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.