What I don't like about Mankiw's logic is that he's only looking at part of the picture. He talks about being ble to save $1,000 without taxes vs $523 with taxes. Fine, let's look at the $1,000 - now how much of that $1,000 will he have to spend to fix damage to his car's suspension system caused by crumbling roads? How much will he have to pay for private schools because the public schools suck? How much will he have to pay for home security monitoring because the police and fire fighting services have had cutbacks? How much will he have to pay to repair the water damaged caused when a nearby 50 year-old water main broke and flooded his house?
We can go on and on - there is certainly a cost in paying taxes but there is also a cost in not paying taxes. People seem to forget that an interstate bridge collapsed a few years ago.
Can we please stop bringing police, fire, roads, and schools into everysinglediscussion on taxes?
We all know that's not all governments spend money on. We all know there's a good deal that could be cut before these basic services are cut. We know that, so why do we insist on pretending otherwise?
Mostly, what we spend money on is services for retirees. Then national defense.
This is highly relevant to the discussion --- moreso than fire, police, roads, etc --- because without a social safety net guaranteeing some minimal standard of living (and, particularly, health care) for our close relatives, many entrepreneurs would be forced to optimize their careers to the benefit of their relatives.
You have a point. Unfortunately it wounds the larger argument I presume you're trying to support.
We all know that's not all governments spend money on
"Police, fire, roads, and schools" are the things that affect and impact every US citizen most everyday, so it's fair to consider them. But of course governments spend money on other things - governments in the USA spend money on welfare (using the term in it's broadest sense), military/defense, health, national park, R&D in a variety of areas, interest payments, science, search & rescue, libraries/museums, workplace safety, courts, arts, media, and so on.
Yes, any of those can be cut before hitting basic services, but my premise hasn't changed - cutting most (if not all) of these will still result in a cost for individuals that people generally don't factor into what they perceive to be their in-pocket money in a no-tax/lower-tax world.
You seem to think that $10 out of $10 in taxes goes directly towards roads, schools, or whatever. In reality, about $2 out of the $10 is actually spent for the those purposes.
$6 out of the $10 is a dead weight loss... completely consumed by government waste and inefficiency. The remaining $2 of the $10 is effectively transferred to bank accounts of politicians & friends via bribes, political donations, and outright theft.
You seem to think that $10 out of $10 in taxes goes directly towards roads, schools, or whatever.
I never said anything about the direct allocation of tax dollars.
$6 out of the $10 is a dead weight loss... completely consumed by government waste and inefficiency.
Of course there is waste in government spending, just as there is in private spending (hey, we just can't get around the laws of thermodynamics). But do you have any (reputable) sources to back up your assertion that 60% of government spending gets lost as "waste and inefficiency"?
We can go on and on - there is certainly a cost in paying taxes but there is also a cost in not paying taxes. People seem to forget that an interstate bridge collapsed a few years ago.