I want to fix America and make things better for our children. We cannot fix anything through complaining. Instead, solutions must be made and implemented. Of course no solution will be perfect, as there will always be a group of people who feel unduly hurt by new proposals. That said, during tough times, tough choices must be made!
One of the best ideas proposed to help improve our country’s fiscal health and our personal finances is limiting what consumers can buy based on their high school grades. Since high school is mandatory, we use high school as a barometer.
Let’s use the car as an example of how we can use grades as a way of controlling consumption to protect our fiscal health. The car is one of the great personal finance killers of our generation and our attitude towards what our car spending habits needs to change!
The assumptions in this article are namely: 1) Big government is good, otherwise, we would not allow such massive federal government spending and ballooning budget deficit, 2) We are all patriots and want to help America, and 3) Despite allowing big government, we are still a meritocracy.
Please keep an open mind while reading as we look towards controlling our overconsumption habits and healing our nation!
THE “GRADES AND CONSUMPTION PLAN”
1) If you have a C-average or worse (~2.5/4.0 GPA), you are not allowed to buy a car, period. Given most people can roll out of bed and get a C-average, this shouldn’t be a problem for most people. Hence, one can conclude that if you only have a C-average or worse, then you aren’t good at rolling out of bed! You might have a difficult time focusing and doing your homework. Work ethic and maturity might be lacking. Perhaps you have un-nurturing parents and are in an environment not conducive to education. If this is the case, then let’s give a probationary period of 3 years to allow one to develop the maturity to be able to purchase a car.
As a C-student or worse, it’s probably not the best idea driving a weapon that could kill people and your personal finances. Only the bus, biking, or walking for C-average or worse students. These are great options that are environmentally friendly and good for your finances and physical health.
2) If you have a B-average (~3.0/4.0 GPA), then you are allowed to buy a Toyota Corolla, Honda Civic, Chevy Volt, or Ford Fiesta, and the value of the car cannot be worth more than 10% of your income (Financial Samurai 1/10th rule for car buying). As a pedestrian or fellow driver, you can immediately identify people in the above four cars as B-average citizens who are spending wisely.
The B-student is the majority of us. There are some subjects we are good at, and some that are completely impossible. Things average out to be “good” but not “great”. Fair enough. No matter how much I studied for Religion class, I could not memorize all the Gods in Greek mythology, and therefore got a B!
3) If you are an A-average student (3.75+/4.0), then the rules become a little more relaxed. Given it’s very difficult to get an A in every single subject, one can conclude that A-average students are harder working, and more intelligent than the C-average student. A-average students have logically concluded that if they can be in the Top 1% of their class, they will have a better selection of colleges to choose from, more scholarship opportunities, less burden on their finances, and better careers upon graduation. Of course not every A-student is like this, but for the most part, they are.
The A-average student gets to buy whatever car they want, basically the system we have now. There’s no guarantee that the A-student will make more money than the C-student. However, given college graduates (30% of people ages 25+) have higher incomes than high school graduates, and the majority of A-students go to college, one can conclude that A-students will have higher incomes.
Of course, higher income people can easily blow themselves up financially as well. Hence, let us put one constraint on the A-average student: Spend no more than 20% of your annual income on a car. If you make $150,000 a year, a $30,000 dollar car is the most the A-student should spend. I’m trying to be a little flexible for you anti 1/10th car buying rule folks!
The car is just one example. We can scale this model towards anything such as clothing, jewelry, watches, and other extraneous desires that have no bearing on whether you live or die. The government can create an awesome 100,000 page spending guidebook to help regulate what consumers can spend their money on to protect our finances, and save the environment.
Bacstop: After the age of 30, you are free to spend on whatever you want, provided you check in with the government registry once your birthday hits. From 18-30, we have big brother watching and controlling your spending so that you lead a better life. The idea is after 12 years of government control, you will be
brainwashed accustomed to spending more responsibly, and more inline with your intelligence. Note, parents are not allowed to buy cars for their kids with C-averages or worse.
THE “WORK ETHIC TAXATION PLAN”
Given that you agree with the “Grades And Consumption” proposal to improve our country’s fiscal health and strengthen our personal finances, let’s take it a step further and propose taxation rates based on how long you work. The “Work Ethic Taxation Plan” is proposed to improve economic output, generate more tax revenue for our country, and empower the people to control their own destinies.
High intelligence is overrated. You do not need to be a genius to stay in shape, make lots of money, get promoted, get a lot of boys or girls and so forth. All you need is basic intelligence and a strong understanding of the system and work towards building your skills. In other words, you need a strong work ethic.
We all agree that more reward should go to those who work harder, unless you are a Socialist For A Brighter Tomorrow. The only fair way we can measure work ethic is through the number of hours worked. Hence, the government devises a website where one can log on and click a button how many hours they work a day. The data gets tabulated and spits out a weekly, monthly, and yearly bar chart of the number of hours worked. Here is the proposal for those in the working ages of 18-55.
THE THREE TAX RATE TIERS
* Federal tax rate for those working 40 hours a week or less: 40%. That’s right baby, let’s tax those who work 40 hours a week or less the same amount the government is proposing to tax the highest income earners in America. The logic is that if you are not working, you are not producing economic output for our country and are taking in more than you are providing. Stay at home parents are excluded, since parenthood is a great output, however even if they were included, they wouldn’t pay any taxes anyway since they are working 24/7. You might only be 23 years old and underemployed, then what? Not to worry, the government’s super computer has a box where you can check to say your employer is unable to provide you the “standard” 40 hours a week.
I don’t know anybody who works just 40 hours a week or less, and wants to get ahead, do you? As a result, hopefully not that many people will have to pay a 40% tax rate!
* Federal tax rate for those working 50 hours a week or more: 30%. Those who work 50 hours a week on average see a 10% reduction in their Federal tax rate to 30%. The assumption again is that by working 10 more hours than the average, you are contributing more to the output of the economy and taking less. There could be a 20% swing here as you provide 10% more output, and are 10% less of a drag.
* Federal tax rate for those working 60 hours a week or more: 15%. Again, no surprise here as those working 60 hours a week are doing their best and producing the most in whatever respective field they are in. They could be the best egg McMuffin maker at McDonald’s, or the President of the United States who is on call 24/7. The system rewards those who work the most, irrespective of income, with the lowest Federal tax rate.
Exemptions for those who want to be exempt: Disabled, physically laborious and hazardous occupations, non-profit workers, and government officials who plan on writing a 500,000 page handbook on the “Work Ethic Taxation” plan.
THINK ABOUT ALL THE BENEFITS
A lot of people grumble why a CEO working 12 hours a day should command 100X the salary of his or her employee who also works 12 hours a day. I hear you loud and clear! The free markets have determined what each individual makes. If you make $100,000,000 a year like Tiger Woods once did, it’s because you are generating more than $100 million in revenue for clients, otherwise you won’t be making that for very long! This is exactly what has happened to Tiger as all his endorsements got stripped away.
With my “Work Ethic Taxation Plan” proposal, we do away with what we have less control over (free markets), and focus on what we can control, our work ethic and hours spent working. A 15% taxation rate should motivate people to work harder and smarter, for if they don’t, they’ve got to pay more than double in Federal Taxes! No longer will people complain about taxes, since the tax rate they pay is all up to them!
Sure, some might take advantage of the system and just sit in their offices all day playing online poker, however, it is up to the manager to keep tabs and make sure good effort is made for the hours worked. Many of you come to this site for solutions, and here I have presented two great solutions for over consumption and declining GDP growth.
Tax Savings Recommendation
Start A Business: A business is one of the best ways to shield your income from more taxes. You can either incorporate as an LLC, S-Corp, or simply be a Sole Proprietor (no incorporating necessary, just be a consultant and file a schedule C). Every business person can start a Self-Employed 401k where you can contribute up to $54,000 ($18,000 from you and ~20% of operating profits). All your business-related expenses are tax deductible as well. Simply launch your own website like this one in under 30 minutes to legitimize your business. Here’s my step-by-step guide to starting your own website.
Updated for 2017 and beyond. Income taxes are set to come down under President Trump. As a result, those who contributed to their Roth IRA or Roth 401k and planned on retiring in 2017 – 2021 had wrong tax expectations.