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When the issue of taxation comes up, there is a criticism offered that some people pay far more in taxes than the value of the government services that they get back. Others pay far less in taxes when compared to the government services they get back. The two taxes that are often cited are the federal income tax and the estate tax. Because of the progressive nature of the federal income tax, higher income earners can pay a large tax bill while lower income tax earners can pay a small or even no federal income tax bill. On the estate tax, only a teeny tiny percentage of people pay this tax on the transfer of property to others. They maintain they get nothing in return for it in the way of increased services or societal benefit.
One could do the same with many other taxes including property tax and others.
The criticism is then offered that there is no one-to-one direct relationship between the amount you pay in taxes compared to the value in government services you get in return. The conclusion from those critics is that such taxation is unfair and should be changed.
Some people advocate a change in this basic idea of taxation. They advocate a system where people are only taxed on the government services they use and no more. This would prevent people for advocating for higher government spending and more government services if they themselves had to pick up the bill for them and they could not pass that increased cost off to others who do not use those services.
This would be similar - if not identical - to the retail shopping experience where you go into a store, pick out only the items you want, go to the checkout with your basket filled, and then pay for only what you have selected. The idea some have suggested is to take that model and apply it to taxation.
I maintain that the purpose of taxation is not at all to get a one to one dollar return on taxes and to expect that anyone should get that is ridiculous. Taxation is a societal policy and the cost of government at different levels is spread to society. To apply that model to societal taxation is nonsensical and defies the very idea of a large system where the burden is spread across the populace.
I also contend that this model of taxation as a retail shopping experience would be impractical and nearly impossible to administrate. Consider one example:
Let us take the case of Albert & Diane Harris of a city in New Jersey. They make $110K per year - a nice sum which places them in the top 7% of income earners in America. They pay about 30% in all taxation to all levels of government after their deductions are figured. This means their annual tax bill is for about $33,000.00. They have four children, ages seven through fourteen who attend the local public school system. Governor Christie of New Jersey has told us that it takes about $20,000.00 per student to educate children in parts of his state. That means the Harris children cost the state at total of $80,000.00 per year in tax dollars. That is almost two and one half times what the family pays in taxation.
Under the taxation as retail shopping idea, the Harris family would have to be taxed $80,000.00 per year to cover that cost of the educational government services they are consuming. How is that even practical? How would you do that? How could they pay such a bill?
And keep in mind that we are only measuring a single government service the Harris family is using. There are scores of other government services they are consuming and those too would have to be paid for under that system. The final tab for the Harris family could quickly run to over $100K per year and they could even fall into the vilified category of using more than they pay for.
How do you deal with the Harris family in a system using taxation as retail shopping model?
Consider example 2: If one should only pay for the government services they actually use as an individual and no more or no less, how do we calculate this on an individual basis without spreading the cost over society or even to the specific group of users of that service?
Let us use the example of a person who owns their own large truck and is in the freight hauling and delivery business. They have a very large and heavy truck which rolls on the highway for some 30 -40,000 miles per year. The truck does damage to the highway system causing ripping up of pavement as nearly all trucks will do at some point.
How do we even begin to asses the cost of that individual truck driver to the damage of the roads and the cost of both building them and maintaining them? Again, not to an average driver and not to the average truck of a similar size. The taxes must be applied to this specific driver and his truck. If we apply the principle of the taxation as retail shopping model - you only pay for what you use in government services - how do we do this in the case of the trucker?
I have no doubt out resourceful posters can come up with thousands of other examples that would fit the lives of the American people.
Is such a system of taxation even possible? Is it practical? Is that the intent of taxation in the first place?
How would it work? Could it work? How much government bureaucracy would be required to make it work? And who would pay the cost of that increased government bureaucracy?
One could do the same with many other taxes including property tax and others.
The criticism is then offered that there is no one-to-one direct relationship between the amount you pay in taxes compared to the value in government services you get in return. The conclusion from those critics is that such taxation is unfair and should be changed.
Some people advocate a change in this basic idea of taxation. They advocate a system where people are only taxed on the government services they use and no more. This would prevent people for advocating for higher government spending and more government services if they themselves had to pick up the bill for them and they could not pass that increased cost off to others who do not use those services.
This would be similar - if not identical - to the retail shopping experience where you go into a store, pick out only the items you want, go to the checkout with your basket filled, and then pay for only what you have selected. The idea some have suggested is to take that model and apply it to taxation.
I maintain that the purpose of taxation is not at all to get a one to one dollar return on taxes and to expect that anyone should get that is ridiculous. Taxation is a societal policy and the cost of government at different levels is spread to society. To apply that model to societal taxation is nonsensical and defies the very idea of a large system where the burden is spread across the populace.
I also contend that this model of taxation as a retail shopping experience would be impractical and nearly impossible to administrate. Consider one example:
Let us take the case of Albert & Diane Harris of a city in New Jersey. They make $110K per year - a nice sum which places them in the top 7% of income earners in America. They pay about 30% in all taxation to all levels of government after their deductions are figured. This means their annual tax bill is for about $33,000.00. They have four children, ages seven through fourteen who attend the local public school system. Governor Christie of New Jersey has told us that it takes about $20,000.00 per student to educate children in parts of his state. That means the Harris children cost the state at total of $80,000.00 per year in tax dollars. That is almost two and one half times what the family pays in taxation.
Under the taxation as retail shopping idea, the Harris family would have to be taxed $80,000.00 per year to cover that cost of the educational government services they are consuming. How is that even practical? How would you do that? How could they pay such a bill?
And keep in mind that we are only measuring a single government service the Harris family is using. There are scores of other government services they are consuming and those too would have to be paid for under that system. The final tab for the Harris family could quickly run to over $100K per year and they could even fall into the vilified category of using more than they pay for.
How do you deal with the Harris family in a system using taxation as retail shopping model?
Consider example 2: If one should only pay for the government services they actually use as an individual and no more or no less, how do we calculate this on an individual basis without spreading the cost over society or even to the specific group of users of that service?
Let us use the example of a person who owns their own large truck and is in the freight hauling and delivery business. They have a very large and heavy truck which rolls on the highway for some 30 -40,000 miles per year. The truck does damage to the highway system causing ripping up of pavement as nearly all trucks will do at some point.
How do we even begin to asses the cost of that individual truck driver to the damage of the roads and the cost of both building them and maintaining them? Again, not to an average driver and not to the average truck of a similar size. The taxes must be applied to this specific driver and his truck. If we apply the principle of the taxation as retail shopping model - you only pay for what you use in government services - how do we do this in the case of the trucker?
I have no doubt out resourceful posters can come up with thousands of other examples that would fit the lives of the American people.
Is such a system of taxation even possible? Is it practical? Is that the intent of taxation in the first place?
How would it work? Could it work? How much government bureaucracy would be required to make it work? And who would pay the cost of that increased government bureaucracy?
