Brad DeLong: "As the late Milton Friedman liked to put it: to spend is to tax. If the government buys things, it must get the money to buy them from somewhere. It can get the money from three places. It can tax. It can borrow - but then the borrowing has to be repaid with interest, and the more is borrowed the higher the interest and the worse the value the taxpayers ultimately get for their money when they are taxed to repay the borrowing. Or it can print the money and so inflate the currency - but that too is a tax, and an especially unfair, painful, and destructive one, as lots and lots of people victimized by inflation find their wealth doesn't buy what it used to and what they expected." (reply)
Atlanta is thinking of adding a $15 charge to speeding fines in order to cover the cost of increasing petrol prices and their consumption by council vehicles.
The nature of government taxation has been changing over the past decade or so. Rather than direct taxes, a new form of revenue raising has appeared where 'bad people' or politically indefensible people are having excess fees tacked on to them in order for governments to raise revenue.
A good recent, and blatant, example of this process was Virginia tacking on extra fees to speeding fines for out of state drivers, not Virginia drivers. It was quickly deemed unconstitutional under the 14th Amendment, however, it shows that the goal of the policy was to raise revenue from 'bad people' without a political cost; ie tacking the fees on to Virginia voters. (more)
Rudd stated:
"What I'm signalling firmly, strongly today is it's time for the buck-passing to end and it's time for the real work, with sleeves rolled up, to begin," Mr Rudd said yesterday. "These are huge challenges for the nation," Mr Rudd said. "The time for buck passing has come and gone. I think the Australian people are tired, just sick and tired of all the excuses which their politicians have served up for so long as to why progress can't be realised in these critical areas of public policy need."The only reason buck passing is possible is because the national government has delved so deeply into the states' revenue stream and responsibilities. We have a broken federal system which has been smashed through successive anti-federalist Governments and High Courts. A government is only supposed to raise enough revenue from taxes to support itself and no more. This is not the case in Australia as the national government does 85% of all taxation in the country. Half of the state budgets are dependent on nationally raised taxation revenue such as the GST and Grants. The quickest way to fix federalism in Australia is dump the GST and Grant system. States would become responsible for meeting their own budgetary needs. This would force them to revisit their agreement allowing the national government to tax income exclusively, curbing the national government's fiscal power by eroding their monopoly on income taxation. (more)
