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

[lehighguy]

I've been thinking along these lines for awhile, but this essay has a lot of ideas put togethor very well. Do you mind if I foward it to people?

[bholdr]

it's an attractive fantasy, natedogg, but that's all.

there are so many problems with any possible implementation of such a system, i won't even bother to point them out beyond saying this: people are greedy.

[lehighguy]

Yes they are, that's what's so buetifal about this system. It relies on it.

[bholdr]

[ QUOTE ]
Yes they are, that's what's so beautiful about this system. It relies on it.

[/ QUOTE ]

my main problem isn't with the system, but with it's implementation- it's impossible. re-read my post.


"pay for national defense?! screw that! taxes are for suckers, i'm sure some civic minded conservative will pay my share along with theirs"

and AFTER we're attacked...

"oops, i wish i had some dollars to give to national defense, instead of all these worthless yuan..."

c'mon, now: it's a fantasy.

[lehighguy]

I can honestly say I would contribute to some basic government services because I agree with them and it serves my best interest to do so.

I think other people would too. Especially if I was asked instead of ordered, and had more say over how it was spent as a result.

Cmmon, look at what's going on now. There are plenty of people that would give money to counter terrorism military units. Do you really doubt it.

And it would result in a more justification for military decision. Imagine if you personally had to decide to pay for Iraq. Do you not think that would improve the situation.

[elwoodblues]

[ QUOTE ]
I can honestly say I would contribute to some basic government services because I agree with them and it serves my best interest to do so.


[/ QUOTE ]

I would suspect that even for the most basic of services (i.e. police) the VAST majority of people would take the free ride.

[slickpoppa]

[ QUOTE ]
Cmmon, look at what's going on now. There are plenty of people that would give money to counter terrorism military units. Do you really doubt it.


[/ QUOTE ]

The US military will gladly accept donations from citizens. So why aren't people donating money now to combat terrorism?

[natedogg]

[ QUOTE ]
it's an attractive fantasy, natedogg, but that's all.

there are so many problems with any possible implementation of such a system, i won't even bother to point them out beyond saying this: people are greedy.

[/ QUOTE ]
Of course it's a fantasy but not because it wouldn't work. It would be politically impossible, but not practically impossible.

The problem of free riders is easily addressed by that fact that any endeavor that is insufficiently funded by voluntary taxation would very likely get supplemented by private industry, which is in fact what happens today for any service that is not provided by our government and even for services that are! Does our government today provide financial advice, insurance ratings, education, term life insurance, disability insurance, emergency services, food for the poor? Yes! But those are all supplemented by private endeavors too, and in many cases the private endeavor is loads better.

Take for example freeways under voluntary taxation. If too many greedy freeloaders decided to contribute $0 to the transportation budget, then many private highway builders would appear, charging tolls for their use. Suppose the public gets tired of paying steeper and possibly confusing tolls for various stretches of highway. At that point the Congress passes a bill authorizing a buyout of the private interests... and then raises voluntary taxes to fund the buyout.

Those who have been feeling the pain of the higher tolls will now be more willing to contribute to a public road, although ongoing contributions will be necessary for maintenance, and those may end up being more onerous than simply paying tollway fees. It would certainly be a balancing act.

Even something like courts could be supplemented with private industry if too many freeloaders fail to support the courts. Anyone who thinks private justice is impossible has apparently never heard of binding arbitration. In many, many civil lawsuits both parties will often agree to have the case sent to binding arbitration which is a situation where they pay a private entity, usually a retired judge, to run the case outside the court system. The real Court system's only function is to rubber-stamp the judgement that comes from the private judge.

If, under the voluntary taxation system, too many freeriders impoverished our courts, then more parties would use binding arbitration (which nowdays is often employed for expediency because real courts operate at a snail's pace). Mediation is another solution which is not binding but tends to work anyway.

The point is that just because a certain government endeavor may not be fully funded due to free-riders does not mean that society would not get those services.

Again, I realize this is all a fantasy thought experiment, but that is due to political realities only. Under voluntary taxation, life would go on and society would devise systems for achieving the essential components we have today. Some things would manifest very differently while others would hardly change. Some would be improved, and some would be worse. But it's important to realize that the question of public funding is not an either/or proposition for the current govt services we receive

Furthermore, the negatives could be outweighed by such giant-killers as

1. No national debt, not even possible.

2. Eliminating cavalier foreign military engagements.

3. No more pork spending and giveaways to corporate shareholders via the current reverse-Robin Hood "appropriations" process.

4. Almost certainly it would be the end of the drug war.

Those benefits alone might be a fair tradeoff even if we end up with things like more tollways, less bread and circuses, and no teacher's union. Oh wait, that last one would be awesome too!

Could it work? I think it could. Would it be a better system than what we have now? Who knows, but I don't think it's outside the realm of possibility. It's important to imagine a different world from time to time. Or in my case all the time. [img]/images/graemlins/smile.gif[/img]

natedogg

[jackdaniels]

[ QUOTE ]
Suppose the public gets tired of paying steeper and possibly confusing tolls for various stretches of highway. At that point the Congress passes a bill authorizing a buyout of the private interests... and then raises voluntary taxes to fund the buyout.


[/ QUOTE ]

I agree with most of what you are saying except when you say things like the above. The gov't has NO authority (or shouldn't in a free society) to appropriate private property from legitimate owners (Emminant Domain).

The toll system is a very appropriate approach to highway and road use as only those that actually use the road pay for it. If this system becomes inefficient then people will stop using it, the owners will lose profit and exit the business, allowing someone else to step in and make it better (someone with the right motivation: "I want to make money so I have to keep my customers happy").

Aside from that I think you are on the money with your suggestions.

As for those here whining about "the public good" and "lets not regress to the state of banana republics". You sicken me. What makes you think it is appropriate for you to make decisions based on your skewed moral understanding on the world? You think it is correct for you and your ilk to dig in to MY pocket and redistribute MY money? I have no problem with wealth redistribution done on a voluntary basis (for all I care, give all YOUR money away. Just keep your hands out of my pocket!

Here is a joke I heard once:

A communist was being interviewed by a reporter:
Reporter: If you have two houses, will you give me one?
Communist: Of course, yes!
Reporter: If you have two cars, will you give me one?
Communist: Of course, yes!
Reporter: If you have two shirts, will you give me one?
Communist: Of course, no!
Reporter: Why no this time?
Communist: Because I HAVE two shirts!

Nuff said.