Friday, October 1, 2010

What do your taxes pay for?

Here's a great idea from Third Way: provide an accounting to taxpayers just what their taxes are paying for. It would put plain and in the open the debates going on about taxes and spending. The issue is not how high or how low taxes are, but what we as consumers get in exchange for our investment.

If I go to the corner bakery and plunk down $3.18 for a bagel and pint of O.J., I know exactly what I'm paying for. I recall years ago, wondering about the mysterious "Kuver" on my restaurant bill in Slovakia. I had ordered a bowl of soup with bread for lunch. I was informed that Kuver covered the cost of all the condiments on the table (of which I had used none). In my eyes, it was an extra tax that I had not been aware of when I ordered. At a fast food joint in Germany, you'll likely be charged for a packet of ketchup, whereas in the States you'll find six stuffed into your carry out bag, when two would suffice. Do they charge more for the hamburger in Ohio than in Hamburg, to cover the cost of condiments? Surely, the consumer is paying for them one way or the other. Which is the fairer model: pay as you go, for what you use, or pay anyway for what you're given?

If I am to subsidize others, shouldn't I be aware of that in advance? There are good reasons to spread expenses around: what I don't need today, I may have need for tomorrow. If I pay to help my neighbor now, perhaps she'll pay to help me in the future. That's the whole point of insurance. But knowing what things cost, and aligning spending with priorities is key. If we think of taxes as an everyday expense for services or goods rendered, we'll be much better off in determining whether or not we're paying for something we wish to, and better informed to decide who should be stewards of that money.

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