Government à la Carte
The Case For Tax Reform & Privatization
December 8, 2002
Just try to imagine a medical system that levies a cover charge on each patient as a prerequisite for entry. That’s correct…before being treated, you are required to pay for all the costs of building and operating the system, including wages and salaries. And don’t worry about service because your cover charge has paid the medical staff in advance…including health care, vacation pay and a very generous pension. Without ever treating a patient, all employees have lifetime financial security. Stop imaging because this is your government.
If you think that paying at least 40% of your income for combined federal, state and local taxes entitles you to the broad range of government services…guess again. Your tax dollars are, in effect, being used to create a permanent job bank that is doled out as patronage by your elected officials.
Simply stated, the federal, state and local governments of the United States have become malignant organisms that are in business primarily for the purpose of self-creation. The sole purpose of most agencies has been perverted into a system that builds offices, hires employees, and consumes an ever-increasing percentage of the nation’s wealth in the most inefficient manner. If you, as the founder of this feast, actually want any services…you may pay for them a la carte.
Property tax is paid at the local level. This revenue is used to build local facilities and staff them. A town hall is built and employees are hired. Now, you want to build a porch on your house. First you must purchase a building permit to cover the cost of the building inspector making the inspections. Then your electrician must purchase an electrical permit to cover the cost of the building inspector conducting the electrical inspection. But wait a minute…aren’t your property tax dollars paying for the building inspector? And wasn’t your electrician required to purchase a state license that supposedly certifies his competence?
Bingo…you guessed it. Your tax dollars are used to construct almost palatial town halls and hire people. If you want any services…start paying fees as you purchase them a la carte.
For instance, the town of Rocky Hill, Connecticut recently increased its local taxes by over 9%, which is more than 300%, the national rate of inflation. The primary justification for this burdensome increase was the education budget, which consumes about 60% of the town’s revenues. Yet, as reported on a local public access program, when high school students arrived for the fall semester they were charged a $60 dollar per year parking fee...a fee not levied upon the administrators, teachers or staff.
Needless to mention that many parents were a bit perplexed and miffed by this new fee. The parents paid their taxes, were just slammed by a large tax increase and now the town was enhancing its revenues by charging students for parking in lots constructed with the parent’s tax dollars. In fairness to Rocky Hill, many other town governments in this country are enhancing their revenues in the same fashion.
The state level is little better. First the state of Connecticut taxes the personal income the taxpayer must earn to purchase an automobile. Next the state levies a sales tax on the specific automobile purchased by the taxpayer. In and endless orgy of income appropriation, the state next charges the taxpayer a license fee to drive any auto and a registration fee to drive each specific auto. Maybe you’re just not getting it but your state taxes were used to build the motor vehicle department and hire the employees. If you actually want any motor vehicle services…start paying fees on an a la carte basis.
Not to be outdone by its little cousins, the federal government is a master of fee-based revenue enhancement.
One of the more amusing presentations of the “fee-for-all” is performed by the U.S. Copyright Office. First your government agency assures you that, “Copyright is a form of protection provided by the laws of the United States (title 17, U.S. Code) to the authors of “original works of authorship,” including literary, dramatic, musical, artistic, and certain other intellectual works. This protection is available to both published and unpublished works.” Next, the same agency lets you know that if you want your legal copyright protections it’s going to cost you a bunch of fees. What’s new…your taxes were used to create and staff the Copyright Offices. If you actually want any copyright services…start buying them for a la carte fees. It’s like a police officer asking you for a $20 bill to protect you from an armed robbery.
And the “fee-for-all” doesn’t end with copyrights. Just look at your telephone bill. As Representative Tauzin so accurately stated it, “Speech is supposed to be honored and respected in America…Yet our government taxes talking on a telephone so high that it amounts to more than the taxes on tobacco in many parts of America.”
Passports, entry to national parks, birth certificates, death certificates, marriage licenses, and the most ridiculous of all…a fee for a Freedom of Information Act request from the C.I.A. are all revenue enhancers (taxes) which are neatly hidden in government budgets under the heading of “Other”.
And that is part of the problem. This “fee-for-all” is purposefully obscured by the government levels that grab your money. Fee-based revenue is hidden in so many ways, even the General Accounting Office is not certain of its magnitude. Some agencies lump it into their budgets and some report it as a line item. When fees are transferred to the general funds of the government, they are usually reported as “Other Receipts”. When the ambitious among us follows a footnote for “Other Receipts” it is discovered that many fees are then reported as “All Other” receipts. Hundreds of fees are camouflaged as “Other”.
Are you getting the general idea?
There are over 21 million governmental employees (mostly belonging to unions that donate millions of dollars to electoral campaign funds) comprising the over 131 million total employees in this country. If your tax dollars are mainly used to create agencies that hire employees who, with little real world performance criteria, then charge the taxpayer on an a la carte basis for actual services…why not dissolve these agencies by privatizing their functions and only pay fees for actual services consumed?
What would be wrong with putting many functions like copyright registration compliance out to competitive bid in the free market? At the very least the taxpayer would be spared the expense of maintaining these huge and inefficient bureaucracies. In their place, the functions of these governmental bureaucracies would be replaced by private companies who have to be economically efficient (certainly no less efficient than the present system) to survive and could actually fire incompetent employees, which is now almost impossible with unionized governmental employees.
The system of agency fees and hidden taxes this country presently operates is borderline corruption. The governmental employees are represented by unions that influence elected officials with millions of dollars in Political Action Committee campaign funds. These same unions negotiate contracts with elected officials that have little economic sensitivity to the realities of the taxpayer or the efficiencies of the marketplace. In simple terms, your tax dollars have been used to create government employee unions whose economic and political clout often intimidate elected officials from doing what is in the taxpayer’s and country’s best interests. It is a system of legal blackmail.
But, without effective tax reform it is doubtful that the wrongs of the present system can be corrected. Taxpayers have been intentionally mislead for decades concerning the real cost of government. With income, property, sales, excise, fees and the really weird taxes hidden from plain consumer view in things like telephone bills, it is absolutely impossible to calculate an individuals real effective tax rate.
Considering the fact that 50% of taxpayers actually pay almost 100% of U.S. taxes, is it that much to ask for a system that allows you to actually calculate how many of your hard-earned dollars the governments of this country appropriate each year? But that would require governmental accountability…which seems to be a lost virtue in our brave new age.
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