L. Neil Smith's
THE LIBERTARIAN ENTERPRISE
Number 200, November 25, 2002
The BIG Tax Form
Exclusive to TLE
As the year comes to a close, I have received a few letters from charities asking for tax-deductible donations, which presumably would reduce my taxes. It is sad when a charity's best selling point is that it can reduce your taxes. The government's theory is that a small deduction will induce more people to give to charities. It is nice to know that the government cares so much. As a thought-experiment, one wonders if the tax deduction were one for one, how much money would be given to charities and how much sent in as taxes? This led me to the concept of the BIG tax form.
Over the years the government has developed smaller (and friendlier) tax forms that are supposed to reduce the time it takes to fill them out (1040 short form). As those forms grow, they again develop new ones so that people don't complain too much (1040 EZ). They keep claiming that the next form will be smaller and take less time to fill out. I think they are going in the wrong direction. I think they should make the forms bigger. Much bigger. As in thousands of pages.
The new form would consist of a one page master form much like the 1040 EZ where the tax-payer calculates the taxes owed followed by 10,000 pages listing all of the government programs where the taxes are to be allocated. Each program would get one 2-inch paragraph to describe the dire need for money and a neat set of boxes to the left where a dollar amount could be entered. The taxpayer would enter amounts in the boxes until the total added up to the total tax calculated on the first page. Each tax-payer would have a direct effect on the budget, could give to the programs that he or she thought worthy of funding, and know that their money was not wasted on programs they thought were wasteful.
This system would eliminate months of congressional bickering over the budget. The budget would be set every April 15th. And voted for by each dollar allocated. It would also reflect the true wishes of the taxpayers. If only $6 was allocated to the Federal Dogcatchers Inspectors Bureau, then only one person could be hired for one hour (at minimum wage) for the year. Maybe next year they would put in a better 2-inch paragraph and get more money.
Under this system, some government agencies, bureaus, and programs would resort to advertising (kind of like campaign commercials): "Please allocate funds to box 32,476 on your tax forms. Only you can protect the existence of the Deli Sands Flower Loving Fly." To make the system work, the taxpayers would have to allocate all of their taxes themselves. There would be no box at the top that says: "If you would like the IRS to allocate your tax funds, please check here."
There would be more grumbling from government officials than from the taxpayers. The officials would claim that people were too overwhelmed by the volume of programs to find their important program and allocate funds to it. Whole cable TV channels would have to be created in order to take up the volume of advertising for the various programs. But, the system would be fair. If you could not attract enough attention to your program to get funding, then maybe no one really wants your program. Unpopular agencies would go out of business.
The biggest complaint against this system would be that it is too complicated. It would take the average tax-payer months to read all of the programs listed (mind you, that is assuming that each program is limited to only 2-inches of description - 12 point font, 6 inches wide!). How could the taxpayers be trusted to make the right decisions? Such a system could not possibly work, they would say, people would refuse to make so many decisions.
Well, there is a system that works. It is much bigger than all of the government programs. Each person makes as many decisions each day as he or she wishes. The system is called the free market. Businesses come and go based only upon the whim of the consumers. The enterprises that provide, earn profits to encourage them to continue providing. The companies that fail to provide, lose and close shop.
If, instead of each tax-payer allocating funds once a year on a BIG tax form, all of the government programs were turned over to privet enterprise and each consumer chose which businesses to buy services from, there would be no need for an income tax at all. If there is a demand for a service, the market will provide it. Note that the government only gets about 37% of its revenue from personal income taxes, so eliminating the income tax would not eliminate the whole government (we can do that later).
The only way to make the tax system fair would be to use the BIG form. But instead of adding complication to everyone's life, an elimination of the income tax to be replaced by the free market would be so much more sensible. A number of states don't have an income tax. In Taxachusetts, 45% of the voters voted to end the income tax this last election. Not quite enough, but it can be done!