I’ve actually proposed this sort of concept in other taxation threads, I even worked out some rough formulae for it. I never seemed to get much traction with the idea though. My proposal was essentially determining a formula to more or less adjust people’s income based on utility, and then having a “flat” percentage based on that. And that percentage would be tied directly to the operating cost of government, so as costs go up or down, taxes would follow with.
The reasons I support this concept is several fold. First, I see some discussion about fairness, but the point is taxes need to be fair. Yes, it’s difficult to define fair in a way that is accurate for everyone, but we should make a reasonable effort to do so. I absolutely agree that the only point of taxes should be to fund the government. But I think it follows as a corrolary from that, knowing that taxes serve, intentionally or not, as a means of social engineering through incentivizing untaxed activities and disincentivizing taxed ones, then it should be as neutral as possible on all activities to avoid it serving those other purposes. Thus, it NEEDS to be fair.
Second, to that extent, this means vast simplifications are in order. If taxes should only serve to fund the government, why are their exemptions and penalties for so many other things. Sure, some of these things may arguably be worth incentivizing or disincentivizing, but I don’t think we should use taxation as the vehicle for that. So, for instance, rather than giving a tax break for owning a home, remove the tax break, create a program to provide that incentivization, then that cost gets built into the cost of government and we can have a debate about whether or not that cost is worth the benefit.
Third, in taxation serving the purpose of only funding the government, it should be as minimally intrusive as possible. That so many people have to spend so much time, money, and effort and reveal so much personal information is unnecessary and a waste of resources. If we went with this sort of proposal, I can figure out pretty quickly how adjustments in the cost of government affect my tax situation. Whether I own my home, how many kids I have, what my medical expenses are, all of that, it really shouldn’t have anything to do with making sure the government has the money it needs to operate. Instead, I should have the choice of whether or not I reveal that sort of information based on whatever program I do or don’t want to take part in.
Fourth, it removes the disconnect from revenue and spending. Everyone always seems to want the government to do more and at the same time reduce taxes. If we can fairly simply tie the cost of the government to a number that runs through a simple formula to say what I owe, then we can have real discussion. For instance, a new bill will cost so many billions of dollars over so many years. It means we HAVE to have a balanced budget, and it also means the public can then see that number broken down to a number that’s meaningful to them. When we hear a number like $500B that means nothing to me as an individual, but if it can be discussed in terms of individual share, and all I have to keep in mind is what my personal utility adjustment is, now I can relate to that number and have an understanding of what the real cost of it is and compare it to the perceived benefit.
Finally, in keeping in mind that it should be fair, the relative “pain” that we all feel in supporting the cost of the goverment should be similar. Obviously, this is difficult to meaningfully qualify, but I think we can get reasonably close fairly easily jsut by considering marginal utility and cost of living. But the whole idea, as mentioned upthread, that generally everyone pays around the same percentage of their income flies in the face of this fairness concept precisely because, in general, marginal utility decreases with greater wealth, so to maintain roughly the same “pain” that percentage should increase. Yes, it will be impossible to be perfect, but we shouldn’t let the perfect be the enemy of the good, certainly if that good will be more fair than the current system.