Friday, June 19, 2009

Taking Input From Depositors

A long time ago, I had the idea that a new form should be added to the income tax return. Rather than being a burden on the individual, it would be an opportunity to provide input on how they wanted their money spent.

It would basically expose the top categories of the federal budget and allow the taxpayer to allocate, by percent, how they want their money spent. At least in the beginning, it might be non-binding, just an informational tool. It would help our government know what we the people really wanted our money spent on.

Even if some people put down 100% of their taxes to spent towards the Defense Department, you'd have another person who might allocate 100% for HHS, or for paying down the national debt. Other people might be more nuanced and thoughtful in their choices.

The IRS obviously has the technology to handle this sort of thing. It is just a question of the government actually wanting detailed feedback directly from the public.

If it looked like it was working (not leading to huge skews in the budget from year to year, or only making up a fraction of the overall budget in size) then it actually could be made binding. Then people who made allocations would actually feel much happier about their tax payments.

I recently had an update of this idea while driving to work. Something similar could be done by banks for depositors. Listen to depositors about how they want their money put to use. Do they want it left in the vault? Do they want it lent to persons or businesses, locally or globally? Do they it used to buy or create derivative instruments?

Just listen, for a start. Any bank could do this without a regulator forcing them. It would make that bank seem to be a much more responsive and concerned institution.