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Source link: http://archive.mises.org/8868/will-broader-taxes-lead-to-more-accountable-government/

Will Broader Taxes Lead to More Accountable Government?

October 29, 2008 by

I’ve read the claim by Tyler Cowen here several times but I still can’t make sense of it:

A good rule of thumb is that is (sic.) you should worry when a state does not fund itself through broadly based income and consumption taxation. We all complain about taxes, but in fact when large numbers of people pay taxes, they also demand accountability from their government.

There is no broad-based consumption tax at the federal level (not yet anyway) but somehow I doubt that passing one will cause government to fear its citizens; actually the reverse is true. As regards the income tax, was the government less accountable in the 19th century before the income taxes or the 20th century? Again, it seems like the opposite of what he claims. It is the unaccountable government that manages to pass laws permitting it to rob people’s earnings directly from their bank accounts in the first place, and once the government gains this power, it becomes worse than ever.

Finally, I’m not sure what it means for the government to be held accountable in our times when masses of people have protested virtually everything the Bush administration has done for 8 years, but it hasn’t stopped the wars, the bailouts, the prisons, the shredding of the bill of rights or anything else. Tyler’s logic would suggest that this is because we aren’t taxed enough.

Maybe someone else can explain.

{ 14 comments }

hudson October 29, 2008 at 3:12 pm

I don’t know if this is the argument that the writer was intending (and I don’t necessarily buy my argument or its basis), but in a progressive tax structure, people don’t pay taxes proportionately. Further, in America today, many have negligible (possibly negative?) tax bills. What kind of accountability from government are these people going to demand?

If everyone were taxed to an equal level of pain, we’d hear banshee-screams for all kinds of reform.

Michael A. Clem October 29, 2008 at 3:17 pm

I can see broad-based taxes as being more “fair”, as opposed to narrowly-defined taxes, like extra taxes on gas, cigarettes, or the hotel/motel tax. But I don’t see why that would necessarily increase accountability.

Dennis October 29, 2008 at 3:55 pm

Over the years, Mr. Cowen has, to at least a modest degree, become an apologist for the state, a so-called belt-way Libertarian. In my opinion, that explains the “logic” of his comment.

Brent October 29, 2008 at 4:04 pm

Why would people care about how much they are taxed if they are net tax consumers anyway? Lots of government bureaucrats purposely vote for higher taxes (on themselves included) because that means the pie is bigger and they’ll get a larger slice.

8 October 29, 2008 at 4:13 pm

$2.4 trillion in receipts for 2007.
300 million Americans, 225 million adults.
$10,667 per person.

How low would the tax have to be if every adult was required to pay? Elderly people would lose most of their SS check to taxes. Minimum wage workers would have about $50 remaining in their weekly paycheck.

MattYoung October 29, 2008 at 4:27 pm

Efficient market theorem says, over time, government services and taxes should match the wealth distribution. The problem is “over time”.

Eric October 29, 2008 at 6:07 pm

I think regardless of the tax structure. I would prefer a flat tax as opposed to progressive or consumption. The individual tax payer needs to write a check each month for the taxes owed. Let us eliminate employer withholdings. Milton Freedman did the government a big favor with that government scheme.

Book 'em Danno October 29, 2008 at 8:49 pm

Cowen engages in fluffy non-sequiturs…

There is no determinism in human behavior, just individuals making choices. And unlike in physics, no constants in human behavior, said Mises. Even if the taxed were taxed the same there would not be a way of determining the level of demand for accountability. Never mind that for some the ability to exact accountability would be diminished to the extent they were taxed. Some people accept serfdom.

Thomas Crown October 30, 2008 at 9:09 am

I believe he is referring to the significant portion of the Amerikan populace which pays no income tax, and which in future is likely to experience a negative income tax under the coming “redistribution” plans. When citizens (who vote) have no skin in the game, and can simply stand in place like Oliver Twist and wait for more handouts they didn’t earn and don’t deserve, guess what kind of government “accountability” we get?

Hank Reardon October 30, 2008 at 11:07 am

Easier Said Than Done… Eric I wholeheartedly agree that we should do away with employers withholding.

Just imagine the revolution to the tax system if each taxpayer actually physically wrote a check to the IRS every month.

I work in finances, when I ask clients how much they paid in taxes I often hear “I did not pay anything, in fact a got some money back” the “money back” was actually due to an overpayment due to excessive withholding be the employer… my point is many employees don’t pay attention to their paystubs enough to KNOW how much taxes they pay, thus, they are not pissed about the system.

Hank Reardon October 30, 2008 at 11:10 am

Abraham Lincoln…

“Property is the fruit of labor…property is desirable… a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.”

Michael October 30, 2008 at 11:27 am

We should hold the state accountable regardless of the level of taxation imposed. Of course, the level of taxation should be commensurate with the size of government. Based on this model, a limited Constitutionally-bound government ought to have a small taxation requirement.

Maturin October 31, 2008 at 7:47 am

“There is no broad-based consumption tax at the federal level (not yet anyway)…”

There is such, but most people pay no attention to it, because it is hidden from their view by what the MSM and Washington Power Brokers keeps telling them: “Price gouging oil companies.”

Last I looked, the sticker on the pump said something like 13 cents per gallon federal excise tax.

Here in NY, according to my calculations, based on the sticker on the pump (which not all stations display where you can see it), we presently pay around 60-65 cents in local, state, and federal taxes, for each gallon that presently costs around 2.80 to 3.00 at the cheap stations. That is better than 20% taxes, but it is artfully hidden from the consumers’ awareness, because it is already calculated into the posted price on the pump, rather than calculated separately at the time of the sale.

As Mr. Clem points out, there are other federal taxes that are artfully hidden from consumers, as well, such as tobacco and alcohol, but not everybody buys those. We all buy fuel for our cars, but we have become inured to the hidden taxes in that cost, because the Washington Liars and MSM tell us fuel costs keep rising due to corporate greed. This lie makes the public feel that the oil companies should be blamed, rather than the liars in power.

My beloved senator has called for an investigation of oil companies that is not based in reality: http://www.instituteforenergyresearch.org/2008/10/29/do-gasoline-and-heating-oil-prices-fall-more-slowly-than-crude-oil-prices/

Dave Atherton October 31, 2008 at 1:55 pm

I think the first poster, hudson, more-or-less hit it. The idea here is that the more progressive the code is, the more the populace in the aggregate is divorced from the costs of their economically idiotic voting patterns and political demands. I would imagine you’d be amazed at how many “critical” programs would be starved to death if each citizen (perhaps each of majority?) were required to pay a flat citizenship fee. There would certainly be a lot of “You want me to pay for WHAT?!” assessments by the tax paying populace. I would guess the size and ridiculousness of government would decrease steadily over time if revenue was raised that way versus what we have now. Of course, this IS inferior to the minarchist alternative, but given the initial conditions of mandatory government, a fee seems to provide a healthier set of incentives.

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