Align the Incentives of Tax Spender and Taxpayer via Structured Compensation
The desires of the tax spender and taxpayer need to be aligned: effective government services for the lowest cost. The current absence of this alignment is highlighted here, A Bad Deal for the Taxpayer, but in summary, tax spenders have limited incentive to spend efficiently. However, if a tax spender’s compensation was aligned to the efficiency of tax spending, outcomes would be different. Let us examine a few methods in which tax spender compensation could be structured in order to benefit both the taxpayer and tax spender:
There are other assessment methods that could be employed and refining this framework is needed. But ultimately, ensuring that government representatives have “skin in the game” is crucial to the success of government.