Thursday, February 19, 2009

Dangerous Precedent

Another interesting exchange from the article about the tax credit/Soil District partisan pissing match:

State Del. Frank Turner, who proposed the reconsideration, had the same explanation for his votes.

“I oppose this,” he said. “I think this bill would set a dangerous precedent.”

Bates dismissed that explanation.

“It’s a dangerous precedent to credit residents for paying for a service they don’t receive?” she asked. “I don’t buy that.”

There are a large number of government services from which I receive a negative return on my tax dollar. Libraries, a golf course, parks, a swimming pool, public schools, etc. are all things that my local tax dollars are wasted on in which I don’t get much benefit from. In my opinion, the government has no business providing these things in the first place.

Many people claim that some things are so important to everyone in the community that these things should be subsidized by and/or provided by the government, rather than being left to the free market. I am specifically thinking about public schools here, since public schools are both controlled by the local government and financed by the local government via taxation. How often do we hear the refrain: “everyone benefits from an educated citizenry, therefore everyone should chip in and pay for education.” You know, the whole “positive externalities” argument. Almost everyone who makes this argument suddenly sees the fallacy of it when asked if they support government subsidy of private schools. After all, private schools provide the exact same benefits to society that public schools do.

When the government tries to make people pay for positive externalities, they end up creating an entire class of free riders. Free riders get far more than they pay for, sort of like an Amish person that pays no taxes yet still gets the benefit of national defense. The benefits from education (be it from public or private schools) overwhelmingly flow directly to the students and parents of students at that school. Obviously, students cannot be expected to foot the bill, but their parents or guardians certainly can. To make someone with no children shell out the same amount of tax dollars as their neighbor that has three kids in public schools is one of the most arrogant and irresponsible abuses of power that I can think of. This could be corrected by requiring that public schools charge tuition as I have suggested in the past.

I should point out that positive externalities are not only the result of education. Anyone who maintains a flower garden that their neighbor can see has produced a positive externality. A beekeeper whose bees pollinate a farmer’s field has produced positive externalities. Having a cool local restaurant like Clyde’s in the community creates positive externalities. creates positive externalities. In fact, positive externalities are everywhere. Unfortunately, so is gummint.