Perhaps the majority of you already know that the free-rider problem is the biggest objection to voluntary taxation. Just recently though I learned about another way of framing it: the preference revelation problem. Most of the time you have absolutely no problem showing your preferences. When you go to the grocery store you select the items that match your preferences, you place them in your cart and then you head over to the checkout aisle. And perhaps, on occasion, your preferences have caused the cashier lady to raise her eyebrows? When you're browsing on Netflix...you scroll past the movies that do not match your preferences...in order to find the ones that do match. Here on this forum you search for the threads that are the closest match to your preferences...and here you are! You've demonstrated your preference! Clearly our preferences are important. If we weren't able to express them...then producers would have no idea how much of any good should be produced. That's why, when it comes to the public sector, rather than thinking of it as a free-rider problem...it's more insightful to think of it as a preference revelation problem. The term..."free-rider problem"...just conveys the idea that you're mooching off of others' contributions...but the term "preference revelation problem" conveys the idea that your preferences are important enough that it's a problem if they can't be determined. Given that paying taxes isn't optional, it should be quite apparent that this problem hasn't been solved. Except, if our preferences truly are important, as the preference revelation problem implies, then why aren't we allowed to choose where our taxes go? Paying them still wouldn't be optional...but allowing taxpayers to shop for themselves in the public sector would give them the opportunity to contribute to the public goods that most closely match their preferences. This way, government organizations would know exactly how much of each public good should be produced. If it wouldn't make any sense for us to have an inefficient allocation of private goods...then why would we want to have an inefficient allocation of public goods? For example, if it wouldn't make any sense for us to have too many cucumbers and not enough video games...then why would it make any sense for us to have too much national defense and not enough public healthcare? Perhaps at this point...you might be a bit skeptical regarding the origins of the preference revelation problem. The person who by far gets the most credit for highlighting this problem was the Nobel Prize winner Paul Samuelson...a Keynesian (liberal) economist. He discussed the problem in his paper...The Pure Theory of Public Expenditure...which has been cited over 5,000 times. Samuelson's paper provides the definitive theoretical justification for our tax system. In it, he acknowledges that your preferences are important and it's a problem that we can't determine exactly how much you value public goods. After doing quite a bit of digging...I have yet to find any relevant/credible/noteworthy economist who argues that your preferences are not important. For comparison's sake though...here is the best example that I've found of the belief that your preferences are not important... It doesn't matter how much money or education you do or do not have...none of you are blank pages. You have preferences...and they matter. The more that somebody believes that other people's preferences do not matter...the more dire the consequences. In China's case...20-40 million people died from state caused famine. Freedom means that you can decide for yourself what does...or doesn't...make sense for you to do. If you're a vegetarian...would it make sense to buy meat? If you're a sports enthusiast...would it make sense to watch soap operas? If you prefer the great outdoors...would it make sense to spend your time indoors? There are plenty of things that it really wouldn't make any sense for you to do...and for the most part, you avoid doing them. That's why the market works. The alternative would be nonsense...also known as non sequitur economics...planned/command economics...socialism. The public sector is a non sequitur economy...which is a problem because that's where half of our nation's revenue is spent. Fortunately, our supply of food isn't determined by non sequitur economics...unfortunately, our supply of war is. We've already had two world wars...so rather than having a third one...let's give taxpayers the freedom to spend their tax dollars on the public goods that make the most sense to them. Is what I'm saying making sense to you? If it does...then like tax choice on facebook. But if it doesn't...and you value having the freedom to say "no thanks!"...then doesn't that automatically mean that you really should like tax choice on facebook? If you'd still prefer to do some digging of your own though...here's the Wikipedia entry that I created for the benefit principle. In the reference section there are over a dozen sources on the topic. So...is it your preference to reply to this thread? I can't know that...only you can. All I can do is make an educated guess regarding what might match your preferences and then submit this thread. And when I submit this thread...I'll be giving you one more option than you had before. Whether it's better than your other options is up to you to decide.
pretty dumb if you ask me. we all use government stuff.... drive on roads, occasionally might have to call the police or ambulance for something.... plus out military protects all of us so we all have to chip in and pay. if you dont sacrifice anything for america, then you are no true american.
I'm not saying that people don't have to chip in and pay...I'm saying that they should be able to choose what they chip in and pay for. When you go to the grocery store...why should you be able to choose what you pay for?
oh of course. that makes sense. however some things like roads, military, law enforcement, ambulance, fire department, disaster relief, etc.... things we all might use should be mandatory. things like welfare, medicare, etc things that we dont all use should be voluntary. i agree.
Wouldn't allowing taxpayers to choose where their taxes go quickly reveal which things we all use? Here's your dilemma... A. You can argue that taxpayers are generally irresponsible...but this would mean that the private sector wouldn't allocate "sufficient" resources to helping the needy. Therefore, this argument would, indirectly, be an argument in favor of allowing the government to determine exactly how much of your taxes go to welfare, medicare, etc. B. You can argue that taxpayers are generally responsible...but this would mean that you really shouldn't mind if taxpayers had the option to give their taxes to welfare, medicare etc. This argument would be an argument in favor of autonomy rather than authority. From my perspective...it's not even a hard choice. It's not even close to being between a rock and a hard place.
I think that if you allowed a person to pay for their services on a case by case basis, rather than having an umbrella fund from the government via tax revenue, then those places which receive it lose a steady source of income and while those people who do not use those services will no longer have to pay, those who do will likely have to pay more when they raise the prices.
They are forced to pay the taxes, but they can choose where they go? That's an improvement, but it doesn't make taxation voluntary. Personally I think that the pure essentials of government can be funded through donations. The US government already has a donation account that gets a surprising amount. Imagine if Obama came out tomorrow and said that they're setting the American people free, and that they should voluntarily choose to fund constitutional government that only uses enumerated powers. It's not hard to see that raising say... a few billion. Especially since some people will be getting an instant 30% pay rise. The Federal government just needs to act in matters between states. It doesn't need to interfere in internal state matters. And if it is unable to fund itself in this way then it doesn't deserve to exist: the people have spoken.
But if people could choose where their taxes go, then why would they give their taxes to a government organization that doesn't deserve to exist? If they gave their taxes to say, public education, then this would indicate that the private sector was not sufficiently meeting the demand for education. Here's the bottom line... If the Dept of Education is doing something that is "sufficiently well done" by the private sector...then taxpayers would derive absolutely no benefit/utility/enjoyment from wasting their taxes on this department. In other words, if there's an adequate supply of education in the private sector...then why would taxpayers demand MORE education from the public sector? If they did demand education from the public sector...then the logical conclusion would be that the private sector is not supplying enough education. Here's another bottom line... Markets allow money to flow where it creates the most value. Tax choice would create a market in the public sector. Therefore, a market in the public sector would allow tax dollars to flow where they create the most value. Inherent in the idea of "flowing" is that the money is shifted away from the government organizations that create the least value. There wouldn't be "profit" in the public sector...but that's ok because losses are even more important than profit...
thats a troll view. might as well have 0 federal government, military, police, or anything. might as well live in Africa. - - - Updated - - - thats a troll view. might as well have 0 federal government, military, police, or anything. might as well live in Africa.
It could be that the budgetary process would fail if taxes were not compulsory. I can't argue from an economic standpoint because I have no expertise in the area, so I'll have to go for common sense (assuming I can muster enough). In a business you don't know how much you'll be getting as income from week to week, but you can probably predict it based on the gathering of historical and contemporary data. I would think that your budgetary decisions would be based on a mix of short-term planning and longer-term planning using that data. In government you don't have the flexibility of being able to deal with the ebb and flow of income. In business if you start running short then you can make decisions which cut your expenses and you live within your means at any point of the cycle. You can't afford to do that in government. You have to know what you're going to get in income so you can plan your expenditure. Discretionary tax would mean government would have to behave like business and frankly I don't think it would work out.
You've already been informed of your error on this one. Education cannot be treated as a standard good; its public good traits ensures that standard demand analysis will guarantee underinvestment. The individual, assuming a utility maximization behaviour, will exhibit a willingness to pay that ensures an overall loss in the general well-being created through public good provision. The whole issue is focused on market failure. And where is that market failure generated? Through the nature of the individual's decision-making. You're demanding a return to market failure. False! You'd have to assume utopianism to derive that result. Markets will generate a pareto efficiency result (which doesn't mean "most value" at all), but only if externalities and public goods do not exist. Choice actually tends to reduce the effectiveness of the public good. It enables discriminatory behaviour. See, for example, vouchers which can negatively impact on social mobility by further exacerbating inequalities of opportunity.
depends on what corporation, they can just print off more stock shares, free money as long as the people buying perceive it to be of value.. when it comes to stock... peoples perception of it... is reality corporations are more like mini governments... .
As usual...you're missing the point... In a tax choice system, given that people would have to pay taxes anyways, they would have absolutely no incentive to lie about their true preferences. Throughout the year taxpayers have the option to shop for themselves in the public sector. They would directly pay their taxes to the government organizations of their choice. The result would be the optimal provision (aka efficient allocation) of public goods. Now, you seem to think that people's true preferences for public are not necessary to determine the optimal provision of public goods. So...cite your sources. Who are the economists who share your perspective?
We already know that their preferences will lead to underprovision of public good. You've come out with guff and then asked for economic analysis into that guff. That's not how it works. The burden is on you. Refer me to one source that supports an individual preference delivery of public goods.
And if everyone opts NOT to pay, I for example might be incentivised to only pay local and state taxes if any and not Federal ones at all. Under your system where is the support for Federal demands to be paid from reliably year to year. For example the armed forces need funding in the modern world what would happen if no one paid into that at all?
Well if they were voluntary no one will ever pay them. I know how you feel though taxes are a burden and should be very very low.
Roads, police and security services, military/defense...none of these services were created by government. They all would and could exist without a monopoly over them, especially in this day and age with our more advanced technology. There are areas of the country in which such services are privately offered. It's not as complicated as you might think. These are not technological marvels that can only be operated by government. And as far as Military protecting us, as it currently stands that's very debatable. I don't feel that I am being protected by our military, in fact I would say they are doing far more harm than good. The soldiers carrying out orders to impose themselves all over the world and kill innocent civilians are not protecting my freedom in the least and I they should be called out on the heinous crimes that many of them have committed. It's not just the evil politicians sending them overseas to kill that are responsible. The soldiers themselves are making a choice to follow such orders.
