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Politics : A US National Health Care System? -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (6039)	2/11/2009 7:51:32 PM
From: TimF	Read Replies (1) \| Respond to of 42652

Good example... Intel doesn't pour cement or nail drywall. That doesn't make it a good example. The government hires contractors to build roads, Intel could hire contractors to build roads, I don't see why Intel would be worse at it, even though "hiring contractors to build roads" isn't a specific competitive strength of Intel. On the other hand our economy couldn't survive without the infrastructure that the government (collective through our representative system) provides. Which means that some parts of government spending provide a larger, even much larger, benefit than the direct cost + the dead weight loss. I don't dispute that point at all. My point is only that you have to add in the dead weight loss of taxation when considering the costs and benefits of government funded activities. There is a secondary point that the dead weight costs for government tend to climb as government gets bigger, both because the natural tendency to grab the "low hanging fruit" first (leaving less justifiable ideas for future government expansion, after the low hanging fruit is already gone), and because the negative effects of taxation grow as the level of taxation grows. A .5% tax might be entirely ignored in many contexts. a 50% tax will typically have more than 100 times the dead weight loss of a 50% tax, its not a linear factor, in fact its sometimes estimated as a factor that increases by approximately the square of the tax rate. But there are some things where a dollar of federal spending might have $10 in benefit, or $9 in benefit after considering the dollar spent. Nobody would claim the dead weight loss of taxation is anywhere near 900% (except in very specific cases of typically small very stupid taxes, not in terms of either the average or the marginal tax dollar). It might be argued that its 10%, it might be argued that its 100%, but either way the hypothetical "10 for 1" project would be clearly justified, as would many other projects with a less extreme cost benefit ratio.