Pay for Use Economics

[Ray]

Pay for use economics?

 

I was reading about how different groups pay different amounts as taxes to the state and what we get for these taxes. I decided to analyze the economics of pay for use in place of a progressive government tax system.

 

The top 10% of earners pay 71% of federal taxes and earn 45% of the total income (2010 census). This group's average income is approximately $180K with a average effective federal tax rate of 22% (about 30% including state and local taxes).

 

The bottom 50% pay 2% of the taxes and earn 12% of the income. This group's average income is approximately $35K with a average effective federal tax rate of 11%.

 

Using 120,000,000 tax returns (2013)

 

Top 10% = 12,000,000 x $180,000 = $2.16 trillion income

Taxes paid $2.16 trillion income x 30% tax rate =$648 billion by the Top 10%

 

Total taxes paid by all = $648 billion / 71% = $912 billion (check figure - the actual 2010 tax paid was $949 billion)

 

If we distribute the total taxes equally, to approximate pay for use, then:

 

$912 billion / 120,000,000 tax payers = $7,600 ea.

 

Tax brackets, effective, for 2010; actual tax paid is likely less due to deductions allowed for most tax payers.

 

$8000 = 10% for $800 tax paid; would pay 9.6 times the taxes as pay for use fees

$34,000 = 13.7% for $4,680 tax paid would pay 1.62 times the taxes as fees

$84,200 = 20% for $16,781 tax paid would pay 55% less in taxes as fees

$171,850 = 24.3% for $41,827 tax paid would pay 84% less in taxes as fees

 

If in a post state world where each of us only pays for the services and/or facilities we each use, the cost of these services would, in general, be equally born by each of us. Not based on a progressive tax that considers the ability to pay. Therefore low income individuals would not be able to afford as many pay per use services. Private companies in a future anarchist world that would provide these services would not price these based on ability to pay but on the cost plus a profit margin.

 

The consequence of this is that we will have access to fewer services and/or facilities than are currently provided by the government. What are these services and/or facilities? In the U.S. these include the following services provided by or significantly subsidized by the government:

 

Public transportation, trains, buses, subways, air travel

Healthcare & medicine

Food production and farming

Public parks & recreation

Public education, primary and secondary

Research at colleges both private and public

Public protective services, fire fighting, police, ambulance, courts

Public infrastructure, roads, streets, highways,

Public utilities, water, sewer, electricity

 

As anarchist we all need to understand the consequences of these economics and be prepared to be more self sufficient.

[Josh F]

Excellent analysis, the only basic assumption I disagree with is that private services will cost the same as their public equivalents.  Companies, free to act, will attempt to provide those services at a much lower and competitive rate.  This is something you see accross industries.  For example, in countries where the government owns the telecommunication companies and protects them with a monopoly, the costs are higher per user and the quality is lower.  These services are often subsidized with tax dollars and/or protection against competitors.  In Costa Rica, where I lived, the people believed that the government controlled Telecomm company would be the only one willing to spend a fortune on giving internet access to remote and poor locations.  In reality, however, once the market opened up competitors were offering those same services at a fraction of the cost making it affordable even for the poor and remote people.  

[Ray]

I agree that some will cost less and others will cost more. But given the cost of services compared to the lower and middle income ranges,I think the amount of services will be much less overall. We will need to do more for our selfs.

[dsayers]

The consequence of this is that we will have access to fewer services and/or facilities than are currently provided by the government.

 

The only service that the government provides is the threat of violence. Beyond that, they just pay the same private companies that would be doing those things without the State. Remember that the only thing that you can accomplish with violence that you cannot accomplish without violence is violence itself.

 

I think the average person's jaw would drop if they understood how much more money they'd have without every aspect of their life being taxed and how much cheaper most things would be without coercive regulations artificially inflating prices. I would argue that this would lead to LESS of a need for self-sufficiency.

 

Self-sufficiency is comparatively inefficient. State violence isolates us for the purpose of incentivizing us to depend on it and/or turn to it for solutions. Without the threat of violence, we'd all be able to work together and specialize in a way that would achieve maximum efficiency. It wouldn't be overnight, but it wouldn't take the sum of human consciousness long to figure out the most efficient ways to meet our collective desires. Coercion is the enemy of innovation.

[J. D. Stembal]

Assuming you are an American, you might want to look at this website (http://www.usdebtclock.org/) and then ask yourself what those taxes are really paying.

[Mister Mister]

  Yes you are assuming that all the costs will be the same, that all the services will be the same, that everyone will have to pay for these things.  Once you remove coercion, it's not going to look the same.  At all.  The police, the courts, the prisons, the schools, the currency itself, will all look entirely different, there will be 100 kinds of solutions to these problems for all different kinds of situations, all being negotiated and innovated all the time.  Who will build the roads?  Where we're going, we don't need roads.