2/28/2010

If we all had a knob to dial-in our tax rate

Give us each a knob that lets us set how much in taxes we will pay, like a big volume control on a stereo. Everybody gets one. We can dial down the amount of tax we pay. We can dial it up and get many more comprehensive services. The government must then adapt to what people want. Wow, what a concept!

The purpose of government is arguably to grow government. If this is true, then the tax knob would be very threatening. The first thing the government would have to scramble to do is (finally) explain what we are paying for. Because if we only dialed up enough taxes to pay for essential services, police, fire, national defense, we'd kill almost the entire government. What else is essential? The burden to answer that would suddenly fall on legislators to explain themselves.

Most would peg the knob at one end or the other to counteract what others are doing. The way to fix this is to make the personal effect stronger than the national effect. Details are left for the interested student.

Another problem is what to do about voters that pay no income taxes? They of course would want to set it at maximum, which would seem a bit unfair to those of us that do pay. Representation without taxation. But the saving grace is that it applies to everything, including corporate taxes and sales tax. In this case, everybody pays, regardless of what goes down on their tax returns.

This thought experiment suggests to me that people would turn it down. Maybe all at once or perhaps little by little over many years. Ultimately, the knob reflects what we really think, that the taxes are high and the services, while often interesting, aren't all worth what they cost.

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