Washington, D.C. (Rightcommentary.com): Well - friends - it’s the most wonderful time of the year (for Washington anyways), where the coffers will be stuffed full with tax revenues and the IRS will be deluged with papers and filings. Indeed - for the Beltway - this is Christmas in April.

I have maintained for a long while - and I realize others (Sean Hannity for example) have copied it - that if people in this country are truly serious about “tax reform,” stop automatic withholding from paychecks. If every citizen had to mail the “taxman” a check every month for their state, federal, FICA, medicare, medicaid, etc., withholding - within about a month you would see a revolt of angry “villagers” with pitchforks and torches (or in Sen. Obama’s world - bibles and guns) demanding an explanation from the towering IRS building on Constitution Avenue.

I for one am not all that upset about paying taxes. Inscribed on the top of the IRS building is the phrase, “Taxes are the price we pay for a civilized society.” Okay - I’ll buy that argument in the abstract. As a Republican I’ll conceded that there are things the government can do better than the private citizen - such as national defense, delivering the mail, enforcing contracts (or the courts more generally), exploring space, and perhaps a few other items. Taxes are something that we all must pay so that collective goods - such as roads, bridges, etc., are built. I can accept all of that.

What I find ironic, however, is the kabuki dance that Congress does over taxation, how the American public fails to recognize inequities in the system, and how “taxes” and revenues really don’t seem to matter all that much in determining budgets, spending, or priorities.

California Republican John Campbell last Thursday introduced in the House his “Put Your Money Where Your Mouth Is Act,” which would amend the tax code to allow individuals to make voluntary donations to the federal government above their normal tax liability. The bill would place a new line on IRS tax forms to make this easy.

Mr. Campbell says he has heard the “cries” of those wealthy Americans – Mrs. Clinton, Warren Buffett, Barbara Streisand – who reject the lower tax rates passed in 2001 and 2003 and complain that they and their fellow rich don’t pay enough. “It’s a great injustice that citizens wishing to fulfill their dream of paying more taxes cannot simply check a box on their 1040 form to make a donation,” he says. His bill would give liberals a chance to salve their consciences without having to raise taxes on millions of Americans who already feel overtaxed as it is.

While mostly a symbolic gesture - I still found it amusing. The Treasury already accepts voluntary donations to decrease the nation’s debt; last year it received all of $2.6 million. Apparently even most liberals would rather keep their money, or bequeath their estates to charity, rather than to the IRS.

Shocking isn’t it?

Another idea along these lines that I had would be a “subscriber” system - where in addition to donating additional funds and revenues, you could also chose what programs in the discretionary side of the budget the money is allocated. Although probably not well known to people outside the federal government, most government employees participate in what’s called the CFC or the Combined Federal Campaign. CFC is the world’s largest and most successful annual workplace charity campaign, with more than 300 CFC campaigns throughout the country and internationally to help to raise millions of dollars each year. Pledges made by Federal civilian, postal and military donors during the campaign season (September 1st to December 15th) support eligible non-profit organizations that provide health and human service benefits throughout the world.

What I would propose is a CFC for the discretionary side of the budget. The IRS could put together a booklet - similar to the CFC’s listing of charities. Really want to make sure Sen. Obama’s support of his Wife’s hospital gets funded - click the box. Want to see that pork project in your district get funded? Click the box. $3 for Obama, $5 for a new road in your town, $15 dollars for a new kick-ass super tank, or $80 dollars for “head start,” it would all be up to you. You could decide how much more money - on top of your federal taxes - you would want to see go to these programs. Of course - you could always choose to pay down the national debt - if that really bothers you.

Although I suspect more than 2.6 million dollars in funds would come in under my plan - I doubt it would be more than 10 million dollars. 10 Million dollars out of a 2.2 trillion dollar budget isn’t exactly much to get excited about.

But that’s beside the point - or is it? I mean, how much would people really contribute if they had to contribute voluntarily - or write that check every month? Would people really be interested in “helping the poor”? Would people really be interested in a strong national defense?

Economics and political science tell us that such “collective action” problems are difficult at best for individuals to solve. However, one economist, Milton Friedman, essentially argued that a market approach for government services - like security (police forces), and postal delivery, and garbage collection, etc., could be designed. Municipalities could become essentially markets for government services.

It was Friedman who in 1962, with the publication of “Capitalism and Freedom,” first proposed the abolition of Social Security, not because it was going bankrupt, but because he considered it immoral.

“We may wish to help poor people,” he wrote. “Is there any justification for helping people whether they are poor or not because they happen to be a certain age?”

Heresy… the third rail of “government” politics.

The late Arizona Republican Sen. Barry Goldwater, whom Friedman advised, found that out in 1964 when he suggested during his presidential campaign that Social Security be made voluntary.

Goldwater was pilloried, not only by editorial pages but his own party. He lost in a landslide to Democratic President Lyndon Johnson, who went on to create Medicare, the biggest entitlement programs in history, in 1965.

Friedman calls Social Security, created by President Franklin Roosevelt in 1935, a Ponzi game.

Charles Ponzi was the 1920s Boston swindler who collected money from “investors” to whom he paid out large “profits” from the proceeds of later investors. The scheme inevitably collapses when there are not enough new entrants to pay earlier ones.

That Social Security operates on a similar basis is not really in dispute. Paul Samuelson, who won his Nobel Prize in economics six years before Friedman and shared a Newsweek column with him in the 1960s, called Social Security “a Ponzi scheme that works.”

“The beauty about social insurance is that it is actuarially unsound,” Samuelson wrote in an oft-quoted 1967 column. “Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in … A growing nation is the greatest Ponzi game ever contrived.”

Today, 38 years after Samuelson wrote this, the number of people collecting benefits is about to rise steeply as Baby Boomers retire, reversing the flow of the system’s finances.

“Everybody goes around talking about the problems created by the declining number of workers per retiree,” he said. “How come life insurance companies aren’t in any problem?”

The question was quintessential Friedman: simple, accessible, and formidable.

Life insurance companies take premium payments and invest them in factories and buildings and other income-producing assets, Friedman said. These accumulate in a growing fund that can then pay benefits. Social Security, by contrast, operates pay-as-you-go, collecting payroll taxes from workers that immediately go to pay retirees.

The biggest misconception about the program, he argues, is that workers believe it works like insurance, with the government depositing taxes in a trust fund.

“I’ve always thought it disgraceful that the government should be essentially lying about what it was doing,” he said.

“How did you ever get the Democrats, who supposedly were in favor of progressive taxation, to pass a tax that is biased against low-income people - - which is on income up to a maximum and no more?” he asked, referring to the (then) $90,000 ceiling (it’s currently 104K now) on which Social Security taxes are levied. “Only by clothing it in this idea that it’s not really a tax, it’s an insurance payment.”

Asked why, if Social Security is so terrible, it is the most popular government program in American history, Friedman replied, “Well, because why does a Ponzi game work? It’s easy to understand why it’s popular. So far, on the average, retirees have gotten more out of the system than they put into it. ”

What about the fact that Social Security has reduced poverty among the elderly?

“Well,” he replied, “what it has done is transfer a lot of income from the young to the old. It is certainly true it has made the old people of the United States the best treated old people in the world.”

But why is that a bad thing? “Oh,” he replied. “It’s not a bad thing for them, but what about the young?”

Indeed - what about the young.

You’d think every April 15th we would ask these questions - where does our money go - especially social security - the program that comprises now approximately 45% of the federal budget (thats almost a TRILLION with “T” dollars). Given the amount of pain people go through to file their taxes - they don’t ask these questions. They’re just gleefully happy with their paltry refund - money they gave the government for free for a year - on which they earned no interest - and which will undoubtedly go to just helping make “ends meet.”

Happy tax day fellow readers.