Choose Your Taxes

Research where subjects reported greater feelings of happiness if they gave money away rather than spent it on themselves, combined with that about how we respond to the perceived fairness of transactions, got me thinking that the impersonal nature of our social systems squanders the good feelings that come from our evolved altruistic tendencies. One idea to try and take advantage of this would be to allow a taxpayer to choose which part of the government his money goes to support. He can't choose the amount, just to what areas the funds go. To support unpopular government functions, a multiplier can be set so that money counts for more towards the amount you must give when you donate to them. Obviously the overall tax rate would need to account for this, but the popularity of the various departments will be fairly well established quickly. This approach would also require government departments to do a better job justifying their existence, which would help with taxpayer education and encourage transparency. If it could be made to work, the resentment taxes cause might be considerably reduced, being much more similar to the experience of donating to charity. It makes me think of the old system of police patrolling where cops would have a beat and they'd get to know the people living along it, which seems like a good example of a more personal approach to government services.

Cap & Trade is Not a New Tax.

I am getting pretty tired of seeing the assertion that a cap and trade scheme for regulating carbon dioxide emissions is somehow an unreasonable extra cost. Yes, it will lead to higher energy prices, but that is due to the fact that costs will begin to more accurately reflect the true nature of the hidden effects involved. This means that energy has been artificially priced too low, and that cap and trade wouldn't be the addition of a new cost, but rather the end of a subsidy. The distinction is an important one as it acknowledges that we have been working with an unrealistic model.

Speculation Proponents

I came across this very interesting article about how former IBM CEO Louis Gerstner suggests that short-term investment gains should be taxed at 80%. I have long opposed short term speculation so his comments just about had me jumping up and down. He admits that there would be a great deal of opposition to such a proposal since profits for many are tied to the volume of transactions. That got me thinking about all the groups that have a direct vested interest in maintaining the status quo:

1) The gamblers. People actively involved in speculation who feel they can strike it rich. It has been well established that playing the lottery in a serious manner is ridiculous, but lots of people still do so. Speculation is a lot less obviously a bad idea.

2) The upper end of the bell curve. People who managed to make a bundle playing the markets. Of course they admire the system that made them wealthy, and they have the political contributions to make their voices heard. Overexposure of their successes fuels the hopes of group #1.

3) Inside traders. Speculation serves as a fantastic cover for the use of illegal information.

4) The infrastructure. All the businesses who support the speculative markets, from the trading companies, to the rating agencies, to the financial news services. The house always wins.