Open Thread, May 19 - 25, 2014

somnicule

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Previous Open Thread

You know the drill - If it's worth saying, but not worth its own post (even in Discussion), then it goes here.

Notes for future OT posters:

1. Please add the 'open_thread' tag.

2. Check if there is an active Open Thread before posting a new one.

3. Open Threads should start on Monday, and end on Sunday.

4. Open Threads should be posted in Discussion, and not Main.

What would happen if citizens had direct control over where their tax dollars went? Imagine a system like this: the United States government raises the average person's tax by 3% (while preserving the current progressive tax rates). This will be a "vote-with-your-wallet" tax, where the citizen can choose where the money should go. For example, he may choose to allocate his tax funds towards the education budget, whereas someone else may choose to put the money towards healthcare instead. Such a system would have the benefit of being at democratic in deciding the nation's priorities, while bypassing political gridlock. What would be the consequences of this system?

In Italy there's something similar: you can choose whether 0.8% of your income taxes goes to the government or to an organized religion of your choice (if you don't choose, it's shared in proportion to the number of people who choose each church), and 0.5% goes to a non-profit or research organization of your choice.

12Nornagest12y

The biggest problem I can see with this is inefficient resource allocation. Others have mentioned ways of giving money to yourself, but we could probably minimize that with conflict-of-interest controls or by scoping budgetary buckets correctly. But there's no reason, even in principle, to think that the public's willingness to donate to a government office corresponds usefully to its actual needs. As a toy example, let's say the public really likes puppies and decides to put, say, 1% of GDP into puppy shelters and puppy-related veterinary programs. Diminishing returns kick in at 0.1% of GDP; puppies are still being saved, but at that point marginal dollars would be doing more good directed at kitten shelters (which were too busy herding cats to spend time on outreach in the run-up to tax season). The last puppy is saved at 0.5% of GDP, and the remaining 0.5% -- after a modest indirect subsidy to casinos and makers of exotic sports cars -- goes into the newly minted Bureau for Puppy Salvation's public education fund. Next tax cycle, that investment pays off and puppies get 2% of GDP.

5JoshuaFox12y

That's what the free market looks like -- and the dollars involved are no longer tax. I suppose the government could still tax and then ask you if you'd rather use it to buy a flatscreen TV for your living room or else better air conditioning for Army tents in Afghanistan, or they could even restrict options to typical government spending, Take a look at Hanson's proposals for allocating government resource with prediction market.