinds of strategies to offshore, relocate, outsource, downsize, and avoid repatriating profits as a result. Lowering the corporate tax rate would be an incentive for businesses to work and profit in the U.S. In this example, I've decreased it from ~40% to 15%, which obviously collects less revenue - some of which, however, is offset by companies on the margin that would bring factories back, repatriate profits, etc.
Step 2: Establish a Carbon Tax - A carbon tax of $40 per ton of CO2 would generate enough funds to offset the budget shortfall caused by Step 1. What's more, it would serve as an economic incentive to migrate toward environmentally sustainable fuels and energy use.
In this situation, there are of course winners and losers... but you knew that, right? This is politics and there are a couple hundred billions of dollars at stake. Interestingly, neither of these steps really moves the needle when compared to the larger picture of the $6.6 trillion total budget for 2016.
Here's a graphic visualization with the shrunken corporate tax in red and the new carbon taxes in black on top of the stack:
Spending in this example is unchanged by the newly proposed steps.
Example 2: Establishing a Guaranteed Basic IncomeStep 1: Dramatically cut the complex payout and administrative budgets of welfare programs.
Step 2: Provide a minimum basic income to all. The amount modeled here is $10,000 annually for adults and $2,500 for children, which is only enough to supplement most situations, but is all the current tax revenues can support. This has been proposed by some as a more efficient and market-based redistribution of wealth that doesn't pick winners and losers, avoids administrative costs of government programs, and hedges against a robot-automated future of employment. This last item is the primary driver for recent interest in this concept, as futurists are contemplating how people will work and subsist in the face of rapidly accelerating artificial intelligence and machine automation.
In this example, there are no changes in how revenues are collected, but the spending side of the equation changes dramatically as shown by the large, new pink category representing the payouts of the basic income:
The above examples are included on tabs at the far right in the linked spreadsheet as values-only.
Note that the second tab of the spreadsheet is used to roughly approximate interactive or feedback effects for the main model on the first tab. For example, if household income taxes are raised, there will be less household spending on retail sales, which means that less revenue will be collected by sales taxes. The interaction factors I used are small and assume linearity, which will not be the case if BIG changes are made, so please understand that this model comes with a grain of salt. I'm sure better data and modeling techniques exist, so I would love to hear any feedback that folks have on that or anything else in the model or data.
Also note that if there are multiple simultaneous users in the google spreadsheet, you can go to the "File" menu & "Make a copy" to edit on your own.
And finally, let me request that everyone keep any political statements respectful and fact-based. Thank you!
CATEGORY: Economic, Political
IDEATION: August 15, 2016
IDEATION: August 15, 2016