From: erc@netcom.com (Eric Smith)
Subject: Re: Funding the govt.....(Re: Just a few...
Organization: Netcom - Online Communication Services (408 241-9760 guest)
Date: Wed, 6 Jan 1993 16:32:32 GMT

In article <1993Jan5.192332.15128@athena.mit.edu> tyadav@athena.mit.edu (T.Y.) writes:
>================================================
> 
> What follows, is my attempt to get my own thoughts straightened out.
> The rightful govt role:
> [1] protection from criminals
> [2] protection from invaders
> [3] run the law courts to settle disputes
>
> All this needs funds. "No free lunch" - as economists like to say.
> The fundamental question is, then, what is the fair and practical way to
> fund these activities. (I want to use the term "practical" there because I
> want the "cost of obtaining funds" to be as low as possible.)


What kind of taxes are fair and practical?  Income taxes certainly aren't.
The difference between rich and poor people is that rich people already
have money and therefore don't need income as much as poor people do.  So
an income tax is really a tax on poor people to keep them poor.  Progressive
income taxes mitigate this slightly by allowing them to become middle class
before slamming the lid on, but it's still unfair.

Income taxes are also impractical, because they give government agents the
right to ask questions and demand answers of innocent citizens to determine
their income, expenses, lifestyle, etc., which is incompatible with freedom.

So income taxes are neither fair nor practical.  How about consumption taxes?
Consumption taxes, such as sales taxes, value added taxes, etc., impose a
tax collection burden on business, which hurts small business most, and makes
it harder to start new businesses, which are the foundation of a growing
economy.  Just look at all the newsgroups where starting a new business is
discussed, and the biggest concern usually is with the red tape.  Lifting the
red tape from new businesses, making them easier to start, might cause
economic growth to double or more.

So consumption taxes aren't really practical.  Also, they aren't fair,
because they take money from the poor who need it most just to survive.

What about import taxes?  To make import taxes fair, you would have to make
them equal.  That is, to impose the same tax on all imports.  Otherwise
you are favoring some domestic industries at the expense of others.  But
making import taxes equal is not practical, except by lowering them all to
the level of the lowest, which is practially zero.

So, all of the above taxes are unfair and/or impractical.  The fact that
they are collected anyway makes it easy to see how unfair and impractical
they are.  Just look at all the disgust and inefficiency that results.

So it seems that leaves real estate tax.  Real estate tax is much more
practical than all of the above, because it can be collected without any
need to investigate the private affairs of the taxpayers.  It's also more
fair, because defense of real estate is really the main service provided
by government.  With no government, the first armed gang that came along
could throw you off your property and take it for themselves.  They can
also commit other crimes, of course, but those crimes have to be committed
somewhere, and that means on some real estate.  So it makes sense that
government should be paid for by taxing the real estate it protects.

A counter argument might be that government really protects people, not
real estate.  But taxing people is impractical, because lots of people
have no money to pay taxes with, and enforcing such taxes would be
barbaric.  Enforcing real estate taxes is as easy as filing a lien on
the real estate.

Thus, 100% of all taxes should be collected from real estate.  People who
own real estate might be horrified at that idea, but thinking about it
for a while they would realize they would actually wind up paying a lot
less to a fair government than they do now, by ending their income taxes,
sales taxes, etc.