Putting Taxes to Work Let's use the state budget surplus to set up Commonwealth Trust accounts, funds every citizen can use to offset a portion of their health care expenses.   The weekend of August 5-6 is the tax gimmick for back-to-school sales tax relief. The Conservative Republicans in the House of Delegates didn’t have the votes to overcome the Republicans in the Senate to return the surplus-producing ’04 sales tax hike to The People, so they settled for a trick. The People may get about $3.6 million in chump change back from their $1.4 billion taking in increased sales taxes.   If the Republican majority in the General Assembly won’t roll back the taxes, at least they could put them to work for the People. Write the law to create ‘Commonwealth Trust Accounts’ and put The People’s money in service to The People, not the special interests.   If there were approximately 7.25 million Virginia residents in 2004, then let’s assume there are 7.5 million Virginians now. A $200 Commonwealth Trust Account for every Virginian would cost $1.5 billion. Figure the take on increased sales taxes is another $100 million or so and apply that money to the administration of the accounts.   Let the Commonwealth Trust Accounts begin as health savings accounts. Here are some ideas on how they could work for The People.   How to pay for Trust Accounts Take the extra half a penny sales tax slammed on Virginians (’04) and dedicate each and every one of its pennies to the Commonwealth Trust Accounts. Perhaps, over time, add more of the sales tax revenues to the accounts. "Pay" for the dedication of these taxes by holding increases in state spending to four percent per year, or alternatively the rate of inflation plus the rate of new growth -- instead of the obscene 20 percent growth in the new biennial budget. A fund of $1.5 billion would be established the first year. This sum would be replenished in following years, if not grow with sales taxes. Over time allow individuals, corporations and community groups to donate to individual Trust Accounts and deduct the contribution from taxes. Who gets a Trust Account? Everyone who is a legal United States citizen and Virginia resident gets an account and account number if residency is established by a certain date each year.  The account is vested at the start for Virginia citizens with over seven years residency. After seven years the account is vested for babies and move-ins. The account is portable. Anyone who is vested can use their account outside of Virginia. The account can be used until it’s gone. No new money is added by the Commonwealth for persons living outside Virginia. How to use the Trust Account The individual gives his or her account number to the medical provider. The medical provider gives the number to the financial institution managing the account. The financial institution pays the bill(s) up to the full amount of the account balance. The financial institution reports the transactions to the Virginia agency administering the system. If less than the full amount is used in a year, then the remainder gets rolled over. If a person dies, the remainder is returned to the Virginia agency for redistribution across the Commonwealth on the next annual distribution. How to manage the Trust Accounts The accounts are administered by private financial organizations under the oversight and regulation of a designated Virginia agency. Financial organizations invest the annual deposit. If the individual citizen uses the full amount available during the current year, there still will be some gain from the investment. Regulations will determine how the profit will be shared between the private financial organization and returns to the individual Commonwealth Trust Account. The Virginia agency will provide guidelines for for prudent investments. For example, a certain percentage might be invested in city/county, Commonwealth or U.S. bonds. The financial institutions might be required to keep a very large percent of the investments in Virginia-based and/or headquartered businesses. The money (over $100 million in the first year?) sent to the Virginia agency may be split into administrative overhead and funding for a rainy day fund to act as insurance for any difficulties a financial organization may have during a down turn in the economy. Critics may scoff at the small amount to start - $200 per person a year. But it’s a good start. It isn’t a new tax. It’s putting taxes to work properly for The People. It means uninsured Virginians have a first step up on medical care. It means medical institutions in Virginia get an infusion of up to $1.4 billion in bills paid in one year.   If it works well, the portion of the sales tax dedicated to Commonwealth Trust Accounts could be expanded.  The opportunities for others to contribute to Trust Accounts and take it off their taxes may be expanded.   Commonwealth Trust Accounts might be applied in time to retirement and education costs. But health care seems the most urgent place to start. You can't do it all, and you have to begin somewhere.   The principle of using the taxes for individual savings were established by the Social Security Act and then betrayed by decades of Ponzi scheme management.  Commonwealth Trust Accounts would be focused on individuals and a structured for success – leveraging good economics with increased savings and investments and fixed spending limits.   Talk to the your representatives in the General Assembly. Let’s establish Commonwealth Trust Accounts for Virginians.   -- August 7, 2006