Tax Cuts Cost You More

The title of this post needs to become the mantra of all those that value civilization and all that it brings us.

An alarming majority of people use services that are provided for by means of taxes and don’t even realize it. They are often small government, fiscal conservative types. A 2008 Cornell study found that 57% of Americans claimed they never used services funded by taxes but when asked if they haf availed themselves of 21 programs 94% had made use of at least one with the average being four.

Savy politicians know that in cutting taxes expenditure must also be cut too but that that is often unpalatable. Instead, the go to political tool is to make those programs “self sustaining” by means of the application of user fees.

This provides the cover and optics of not cutting services but renders the service less accessible. In isolation, for a single program, this may have little effect on use, but when a majority of programs become user fee based overall use begins to decline.

A cash strapped house that may previously have partaken in five programs may have to make a choice to only engage in three. Overall, many households begin to use programs that can assist in improving their station in life less.

This ploy is particularly insidious because of how gradual it is: insert frog in boiling water analogy here.

There is definitely a need to be diligent in reviewing programs to ensure they are achieving their stated goals, even occasionally making some tax supported programs user fee supported instead.

On the other hand it is important to identify those services where being funded by the tax base makes them cheaper to operate for everyone.

Healthcare is a perfect case in point: US per capita costs were USD$9,451 in 2015 while in Canada they were USD$4,608 with no significant difference in health outcomes. In fact, Canadians tend to have better outcomes because they have no qualms in seeking care in the first place because of a lack of concern for how to pay for it.

Overall, it can be an appealing argument to want to cut taxes. Taxes come in the form of one large and daunting statement with little transparency into what it pays for. User fees, on the other hand, come in the form of many small payments and few people spend the time to add up all those amounts and figure out the overall cost to themselves.

It’s time to pierce that veil of ignorance: Tax Cuts Cost You More.