A Bad Deal for the Taxpayer
One of the many failures of the tax system under the nation-state regime is the lack of mutual benefit between taxpayer and tax spender. A mutual benefit, or a “good deal,” is when two parties in an agreement both benefit from an exchange. Think of a sale, where a buyer purchases a product, and a seller receives money in return. If the seller’s product is of good value, the buyer will recommend that product, which enables a seller to establish future sales. Both parties are properly incentivized. What about the tax system? Does it provide proper incentives to both the taxpayer and tax spender?
What does the taxpayer seek? The taxpayer wants an optimization of their tax obligation. That is, to have a variety of effective state services provided in the most cost-effective manner. Is the tax spender properly incentivized to fulfill the desire of the taxpayer? Is there adequate incentive to provide the best state services at the least amount of cost? This text argues no.
Let’s examine how the tax spender is incentivized.
1) Financial. Many tax spenders are incentivized to build their personal brand for financial gain. If one can build a public persona, they can monetize that persona via a book deal, media appearances, speaking events, etc.
2) Re-election. Many tax spenders are focused on re-election, fundraising, and campaigning for the next election cycle to maintain their job, and they do not prioritize improving the condition of government services.
3) Power. Some tax spenders simply have a thirst for authority, and public representation fulfills that desire. Delivering improved government is secondary, at best.
4) Party Recognition. Serving in public office and advancing political party objectives can be a springboard to higher and more visible public office, particularly in nation-states with dominant/single party rule.
There are some tax spenders who prioritize government efficiency, but they are in the minority. The only guarantee that the taxpayer has is the campaign promise of the tax spender. A promise. The current tax system is a bad deal for the taxpayer. A new system is needed.