Author Topic: What if taxes...  (Read 5650 times)

TheDrake

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What if taxes...
« on: February 25, 2016, 10:28:05 AM »
What if taxes were allocated by the payer? Those concerned with national security and border enforcement could allocate to that. Those who want social programs, like free college, could pay toward that. Budgets of cabinet level departments would be constrained by the amount of money earmarked by the people. Special interest lobbying would have to convince large numbers of people in many cases. People could withhold money from departments doing things that they didn't like, whether it is planned parenthood or the drug war.

For the purpose of the thought experiment, we have to ignore things like non-discretionary commitments, so use whatever framework you need including a constitutional convention. :)

You might have someone allocating state tax to education, and not to federal education, if they believe in local control of that function.

What areas would likely lose funding? Which would gain?

This is the ultra-libertarian argument, except for the fact that you can only allocate and not change the amount you are paying.


Pete at Home

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Re: What if taxes...
« Reply #1 on: February 25, 2016, 10:37:58 AM »
Congressional salaries might take a hit.  :D

The question seems silly, but it's actually not that far off from what the Constitution actually says, where all budget allocations are made by the single most democratic subbranch of the federal government, i.e. the house of Representatives.  If you followed the original intent (which would have thousands of representatives in the house now) it would look a lot closer to what you're proposing.

Pete at Home

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Re: What if taxes...
« Reply #2 on: February 25, 2016, 10:42:28 AM »
In your scenario, how would you manage the allocation of corporate taxes?  Are they broken down to the stockholder level, giving foreign owners of corporate stock power to allocate US spending?

The Koch brothers would find they needed to keep paying taxes in order to control the government.

Seriati

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Re: What if taxes...
« Reply #3 on: February 25, 2016, 10:51:39 AM »
At what level are you talking?  This could be achieved by eliminating the power to levy taxes, in which case all government programs would only be funded to the extent that people made voluntary contributions to them.  Local issues would predominate, security and police would get funding while militaries would not, local roads and economically important ones maintained, others not so much.  Expensive bridges?  No chance. 

If you're talking the same amount of funding, and no ability to directly allocate it back to yourself, sort of like the ability to allocate your retirement funds in a 401(k) between 15-20 choices but not any where in the market, then you'd certainly bizarre over and under allocations, with enormous waste and empire building when a group got more than it needs and hopeless inadequacy when it got far less.  In any event, you'd see a massive waste as every part of government that was one of the choices would divert massive resources to marketing, and a reallocation of resources to short term "in your face" style projects to demonstrate your benefit.

Pete at Home

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Re: What if taxes...
« Reply #4 on: February 25, 2016, 11:29:03 AM »
I was talking about Drake's proposal, where the taxpayer's levy remains constant, but taxpayer can control the distribution.  The main difference between that and what's in the ORIGINAL constitution (before the house representation numbers were screwed with) is that it's financial representation per dollar, rather than per individual.

TheDrake

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Re: What if taxes...
« Reply #5 on: February 25, 2016, 11:33:25 AM »
Pete - The house, through appropriations, is doing what they are supposed to be doing as far as I know, they just do it badly. The problem is representative democracy means that if 20% of people in a congressional district want something, they have enough voting power to make the other 80% pay for their favorite. Rinse and repeat. Then there's the fact that to pass a budget, you can ignore what slightly less than half the country wants.

Seriati - I set it up the way I did because it eliminates the free rider effect of someone choosing not to fund anything via voluntary contributions. I don't see this deliberately leading to any more inefficiency than the current system. Lots of the money spent on campaigns would likely shift to SuperPAC type entities lobbying the people directly.

Pete - Corporate taxes, I have to admit I didn't consider, nor any number of other tax collections such as fuel taxes, import duties, etc. I've generally favored tax code changes that eliminate corporate income tax - but I don't want to derail. Perhaps for the sake of argument, corporate taxes get allocated proportionally based on how individuals allocated their own.

Bear in mind, I'm not really considering this in any way to be a viable political plan for a variety of reasons.

There is clearly a problem with people perhaps not understanding the full function of each department, such as commerce or labor. This could either be good or bad, with people believing whatever the 60 second spot or internet meme told them, or with people learning more about what their government is doing.

Pete at Home

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Re: What if taxes...
« Reply #6 on: February 25, 2016, 12:18:36 PM »
If by individuals you mean individual stockholders, Then the most notable effect, assuming all other things the same (as in GAry Larson, "the days before television"), would be habding the reins of US government spending to foreign investors such as the House of Saud and the People's Liberation Army, who seem less skittish than US investors to paying meager US taxes in exchange for owning American industry.

Otoh if you meant in proportion to individual citizen expenditures, then it would probabbly give citizens mORE control. Than under the status quo.

If we dispense with the silly days before television effect, i think the prospect of more govt influence would lead to more entrepreneurship by citizens, and less corporate investing.  Less tax avoidance by uber-wealthy.  Tus more employment.
« Last Edit: February 25, 2016, 12:26:51 PM by Pete at Home »

Seriati

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Re: What if taxes...
« Reply #7 on: February 25, 2016, 12:41:14 PM »
Thanks for the clarification TheDrake.  I think the different ways that we tax people are going to have a major impact.  Income tax for example, is disproportionately paid by the upper middle class and lower upper class, once you get to the true upper class other forms of income predominate (capital gains, property tax, interest income) and below the upper middle class the amount of tax paid relative to income is suppressed.  If you just allocate income tax I think programs for the poor could get the shaft, they'd largely be funded out of guilt by people who expect to receive no benefit from them.

Sales tax, on the other hand, is incredibly retrograde, and if it were reallocated by choice, it'd probably flood the welfare and health care coffers.

Capital gains tax?  Controlled almost exclusively by the wealthy and the owner and investor classes, have to imagine they'd allocate towards structure and security more than anything.

Property taxes?  Favor local issues.

It really depends heavily on the options for funding.

Pete at Home

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Re: What if taxes...
« Reply #8 on: February 25, 2016, 01:40:07 PM »
On the whole, I think Drake's hypothetical (it's not AFAIK a serious proposal) would be dangerous and unfeasible, defeating the whole purpose of a representative democracy.  OTOH, to return to the founders' intent of giving the people more control of how their money is spent, I think we should have a greater number, say ten, major items on every tax return, where the People get to "vote" with their money.  We already see this to some extent with some of the tax returns.  I haven't actually filed one since my 2012 return when I dropped out.  I'm only now contemplating voting again.  I didn't vote in 2014 as part of my lifelong philosophy that persons that don't follow the issues should not vote.

TheDrake

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Re: What if taxes...
« Reply #9 on: February 25, 2016, 01:40:34 PM »
I do wonder about what would happen to something like food assistance. While there might well be some middle class defunding, you've got a lot of rich liberals out there who also donate a lot to charity. They might well fear for the loss of such programs and allocate all their share to those social programs, while counting on hawks to fund whatever defense spending might be needed.

Likewise, the DOE, where many economic libertarians might immediately drop funding. Might be harder to get someone to step up for them.

You might see the DOJ take hits from all sides. Nobody really has a positive experience with their various activities, I'd say.

The idea of sales tax allocations would be interesting, because it is all state level. While regressive, I'm unsure about the totals of all sales tax by dollars. While the lowest 20% by income pay 7% of their income as sales tax, the income is so low they might be balanced by the people buying new cars and other larger ticket items. It would also vary by state, some states do not tax groceries which makes a big difference. Then there's the question of how much sales tax poor people pay can add up to fund social programs.

Property tax probably mostly stays where I think it is today, in education, public safety and infrastructure.

TheDrake

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Re: What if taxes...
« Reply #10 on: February 25, 2016, 01:41:45 PM »
The real winners would be the cable news pundits. Imagine all the glorious polls and angry rants...

TheDrake

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Re: What if taxes...
« Reply #11 on: February 25, 2016, 01:43:08 PM »

Pete at Home

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Re: What if taxes...
« Reply #12 on: February 25, 2016, 01:49:04 PM »
What if taxes were allocated by the payer? Those concerned with national security and border enforcement could allocate to that. Those who want social programs, like free college, could pay toward that. Budgets of cabinet level departments would be constrained by the amount of money earmarked by the people. Special interest lobbying would have to convince large numbers of people in many cases. People could withhold money from departments doing things that they didn't like, whether it is planned parenthood or the drug war.

For the purpose of the thought experiment, we have to ignore things like non-discretionary commitments, so use whatever framework you need including a constitutional convention. :)

You might have someone allocating state tax to education, and not to federal education, if they believe in local control of that function.

What areas would likely lose funding? Which would gain?

This is the ultra-libertarian argument, except for the fact that you can only allocate and not change the amount you are paying.



I'd love to see, in addition to the present 1-5 items of $1 to $3 tax return dollar allocations, to see about five different options where the voter can allocate 1% of his or her taxes.

Another interesting option would be to allow the voter to forgo a legitimate tax deduction in favor of early payoff of the national debt.  Or payoff of student loan forgiveness, etc.

scifibum

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Re: What if taxes...
« Reply #13 on: February 25, 2016, 01:51:48 PM »
I like the idea of taxpayers being able to forgo a tax break and direct the funds accordingly, but I'm unsure how to fairly administer the available options.  Congress shouldn't have too much say in how all that works, if we want actual different results.

Seriati

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Re: What if taxes...
« Reply #14 on: February 25, 2016, 02:05:28 PM »
Here is one such unsurprising poll...

http://www.randalolson.com/2014/10/28/the-age-divide-in-where-americans-want-their-tax-dollars-spent/
What's interesting to me about that chart is it shows exactly what you'd expect, that each group of people votes their own self interest in where they want tax dollars spent, yet the person providing the gloss divined a hidden political meaning (ie that millennials are sick of wars, rather than just heavily favoring their own personal interests - job growth and education).

Pete at Home

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Re: What if taxes...
« Reply #15 on: February 25, 2016, 02:10:15 PM »
Not just their own interest, but their own immediate kill the goose that lays the eggs sort of interest.

65+ folks don't seem to grasp that people need jobs to keep the social security system flowing, and that the current generation of elderly is likely to dramatically outlive its predecessors...

Seriati

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Re: What if taxes...
« Reply #16 on: February 25, 2016, 02:19:15 PM »
Not just their own interest, but their own immediate kill the goose that lays the eggs sort of interest.

65+ folks don't seem to grasp that people need jobs to keep the social security system flowing, and that the current generation of elderly is likely to dramatically outlive its predecessors...
It's only going to get worse.  It's anecdotal, but all four of my grandparents provided for their own retirements and each of them, before they passed away, expressed in few words or many how guilty they felt about social security payments and that it was unfair that money was being taken by young people who needed it more.  It didn't stop them from taking the money, but my father's parents expressed that they were taking it for their children's benefit (for their estate) and not out of personal need.

My kids grandparents on the other hand, have each expressed some version of their entitlement to social security and all of them have relied on it in their retirement plans (even if they still saved extra), in some cases by retiring earlier than they had too.  Their brothers and sisters have been even worse, with some of them pursuing and favoring aggressively redistributionist policies where those "kids" have to give them their due for all their years of hard work. 

I think the next generation after that more expects the pyramid scheme to collapse than to be there for them, so this may be a short/mid term problem and not a long term one, but it'll definitely get way worse before it gets better.

TheDrake

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Re: What if taxes...
« Reply #17 on: February 25, 2016, 03:27:42 PM »
Understanding full ramifications can be tricky for voters. I'm reminded of a Simpson's episode (Grift of the Magi), where the kids put on a school play and describe how it would be personally bad for Mr. Burns if the kids are not educated.

This is especially common in communities whose voters are primarily elderly and sensitive to property taxes, which puts them in conflict with young families who are trying to get better education for their kids.


Pyrtolin

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Re: What if taxes...
« Reply #18 on: February 25, 2016, 05:40:17 PM »
How would you account for new issuance of money in such a system? (Forgetting where money would come from in the first place if  you're starting for scratch) Who makes the call on net expansions to the money supply? Without that, you're doomed to failure no matter what unless you're also supposing that the overall population is fixed or shrinking and there's not going to be any economic growth.

LetterRip

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Re: What if taxes...
« Reply #19 on: March 01, 2016, 06:28:44 PM »
TheDrake,

I proposed a variant of that many years ago - allow tax payers to allocate some percentage of their taxes and disallow the usage of the taxes for certain things as well.  (So I could say 'don't fund EPA or don't fund the NEA' or someone could say 'don't fund NSA') and ones taxes couldn't be used for that.