Yes. I realize that it’s quite long. I believe it’s worth reading or I wouldn’t have added it. Anyways, no one need feel obligated; and I will understand if many people choose not to read it.
Regarding #1:
I would definitely agree that both the costs and benefits of government (I guess that’s what you meant in #1?) must be taken into account; indeed it is precisely such a line of reasoning that led to the suggestion of taxing wealth rather than income in the first place. There is absolutely (from what I can tell – what I’ve read) no principled explanation for using income (rather than some other quantity – e.g. the number of cats one owns) as the basis for assessing tax obligations. In other words, the questions I was contemplating (as you’ll see from the post) are:
(a) why do we pay taxes? and
(b) in what way(s) do we benefit from the existence of government*?
I obviously came to question (b) in consequence of my answer to question (a), which was: because government is a costly activity (i.e. expenditures are incurred as a result of government existence/operation), the results of which (at least in our case – and I think in the case of much of the “civilized” world) produce a public good in the form of property rights from which many of us derive economic benefit. I admittedly do, in the post, take for granted that government is a good thing (I mean that I do believe that some amount of order is generally better than the extreme alternative). Given the tenor of some of the comments I’ve read, no doubt some will take issue with this presumption. My comments would be geared more at those who don’t find the existence of government somehow offensive [see * below].
In other words, my view of the purpose of life is friendly towards the establishment of institutions that have the purpose of facilitating the production of public goods, including a certain amount of order to our daily lives; with the important constraint that some semblance of human agency (an internally consistent notion of freedom) be preserved. In other words, I’m in favor of having government. Another way of putting this is that I believe (to answer your #1) that the benefits of government generally far outweigh the costs – especially when government has the basic form that ours has. (I like to think that I’m not naïve about its problems; but there’s no question in my mind regarding its desirability compared to pretty much every other setup that currently exists on this planet.)
Regarding your comment about “the pricing system”: I’m not exactly sure what you’re referring to. I am a little bit familiar with some pricing concepts and, again, my comments in the post reflect (I believe) that I have taken this consideration into account. Indeed, given the assumption that we want access to the public goods that result from collective behavior (i.e. government), using wealth (rather than income) to finance general government expenditures is sensible precisely because it results from taking pricing frameworks seriously – much more seriously than the vast tax theory literature which ignores it altogether as a consequence of assuming that governments have (and will continue to always have) strict monopoly power. The line of reasoning seems to be that governments have monopoly power to tax, therefore taxes are entirely devoid of connection to any benefit we derive by the existence or operation of government. (Well, at least this assumption of complete monopoly power – extending into perpetuity - seems to me to be the tenet that is most responsible for the mistaken line of reasoning that has resulted in decades of focus on efficiency to the exclusion of all else in the tax theory literature.) If governments do and always will have claim to such monopoly power, then there is no sense in talking about pricing when it comes to government goods and services – because monopolies can set whatever prices they want to. If, on the other hand, improvements in telecommunications and transportation place information and the opportunity of choosing what country we can live in – a direction that seems to be the trend – then governments can no longer take such monopoly power for granted: they must in a sense compete for citizens in much the way that vendors compete for customers.
Once one has reached the conclusion that this is the general direction in which things are going, it seems sensible to speak about pricing where government goods and services are concerned; and it leads to the second question that I mentioned above, i.e. question (b). I have reached the conclusion (others need not agree) that while we potentially benefit from government in many different ways, the most fundamental and pervasive economic benefit is that of property rights. The question then becomes, what kind of a tax policy (i.e. means of assessing financial obligations sufficient to meet the expenditure requirements of producing these public goods) makes the most sense? The conclusion I have reached is wealth taxation – e.g. a fixed percent of each individual’s net wealth (I believe it would be quite low – Shakow has some preliminary numbers that I came across about a year ago). I’ve reached this conclusion because I have come to believe that the degree to which we individually benefit by the existence of the property rights guaranteed (implicitly - to whatever degree they exist) by our governments is proportional to our individual net wealths. The income tax as we know it and taxation of corporations would be done away with (corporate assets would be taxed according to their respective shares of ownership by individuals). This is a bare bones system in the sense that additional programs (should a nation choose democratically to have them) should be “priced” (i.e. costs assessed to individual citizens) in a similar manner: by identifying the degree to which we benefit and then dividing the costs accordingly.
Response to #2:
I have nowhere stated that I believe that taxation creates or preserves property rights. I also don’t believe that the money you pay to the grocer for groceries actually creates milk or eggs – at least I haven’t ever seen a five-dollar bill do that kind of thing, whereas I have seen cows produce milk and chickens produce eggs. And I guess that if the grocer stopped giving you milk and eggs when you gave him your money that you might not be very happy about continuing to make the exchange going into the future. You might find another grocer…
Response to #3
I have a model that predicts that wealthier people would have economic incentives to pay greater amounts for a guarantee of property rights once we have collectively agreed to finance this public good. All groups have rules of membership and as people are more and more free to move from one country to another (i.e. to choose the governments they will live under), I will not weep for the person who chooses to stay in a country and gets thrown into jail for not keeping the law that demands just payment (one that he should be willing to pay if the benefit were retractable, which it is not because it’s a public good) for a benefit he implicitly receives (i.e. a benefit that cannot be turned down due to the public nature of its production). The notion of property does not appear to exist outside the framework of sociality or government: there’s no right to anything when there’s no government to establish that right is there? Well, I’m not an expert in this subject (my training is in stats and economics); but hopefully my comments will have been interesting to you all – if not convincing.
Best regards,
Loftin Graham