THE REFUND PLAN
This approach to refunding the potential surpluses is not the traditional supply-side (trickle-down) approach, but what we call "trickle-up" approach. This is the approach that provides the greatest economic impact.
In the Trickle-Down theory or Supply-Side theory, the approach was to give the money to 10% of the wealthiest Americans and they would invest and spend the money that would increase employment and help the 90% of Americans.
Some say it worked, others said a full bucket was given to the 10% and only a few drops "trickled-down" to the 90%. Almost all tax reductions proposed provide more benefits to the 10% than the 90%.
This trickle-up approach is to provide the potential surpluses to all residents of the particular government equally so that the 90% of the residents, that are usually excluded, will be the initial beneficiaries as well as the 10%. This approach will work because it is the 90% of the residents that drive the local economy, not the 10%.
Also and another more understandable way of saying this is that you do not want to disenfrancize the middle and lower classes by not adequately considering the chads on their ballots. You need them because they have the most votes.
One way they con the American people is with averages. They will state that the average tax reduction is $1,000 per person. That sounds great, right! Probably wrong. This is the $1,000 per person average.
Guess what. I will bet you are in the 10,000 group and your tax savings will only be $561. Conned again.
Remember when there was a surplus with the Federal budget and they decided to reduce the income tax? Well, you may not know that the income tax collected amounted to only about 50% of the surplus. All other taxes accounted for the other 50% of the surplus. So were all other taxes reduced for 50% of the surplus. No, almost all of the tax reductions dealt with the income taxes. This is because the wealthy benefit more from income tax reductions than reductions of other taxes.
The surpluses should have been allocated 50% to the income tax rates and 50% reduction in all other taxes.
The Trickle-up Approach is Simple. In the CAFR Budget System outlined in this writing, the trickle-up approach is built in.
What this system provides is that for each fund in the CAFR the revenue adjustments will be made on how the revenues were initially applied within the fund. This means that if there needs to be a reduction in revenue requirements and the sales tax amount to 50% of the revenue then the sales tax requirements will be reduced by 50% of the needed revenue reductions.
If this done in every fund the adjustments in revenue will be at the fund level. This means the money cannot be returned to the General Fund and everyone gets a crack at it, new programs, increase in programs, pork barrelling, etc.
In other words, the revenue requirements will be back into. This method says how much revenue do we need. When we determine the revenue we expect to receive we make adjustments. The current system is to determine how much revenue is available and what are we going to spend it on. A radical departure from the current method of operation, but needed.
What this method does is to reduce or increase the revenues based on need at the fund level. For example, if the fishing and hunting licenses fund has too much money for its intended purposes then the cost of fish and hunting license will be reduced. Not the surplus taken to the General Fund and spent on income tax reductions, other programs, new programs, or pork barrelling. This again locks the politicans into a given procedure of what to do with revenue reductions or revenue increases. No stealing from Peter to pay Paul.