Tax Choice is Evil
Oct 3, 2013 20:03:33 GMT 12
Post by BlackWarGreymon on Oct 3, 2013 20:03:33 GMT 12
Elsewhere, I have encountered the concept of "tax choice". Simply put, this is the idea that taxation would be compulsory but taxpayers would choose where to allocate their taxes. So, for example, this means that Taxpayer A can have 10% of their tax income go to education, 10% to welfare and 80% to health while Taxpayer B can have 20% go to health and spend 70% on defence with another 10% going to seatbelt subsidies or something. This is a stupid and completely impractical idea for a number of reasons. It is also wrong.
Why Tax Choice is Stupid
The point of a government is that it can look at the bigger picture, while its citizens and taxpayers are much more parochial in outlook. A government is able to consider concerns over the entirety of an area, while individual taxpayers are much more limited. Additionally, local concerns are often to large to cover by themselves. A government can step in and take money from all over the place to bring money to areas that need it. Under a tax choice model, a government is largely powerless to allocate tax take. The result is that a bridge needed in Area A is only going to be paid for by people in Area A. People in Area B (assuming they're rational) are going to be focussed on their own concerns. Even using broader categories such as "infrastructure" if Area B's chief concern in crime (or anything else other than infrastructure) in all likelihood Area A will not be able to afford the brige it needs. Part of the costs, maybe, which may well end up as wasted money because the work is partially completed and then left to degrade as the rest of the funding just isn't there. This is, of course, ignoring the fact that Area A is going to have other concerns as well.
As things stand, producers and consumers need only take into account private costs and expenditure (in fact, markets assume that this is all they do, which leads to market failure in some markets) when going about their business. A car manufacturer is aware of how much they spend on the variety of inputs and can plan accordingly. They don't have to worry about the state of the roads and such that they rely on because the government takes care of this. In fact, all they have to watch out for is the tax rate(s) that apply to them. The roads (for example) are going to be there whatever they do. In a tax choice system, this is not guaranteed by any means. The car manufacturer has to pay close attention to how much money is likely to go into infrastructure and any other state provided goods/services that impact on their business. This is impossible and will lead to massive drops in business confidence (and, potentially, consumer confidence) due to uncertainty. Conventional macroeconomic thinking says that this will lead to economic contraction, resulting in lower incomes. This will further worsen the problems and the economy would eventually be wrecked. And government would be largely powerless to do anything, with fiscal policy still appearing more useful during recessions than monetary policy. Tax choice having, of course, blunted the already very blunt fiscal policy further.
Why Tax Choice is Impractical
The impractical nature of tax choice is another reason why this is a stupid idea. But why is it impractical? Well, the basic thing is that tax choice has to be implemented somehow. The internet could keep costs down but they're going to exist. Furthermore, the existing administrative issues around taxation would also exist as well. Basically, tax choice would be reliant on taxpayers valuing the IRD and whatever is given the task of running the tax choice service enough money to continue operating. The taxman tends not to be very popular, so it's probably reasonable to assume that any pure tax choice system would never be able to afford to work. That is without taking into account the end result of the previous paragraph.
My experience with advocates of tax choice taken into account with the above point, makes me think that tax choice is just a manifestation of libertarias that have concluded they need to make their ideas more palatable to a wider (less libertarian) audience. Tax Choice advocates tend to draw on the same thinkers/economists as libertarians and approach issues from the same/similar perspective/s. It is, of course, just as/more possible that tax choice is an evolved ideology of libertarians who have partially come to reject their previous ideology. Given that "free riders" do pop up in their arguments (i.e. those who are able to use a good/service without having to pay for it), this is definitely the simpler explanation (and therefore better) than "stealth libertarianism".
Why Tax Choice is Wrong
At the moment Gobblers may seem to be pretty biased to one particular way of thinking but that's just because it's just me who is around. I mention this, becuase if one is okay with basically giving wealthy people a voice in the running of society, this criticism is not going to seem like much of one. At its core, this is very simple critcism. The greater one's income the more influence over society one has. This is a bad idea because geographical parochialism is not alone, wealth based parochialism exists. There are, for example, people who scoff at the idea of $50,000. They seem quite unaware that to many $50,000 is not only quite a desirable income but it is also a very distant one. The interests of the poor and the wealthy can often conflict or, at least, not be significantly similar. A government's greatest function is, in many respects, to create a society that recognises those who have less and give's them a voice equal to those with more in the running of society. Well, that's what a well-implemented, transparent democracy creates at any rate (there are many governments that do not do this, some which deliberately set out to do the opposite). It is because of this fact that I consider tax choice, in many ways, to be more like electoral reform than anything else.
As a parting note, the arguments used to support tax choice tend to be quite flimsy and/or factually wrong. These paragraphs represent criticisms (mostly) of the very concept of "tax choice" not the arguments used to support it. It is my firm belief that we, as humans, cannot and should not bring ourselves to support tax choice because of the arguments (and some I have not written here/thought of/read of/some other reason for their exclusion) presented here.
Why Tax Choice is Stupid
The point of a government is that it can look at the bigger picture, while its citizens and taxpayers are much more parochial in outlook. A government is able to consider concerns over the entirety of an area, while individual taxpayers are much more limited. Additionally, local concerns are often to large to cover by themselves. A government can step in and take money from all over the place to bring money to areas that need it. Under a tax choice model, a government is largely powerless to allocate tax take. The result is that a bridge needed in Area A is only going to be paid for by people in Area A. People in Area B (assuming they're rational) are going to be focussed on their own concerns. Even using broader categories such as "infrastructure" if Area B's chief concern in crime (or anything else other than infrastructure) in all likelihood Area A will not be able to afford the brige it needs. Part of the costs, maybe, which may well end up as wasted money because the work is partially completed and then left to degrade as the rest of the funding just isn't there. This is, of course, ignoring the fact that Area A is going to have other concerns as well.
As things stand, producers and consumers need only take into account private costs and expenditure (in fact, markets assume that this is all they do, which leads to market failure in some markets) when going about their business. A car manufacturer is aware of how much they spend on the variety of inputs and can plan accordingly. They don't have to worry about the state of the roads and such that they rely on because the government takes care of this. In fact, all they have to watch out for is the tax rate(s) that apply to them. The roads (for example) are going to be there whatever they do. In a tax choice system, this is not guaranteed by any means. The car manufacturer has to pay close attention to how much money is likely to go into infrastructure and any other state provided goods/services that impact on their business. This is impossible and will lead to massive drops in business confidence (and, potentially, consumer confidence) due to uncertainty. Conventional macroeconomic thinking says that this will lead to economic contraction, resulting in lower incomes. This will further worsen the problems and the economy would eventually be wrecked. And government would be largely powerless to do anything, with fiscal policy still appearing more useful during recessions than monetary policy. Tax choice having, of course, blunted the already very blunt fiscal policy further.
Why Tax Choice is Impractical
The impractical nature of tax choice is another reason why this is a stupid idea. But why is it impractical? Well, the basic thing is that tax choice has to be implemented somehow. The internet could keep costs down but they're going to exist. Furthermore, the existing administrative issues around taxation would also exist as well. Basically, tax choice would be reliant on taxpayers valuing the IRD and whatever is given the task of running the tax choice service enough money to continue operating. The taxman tends not to be very popular, so it's probably reasonable to assume that any pure tax choice system would never be able to afford to work. That is without taking into account the end result of the previous paragraph.
My experience with advocates of tax choice taken into account with the above point, makes me think that tax choice is just a manifestation of libertarias that have concluded they need to make their ideas more palatable to a wider (less libertarian) audience. Tax Choice advocates tend to draw on the same thinkers/economists as libertarians and approach issues from the same/similar perspective/s. It is, of course, just as/more possible that tax choice is an evolved ideology of libertarians who have partially come to reject their previous ideology. Given that "free riders" do pop up in their arguments (i.e. those who are able to use a good/service without having to pay for it), this is definitely the simpler explanation (and therefore better) than "stealth libertarianism".
Why Tax Choice is Wrong
At the moment Gobblers may seem to be pretty biased to one particular way of thinking but that's just because it's just me who is around. I mention this, becuase if one is okay with basically giving wealthy people a voice in the running of society, this criticism is not going to seem like much of one. At its core, this is very simple critcism. The greater one's income the more influence over society one has. This is a bad idea because geographical parochialism is not alone, wealth based parochialism exists. There are, for example, people who scoff at the idea of $50,000. They seem quite unaware that to many $50,000 is not only quite a desirable income but it is also a very distant one. The interests of the poor and the wealthy can often conflict or, at least, not be significantly similar. A government's greatest function is, in many respects, to create a society that recognises those who have less and give's them a voice equal to those with more in the running of society. Well, that's what a well-implemented, transparent democracy creates at any rate (there are many governments that do not do this, some which deliberately set out to do the opposite). It is because of this fact that I consider tax choice, in many ways, to be more like electoral reform than anything else.
As a parting note, the arguments used to support tax choice tend to be quite flimsy and/or factually wrong. These paragraphs represent criticisms (mostly) of the very concept of "tax choice" not the arguments used to support it. It is my firm belief that we, as humans, cannot and should not bring ourselves to support tax choice because of the arguments (and some I have not written here/thought of/read of/some other reason for their exclusion) presented here.