[ExI] Belief in Market Efficiency

Eric Messick eric at m056832107.syzygy.com
Sun Feb 8 00:35:38 UTC 2009


spike wrote:
>In the USA we are now very close to the point where the majority pays no
>taxes.

Woah, there!  I have a very hard time believing that statement.  It
may be that the majority owe no money on their 1040 forms by being in
a low enough bracket, but even that seems unlikely.

Even someone who pays no income tax directly is still paying it
indirectly, though.  Every product or service that they buy has the
producer's taxes factored in to the price.  The actual amount that
someone pays in taxes can be very hard to determine.

Even the overall aggregate tax rate is hard to figure out.  It is
total government spending at all levels as a fraction of GDP.  I've
never seen a total government spending figure, although someone may
attempt to calculate it.  GDP is probably not the best measure here
either, as it has weird distortions in it (if I destroy something that
you have to replace, GDP goes up as a result).

So, I can see a statement like:

  The majority think they pay little or no taxes.

Which is actually good enough to get you where you're going:

>So voters willingly vote higher taxes on other people.  The actual
>tax payer is in the minority.  This phenomenon is the reason the ancient
>Greeks thought democracy was unstable.  Here is how we may see democracy
>slip away to totalitarianism: if we elect a series of leaders, each
>promising to take more people out of the tax paying column and make up the
>difference by increasing taxes of the rich.
>
>spike

I think you're right here.

The problem is that benefits are concentrated (pork projects) while
costs are distributed (slight rise in both seen and unseen taxes for
everyone).  It's not worth arguing against pork that goes to someone
else, as the cost to you is relatively small.

Curiously, we've gotten to the point where some of this pork is big
enough that people should be willing to invest the time to fight it.
A 1 trillion dollar spending bill is $3333 for each of the 300
million people in the U.S.  The only reason not to invest a sizable
fraction of that $3k in effort to try to stop one of these is that
they seem so inevitable.  Sigh.

-eric



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