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August 21, 2007

Andrew Lilico on Taxation

Well, sorta, but a bit weak.

The right approach, in my view, is to begin by asking what it is that we want the state to be involved in, and what is best left to the market and the voluntary sector.

There are three things we need to get straight before we go further on such a discussion.

1) There are things that only the State can do. These are the things that need to be done both collectively and by compulsion.

2) There are those things which only markets can do.

3) There are things which can be achieved by either markets or the State: where while they need to be done collectively, there is a choice as to whether they should be done voluntarily or with compulsion.

So it isn't  "what we want" the State or markets to be involved : that is addressing only section 3.  We need to start from the point that 1 and 2 are essential. Then we can start arguing over which side of the dividing line in 3 various activities are. That not many are on the State side in my worldview is well known  but that's another matter.

August 21, 2007 in Taxes | Permalink


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Posted by: Mark Wadsworth | Aug 21, 2007 11:33:07 AM

Michael Moore must be pleased that he lives in the USA, the country that has the highest survival rates. Good job Hilary Clinton's NHS style health reforms were rejected while Bill was president.

Posted by: Pete | Aug 21, 2007 12:06:20 PM

For all those in 3 we need to ask "Why should a majority force those in a minority to fund these things via extortion"?

We should also ask whether certain things should be compulsory (i.e. health insurance)? I'd say yes.

Posted by: AntiCitizenOne | Aug 21, 2007 12:07:10 PM

Exactly, ACO.

There needs to be a discussion everytime we decide to remove freedom, e.g. the right to my money and my choice of how to spend it, for purported gains. If we want healthcare for everyone but everyone isn't going to contribute adequately, we have to question whether we really want it. Unfortunately, most of such conversations don't begin at first principles but rather just become a question of how much.

Posted by: Philip Thomas | Aug 21, 2007 12:21:25 PM

Oh, I should say that there may in the future be systems (courtesy of the research into co-operation by scientists such as myself - thank you, thank you, I'm here all week, try the veal) that will allow more freedom (at least of the "I could choose not to contribute but I still will" school) than the current statist prescriptions when it comes to tackling public goods. As we learn more about human co-operation, we learn more about how we can and do exploit our innate tendencies to meet collective ends without the need for high-levels of coercion.

Posted by: Philip Thomas | Aug 21, 2007 12:45:26 PM

Philip Thomas,

It's easy. Lend parent the money to fund education for their own children.

Posted by: AntiCitizenOne | Aug 21, 2007 12:59:40 PM

Tim, I agree.

The State's slice of Section 3 should be very small, for the State has a built-in tendency to create a monopoly if it is involved in any sector.

The first question for those areas left in 3 should be:

"Will this sector/service benefit or be harmed from being a monopoly"?

If "harmed", then a pluralistic market solution is the only way forward.

If "benefit" (as in, it will benefit the customer/user/recipient) then better the State than a private company, IMHO (you might find on occasion that this was actually something that should have been in 1!).

On the unlikely event "neutral", then further questions can be asked, such as if the operation would give the State unfair leverage over the population (e.g. the State running a form of ID Brokerage).

Posted by: Roger Thornhill | Aug 21, 2007 1:00:12 PM

ACO, where does this money come from exactly? Coerced from people by the state. The key is to try and get things done whilst not proscribing choice. I'm not criticising your idea BTW, I'm just saying that it doesn't solve the central problem of taxation.

Posted by: Philip Thomas | Aug 21, 2007 1:11:28 PM

Philip Thomas,

Only the initial money has to come from taxpayers. As it already does at the moment, there is no real change.

Over time there will be less extortion. I think Libertarians are far too against the sort of incremental improvements that would get them more political support.

Posted by: AntiCitizenOne | Aug 21, 2007 1:52:14 PM

Chaps, it is simpler than that.

1. Core functions - law'n'order, defence, protecting private property rights - clearly up to the State - to be financed by "user charges" as far as possible, for example Land Value Tax.

2. Then there are "merit goods" such as education and health. There are two sides to this, financing and provision. It is broadly agreed (rightly or wrongly, and I subscribe to the consensus here) that these should be largely financed by the taxpayer in general. This is nothing to do with provision - private provision will nearly always be better, this can be achieved by having taxpayer funded health and education vouchers.

3. The welfare system is a form of compulsory insurance/income spreading. Broadly speaking, income tax receipts and the welfare state nets off to nil - an average taxpayer gets as much in benefits in a lifetime as he does in Child Benefit, student grant, unemployment benefit and State pension. We can have a good old argument about what the right level of benefits (preferably simple universal benefits) should be and the corresponding tax rate (preferably flat and low) to fund it.

And that's the end of that, apart from transport infrastructure, which sort of straddles all categories.

Posted by: Mark Wadsworth | Aug 21, 2007 1:55:27 PM


Instead of "gets as much in benefits in a lifetime" I mean "pays as much income tax in a lifetime".

Posted by: Mark Wadsworth | Aug 21, 2007 2:38:11 PM

"And that's the end of that, apart from transport infrastructure, which sort of straddles all categories."

There are quite a few other "commons" too. Like the radio spectrum, for example.

Posted by: Kay Tie | Aug 21, 2007 5:52:47 PM