Friday, April 06, 2001

You get what you pay and it better cost less soon!

You get what you pay for and it better cost less soon or I’d pay an 80% tax rate to stay young and live forever.

As you mention in your tutorial taxpayers pay a tax for the service the government provides. This service can come in many forms. The type of tax and how much tax we are willing to pay/tolerate depends on the degree of return we receive from the government for our tax dollars. A group of people might be willing to accept the imposition of a “sin” tax or punishment, if they perceive that they are benefiting. Maybe as a whole they feel they need help curbing the appetites of their society. Maybe they are hoping to benefit as a society from intangibles like reduced health care cost related to lower consumption of cigarettes.
The funny thing about tax is that once you have it its hard to dump it. As people become accustomed to the entitlement they receive from the government in exchange for their tax dollars, they often don’t wish to forego this entitlement even for the benefit of more money. In this age of efficiency people have come to expect that even despite inflation, things and services should be able to be created and achieved for a lower cost. They expect their taxes to go down and their benefits to remain the same.
Governments that charge too much for too little are overthrown or avoided
I also believe that people will go where the deal is. If they can’t then they will do everything in their power to make a new deal. Theories relating to the ‘Social Contract’ and the purpose of ‘Revolution’ do not answer all questions, but they do explain some things on the surface. Other countries and mobile taxpayers will avoid a country with a rate of tax that they perceive to be to high in relation to the benefits proffered. If they can’t avoid the tax, the social angst generated will eventually drive for change. This change can be peaceful or violent, but it is the exception rather than the rule that the status quo of a system out of balance will endure.
Governments that charge to little for too many services fail due to lack of funds to support an onslaught of attention.
This is the flip side of my last point. A government in this situation will not be able to sustain itself and will drown in the volume of people that wish to partake of their benefits. Certain nations with large quantities of natural resources may feel exempt from this rule, but in reality they are taxing their people by spending the resources that the nation as a whole owns. In reality they may charge a low monetary tax rate but their ‘real’ (dollars and barrels of oil for example) are probably quite high. Many countries today are trying to come to terms with the increase in emigrants. This natural balancing of the world population is a physical example of the worlds population moving to an area supported with one form of benefit or another. While diversity is extremely important and vital to the success of any nation, there must come a point of saturation when the economy of the state can not sustain the growth.

One final note
I would hazard to offer that many people might be willing to pay a higher possibly unlimited tax rate for the right benefits from their government. This may be contrary to the entrepreneurial attitude that many capitalists feel is integral to society's evolution. However, this attitude is not shared or practiced by all. I for one might be willing to forego a substantial portion of my income in return for perpetual youth and happiness (all sorts of worst case exceptions and scenarios could be proffered here). Others might choose to exchange their income in return for certain physical substances that create a feeling of euphoria. Some groups might be willing to live a Spartan lifestyle in exchange for job security and perceived equality. All these deals proffered by the government (substitute your evil deity of choice here) are interventionistic at the extreme, but it is the proposition of ideals and the compromises for these ideals that sometimes lead society awry. Of course who knows maybe one day or in some dimension a government will get it right and be able to offer to everyone their hearts desire for a nominal amount and still prosper and progress.