Voluntary taxation, a thought experiment

[natedogg]

This is merely a thought experiment. I'm under no illusions that our decline towards an authoritarian socialist system will ever reverse direction.

But....

Imagine a system where all government endeavors are funded by voluntary contributions, a system where for example, congress can pass bills that *authorize* policies but cannot levy *taxes* to *fund* those policies.

Under such a system, it is rather obvious that most endeavors of govt would disappear instantly. We can safely assume that welfare of all types would disappear from government. This does not mean that charity and aid for the truly poor would disappear, but most charitable souls would surely provide their donation to a more efficient and targeted private charity. (Although govt welfare would become more effective in order to compete for funds and thus might begin to attract contributions). It goes without saying that a fraudulent scam like Social Security would disappear, but again, some sort of charitable aid to starving seniors who failed to save for retirement and have no family would certainly exist as a private charity.

We can also assume that certain things would truly disappear once govt could not fund them via compulsory taxation such as
$18 Billion a year of farm subsidies, research grants for studying why why popcorn kernels sometimes fail to pop or
$100,000 to boost Tiger Woods' PR and

$230 million for a bridge to serve a population of 14,000 (who currently do just fine with a ferry), to name a few.

Some might protest "But these projects create jobs!"
That's nonsense, and not worth explaining here.

Now, lets examine some things that might truly be considered essential activities of government such as courts, law enforcement, and national defense, even public education. Without taxes collected under threat of jail, would these endeavors still continue? I think so.

Imagine your tax burden disappeared and now the military came to you asking for a contribution. I have no doubts that many people would contribute out of a desire to keep our country safe. I know I would do so. In fact, the levels of spending on the military, while certain to go down, would almost certainly increase as a portion of govt spending. Defense is a visible and necessary component of our government and most people immediately identify it as an unavoidable expense.

But... suddenly we'd have an army scrambling to attract your dollars. Efficiency levels would soar as the military re-tooled itself to use your dollars wisely. Our foreign adventures would have to be financed directly. Something like the Iraq war or the Balkans' Bombing Bonanza could never take place unless those who support it were willing to contribute thousands of dollars.

Branches and sub-branches of the military would have to compete for your contributions by becoming efficient and demonstrating that you are getting your money's worth. They'd have to show how they use the money, expose the accounting, and outline their high-level directives and initiatives, allowing you to decide what to support.

Third party private evaluators of govt services would spring up. Just as morningstar and consumer reports provide detailed analysis to consumers about certain industries, "Government Reports" (and its competitors) would provide detailed analysis and summaries of each government endeavor. They would break down the amount of contribution you should give based on your income, assuming you support the endeavor and wish to contribute.

Government agencies would break down their goals and milestones by budget. "If we get $X, we'll first do this and that, if we get $X more, we'll do this and that other thing too", which is basically how private foundations work now when they ask for funds. They outline a stepladder of goals based on possible levels of funding they hope to achieve. If they don't stick to that ladder, you are free to contribute elsewhere to an organization that will stay true to its promised prioritized goals.

In this environment, various funding organizations would arise that would do the work for you. If you want to contribute to building interstate highways, you should not have to research every budget proposal for every possible highway project to identify the pork vs. the valid projects. You would contribute to the "Responsible Highway Project Contribution Service" which you trust to allocate your money efficiently to highway projects that need funding. If they turned out to do a poor job you would just give your money to the "Even More Reponsible And Even More Informed Highway Project Contribution Service" which may charge a slightly higher distribution fee or maybe not.

Some might fear that under this system, businesses could easily create their own advanatageous business climate by contributing to government endeavors that would protect them from competitors. Let's ignore for a moment the fact that this is currently how things work anyway. In order for a business to buy an advantage from the public, government would still have to authorize the endeavor, then go asking for money to support it. So if politicians pass a law that creates an unfair business subsidy to favor a campaign contributor, they still have to come to you and ask for the money!

For example, if you live in Maryland you might be asked
"How much do you want to donate to Giant Foods LLC to create an unfair advantage against Walmart?" You might think that is a worthy use of govt funds and contribute. )I realize there's more to the Walmart issue but this instance is a pretty straightforward example of competetitors recruiting the legislature to give them an advantage.

Regardless, it becomes a LOT harder for corporations to engineer an unfair playing field under a voluntary taxation scheme. (This is why I also support the more realistic policy of an extremely low corporate tax rate - preferably 0%)


For most of the nonsense that goes on with our money, such as
giving money to the rich so they can build homes in risky flood zones , you would be able to rest easy knowing that your trusted "Disaster Relief Contribution Service" would not bother to throw your money away like that. If by chance you happened to believe that the wealthy should have their flood-zone properties subsidized by you to cover the damages they are sure to suffer, nothing would stop you from contributing to that program. If you are foolish enough to give your contribution to a service that is a front for the rich and funds those kinds of things, that is your choice. It would be widely available knowledge which services were most responsible with their tax contributors' money. And of course, you could always contribute directly, evaluating the value proposition of each govt endeavor on your own.


The most beautiful and attractive result of this system pertains to the national debt. Under a voluntary taxation system there would be no national debt, only personal debt. If you wanted to borrow from your grandchildren's future to finance today's govt endeavors, you would *literally* do so. Take out a loan and give that money to the govt. Obviously, very few people would do this but that only shows what an egregious violation of our public trust the deficits represent. But if there was a need to overspend, what public debt there was would actually be held by the citizens of the public! That would be a *much* better situation than we have now.

The current system which uses comprehensive taxation that goes into a single pot and *then* gets doled out to the most plaintive special interests is an outright disaster that disconnects the will of the people from our representation. Politicians can claim one thing while funding another (ala No Child Left Behind). And they can get away with policies that no one supports because they've already got your money to do it with!

For example, congress has authorized the local police to sieze your home if they find your neighbor's kid smoking pot in your back yard. Who in their right mind would fund such a ridiculous policy? Under voluntary taxation, you could immediately stop contributing to the police department that chooses to use those tactics.

Imagine a system where congress has to come to you with hat in hand asking for $1000 to pay for some dictator's palaces and death squads? Imagine they had to come beg your money to subsidize offshore drilling in Alaska, which is a component of Bush's current energy bill ? How much money would you donate to the shareholders of offshore oil drillers in Alaska if you actually had the discretion? Congress is about to require a very large donation on your part to those very shareholders.

No doubt, under a voluntary taxation system, there would be many drawbacks. But the essential services of government would likely continue. I base this on nothing more than common sense, and my own proclivity to contribute to essential services, but perhaps I'm wrong.

Consider energy tech, a favorite topic of this forum. I would contribute to such research efforts with alacrity, as I'm sure many would. If anything, alternative energy research would probably improve as citizens became empowered to fund and direct research efforts free of corporate influence on Congress. Citizens could rely on trusted third party foundations to direct the research contributions to the most worthy projects.

As I said, no system is perfect. There's no chance in hell our socialist authoritarian leaders and our simpering socialist electorate would allow this system to arise, but it's an interesting thought experiment.

Ideally I'd prefer this voluntary taxation system, because most justifications for comprehensive compulsory taxation do *not* rest on the notion of public good but are simply mealy-mouthed ways of saying "I want *you* to pay for *my* (fill in the blank)" and even "I believe you should give money to such and such third party so I'm going to make you do it" and of course "if you contribute $3k to my campaign I'll steal $1 billion from taxpayers to subsidize your shareholder value".

That's the sad truth of today's system. Things could be different.

Just food for thought.

natedogg