Assume libertarians took over the US. How would this affect the tax rate?
My understanding of taxes is thusly, the majority goes to a handful of things
Healthcare $800 billion
Education $850 billion
Military $400 billion
Social Security $550 billion
Legal system $200 billion
Interest on the national debt $350 billion
If we lived in a libertarian world I assume SS would be gone. What about education, would libertarians still support funding education as intensely as we do now or would they make that private? And the legal system would have to say. They’d still have to pay off the national debt as well. And the military would stay.
So That still adds up to 1.8 trillion a year in taxes, minimum and not including discretionary spending (roads, etc) which would probably raise it to nearly 2 trillion a year. So compared to our $3 trillion a year in taxes that is only a 30-40% tax decrease. And largely irrelevant anyway as we’d just spend more privatey to save for our retirements and spend on healthcare (I personally don’t prefer/care about tax cuts because my philosophy is if taxes don’t pay for it personal spending will so a world with a 20% tax rate will just be a world where we spend more privately for healthcare and education instead of our current 30% tax rate.)
Of course some libertarians would privatize everything except the military and legal system, but that still leaves $600 billion in taxes & paying off the debt at $350 billion, so around a trillion total in tax revenues.
This is a debate and not a question? I was just asking how tax rates woudl vary under a libertarian administration and what all they would consider ‘government responsibility’ and what htey would turn over to the private sector. Of course there are varying degrees of libertarian. Some only support taxation for judicial and military enforcement and even then prefer privitization whenever possible while others just prefer to get rid of social security and some medical expenses while keeping most everything else.
But… the US was fairly close to a libertarian state at the federal level in the early years of the Republic. I believe that in those days the federal budget was about 3% pf GDP. It’s about 20% now, so one might conclude that federal taxes would be somewhere between 6-10x lower.
As for state taxes, it depends. If we had a libertarian federal government, but whatever-the-people-want at the state level, you could see taxes all over the map.
Keep in mind that most people would probably increase payments for things that they get from the government now, especially insurance. So you’d have to net that out. For many of us who lean libertarian, it’s not so much about the amount of money, but control over the money-- do you control it or does the governent. I can conceive of a stituation where it would cost me MORE to live day-to-day in a libertarian type system, but I’d still perfer it because it gave me more control (freedom) over my own expenditures.
Yeah, but what were the average state budgets back in those days? Back then the federal gov. was pretty weak and states strong and now it is the opposite.
It was still a lot less. One of the reasons for the revolution was taxes after all. IIRC the tax rate was less than 5% even at the state level.
To answer your question I’d say that the Federal taxes would be slashed in Libertarian America. You can pretty much kill Education and Health care on a Federal level, cut way back on Social Security and perhaps the Military as well. Our State taxes would probably go up a bit depending as John said what the individual states decided to do (I’m assuming we go back to having the States more autonomous…i.e. a Union of States with a small Federal government loosely tieing them all together). My guess would be that our taxes would essentially remain the same, but with the majority of our tax money going to the states instead of to the Federal Government.
I suspect it varied from state to state, and I’d be willing to bet it was a LOT less than it is now, on average. If anyone has actual data, I’d be interested in seeing it.
Yeah, it’d be alot less than now. They had no social security, no medical expenses, no national debt (that I’m aware of) and the military, education and legal system were probably alot smaller compared to the population at large than they are now.
Keep in mind that most people paid 0 federal taxes up until about 100 years ago. The first time the feds tried to institute an income tax it was found by the SCOTUS to be unconstitutional. Hence the 16th amendment:
For about the first half of the history of the US, the Federal gov’t was funded by fees and tarrifs. Those are certainly a form of tax, but not how we’re used to thinking of taxes.
I’m wondering where you get these numbers… according to the US Education Dept. Budget, spending for 2006 is $56 billion, 1% less than last year. There’s a slight difference between that and $850 billion. Likewise, I suspect the federal judiciary runs on less than 5% of $200 billion a year.
Are you conflating state and federal spending? State, local, and federal? Do libertarians take over at all levels of government or just federal?
He never said he was only talking about federal taxes. I think he’s purposely lumping them together and asking how both would differin the ULSA (the United Libertarian States of America).
Spending for the education budget is nothing like spending for K-12 education which averages about 7k per pupil per year or for college education which is over 10k per student per year.
Total taxpayer investment in K-12 education in the United States for the 2004-05 school year is estimated to be $536 billion.
Even in this current time of the war against terror, taxpayer investment in education exceeds that for national defense. In addition to the K-12 money mentioned above, taxpayers will spend an estimated $373 billion for higher education in the same school year. As depicted on the chart below, the United States is a world leader in education investment. However, nations that spend far less achieve higher levels of student performance.
So its actually closer to $900 billion a year.
However there is some overlap between those figures. Healthcare spending includes spending for healthcare for veterans, law enforcement workers and teachers, but that expenditure is probably included in the military, judicial and education budgets as well. Some soldiers get their educations funed by the government. So the actual figure when you combine those 6 things may be $100-300 billion lower than if you just add them all up directly.
This is assuming libertarians took over the federal government and passed laws forcing all state and local governments to practice libertarian economic and taxation practices.
But that’s the whole point of libertarianism - they want YOU to spend your money, not the government. Should you choose to save more for retirement, you can. If you choose to save less, you can (and accept the consequences).
Libertarianism isn’t about spending less money, it’s about personal choice over goverment-imposed non-choices.
