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Thursday, September 29, 2005

One Time Tax?

When I saw this opinion piece, I found it a little disturbing from an economic liberty perspective. My first problem with the whole idea of expecting taxpayers to pay for Katrina is that it seems like a misuse of government’s coercive power. It seems to me that from the point of view of the corrective state, government has no business stepping in on the Katrina relief efforts in the first place. This may seem like an inhuman statement, but I think that natural order would indicate that individuals would take care of the situation better than the government would. However, since the government is unlikely to step back from its efforts the problem of how to pay for these efforts arises.

I disagree with Mr. Frost’s idea that a one time flat tax is the right course of action. It seems to me that economically this would only add insult to injury to consumers, and that it would be a further abuse of government power. From the liberty perspective this tax would be stealing, since the role of government is to prevent people from harming each other and the money would not be going towards such a purpose. From an efficiency perspective, this tax is still inappropriate. There is no market failure present as far as I can tell. A hurricane is not an externality, a public good, or a monopoly. A tax would only hurt people further, by reducing the amount of money that they can spend from what they earned. Many have been complaining of rising prices resulting from Katrina, and an increase in taxes would increase the effects of those price increases, and further slow down the growth of the economy.

I do realize that the money to pay for what the government has done has to come from somewhere, but I do not think that there is any economic justification for a tax increase of any kind. The government needs to figure out how to pay for what it does with the money that it already has. It would be a government failure for them to raise taxes from an efficiency or a liberty perspective. I think that this situation is a good example of why we need to have limits on government. How much better could this situation have been if government had just allowed people to help voluntarily? It seems to me that everyone who pays taxes in the US has been forced to help with Katrina relief whether or not they want to, and that such coercion leads to inefficiency. I am uncomfortable with government taking any more money for a project that could be better handled by private citizens.

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