Economics on trial by Mark Skousen

Author:Mark Skousen
Language: eng
Format: epub
Tags: Economics.
Publisher: Business One Irwin
Published: 1991-03-14T16:00:00+00:00

The Growing Tax Burden 167

counts for movies, restaurant meals, and park entrance fees. But for the most part price discrimination does not occur often enough to destroy monetary incentives. Rich people may pay more, but not so much more that they have no incentive to achieve a high income.

APPLYING THE BENEFIT PRINCIPLE

Certainly the ability-to-pay principle is not the fairest basis for taxation. The fairest tax is the user fee, or charge for a government service, because it links the benefit to the payer. Examples include electric and water utilities; garbage collection; bus fares; entry fees into museums, zoos, and parks; tolls on turnpikes; and gasoline taxes. Gasoline taxes are specifically earmarked for maintenance and construction of roads. Those who use the roads pay for them, and those who use the roads more pay more.

The benefit principle could also be applied to public education. Currently, public schools are paid for by local property taxes, which violates the basic principle of linking benefits to users. Homeowners who have no children are required to finance homeowners who do. Homeowners who send their children to a private school have to pay double for their children’s education. The worst drawback to this current method of financing public education is that teachers and administrators are paid by the local or state government, not directly by the parents of the students. If the parents paid for the education of their children directly and had the ability to switch schools as they do in the private-school market, the public school system would become much more efficient, cost-effective, and responsive to parents. (Competition is another essential doctrine in the marketplace.) The quality of the public schools would definitely improve. The proposed use of student vouchers to achieve this optimality is definitely a move in the right direction.

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