[familyop]

"Tell me what you think of my local tax bond idea in post #19. Thanks!"

Ah...you're interest here is unusually analytical. Sorry about the rhetoric and hyperbole. Philosophically and generally, I think bonds are a great way to go.

Yields should be going up for newer Treasury bond investors, but we might be seeing the rare chance of risk for such bonds (reason for demands for higher yields). Some advisors have even recently spoken of a possibility of collapse in the future. If you know much more than I do about bonds and see returns with low enough risk, do it. Otherwise, you might seek more well informed advice or devote some study to Treasury bonds, as local accounts would be dependent on them. ...wish that I could be of more help than that.

If you're concerned about keeping a local government going during unusually poor conditions, some very unique backup plans might also be good for possible rare economic occurrences. Elected officials and employees won't accept the notion of reductions very well, so some discretion would be in order for planning worst case scenarios. I've wondered about how we might retain the most essential services (commissioners, judicial officers, roads, municipal equivalents) and will put a little thought into that off and on. Most people tend to avoid thought about conditions requiring changing mindsets in leadership (e.g., pay reductions, working with volunteers, and the like).

Yes, that's downbeat, but someone should do it. And yes, planning for unexpected times of plenty should also be made. Military commanders maintain plans for varieties of scenarios, and they also do much civil work (from politics to roads).

I don't know whether any of that was of any help, but I tried.

[Hostage]

Good points again. Until I read this thread about the impact of e-commerce on state/local sales tax revenues, I was all for sales tax at both state and federal levels using the FairTax at both level.

I don’t want to see property taxes, business taxes, cap gain taxes and on and on.

I always thought states and locals could subsist off sales tax but now am not so sure.

I don’t support taxing internet retailers as this thread discusses.

So what to do?

I know there is a lot of waste and so people are fed up with all the spending and would like to see spending cuts.

But if we could define a list of essential services such as you started to point out, and then use a revenue stream taken from US Treasury Bonds to fund only those essential services, then that would leave all the socialists with pretty much nowhere to go to panhandle for tax money, because that is exactly what they are, political panhandlers.

So now I see the FairTax would work at the federal level but not necessarily at the state level if we enact laws barring states from taxing internet sales and sales tax revenues begin to decline.

So what’s left in the tax engineering design is how to fund a list of essential services at the state/local level without using taxes on property, business, cap gains, income and also reduced in-state sales.

The beauty of attaching revenues from US treasury bonds is that the federal government could sell the bonds at a discount to state and local governments, limit the quantity of discounted bonds by constitutional apportionment and mandate that the interest revenue from discounted bonds be used only for the defined essential services.

As far as the bond market stability, I know things now are precarious but federal bonds should not default although their market value can plummet. The reason they won’t default IMO is because the Fed will just monetize the debt, which they have been doing of late. The danger is hyperinflation but we are in a deflationary environment in many respects, and also all currencies float leaving the benchmark GDP performance amd other relative measures to interact and set the price of a dollar against commodities and other things ecnomic. IOW we the USA will likely remain at the top of a giant mudslide of all falling economies. So we may be shielded from hyper-inflation. We will see, Geithner and the Fed are getting away with it for now because so many other economies are doing so poorly relative to the USA.

I really liked also ALPAPilot pointing out the history of fire protection being a matter for property insurers and for property tax to fund fire departments.