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Politics : Formerly About Advanced Micro Devices

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To: Road Walker who wrote (372225)	2/27/2008 9:02:17 PM
From: TimF	Read Replies (1) of 1576167

No the Y is a loss. If the government is trying to raise $1bil, and the costs of getting that billion to the government (compliance costs, avoidence costs, enforcement costs, perverse incentives etc.) is $.5bil than the dead weight loss of taxation is $.5bil. The dead weight loss of the tax is still $.5 bil even if the government produces more than $1.5bil benefit from some particular bit of spending. And of course the majority of the government's spending is transfer payments. The biggest part of what's left is the military, which might be very important, but creates little wealth (although it can prevent the loss of wealth) And significant parts of what's left aren't going to create more value than the private sector. But even if you cherry pick the government spending that does produce more value (maybe an important infrastructure project) you still have the $.5 bil in dead weight loss from taxation, you just have enough benefit from that particular program to justify encouring the dead weight loss from taxation. The positive result from that infrastructure project is real, but it only gets counted once. Its the benefit from the project it doesn't reduce its cost.

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