the tax bill idea – more comments
A few months ago, I wondered if it would be better for people to pay a tax bill instead of an income tax. In that scheme, the state tallies up the cost of gov’t and divides by the size of the population. Call that number your “tax bill.” You discount for poverty and surcharge for wealth.
Two points. First, Tax Historian, a commenter, thought that I was arguing that each person get an individualized bill. E.g., if I drove more, I might pay more taxes for roads. That is not what I suggested and I agree it would be impractical. Rather, my suggestion is simple. At the end of each year, the state looks at its expenditures and divides by the population size. So if the federal budget was $300,000,000,000 (33o billion) and our population was 300,000,000, then each person pays $100. The rich might pay a multiple to account for lower income people who can’t pay at all or pay the full price.
Second, I was a little surprised by the hostility in the comments. Here’s the intuition so you can see where I am coming from. Currently, most tax schemes just assume that the state vacuums up a certain chunk of your income, or transactions, or assets. If you believe that the state just owns part of you, or that you just owe a chunk of your wealth to someone else, then sales taxes or income taxes or value added taxes seem normal.
However, if you start with the assumption that government provides services that can’t be provided privately, then it doesn’t follow that the state just owns, say 30% of your income or 8% of your transactions. Instead, you should first (a) figure out what you need and then (b) force people to pay up. That’s the logic of assessments in homeowner associations, for example. Let’s put it this way with an example. How do we shop for food? (a) We just give the grocer 10% of our income and hope he give us enough food or (b) We ask the grocer how much it costs and then pay the market value. There’s a good case to be made for the second option.