I had been wondering for a while "what if government taxes us all half a cent. Would that really create economic inefficiency? Surely half a cent will not make a dent in anyone's account. You can't get a Bruger for half a cent. You can't even get a paperclip for half a cent, likely."
I answered my own question:
It does matter. Why? Because just as the government can "collect" half-cents, so can private businesses. For example, imagine that an entrepreneur got half a cent from every single person in the US. That's more than $150 million! With that money he could start a gigantic business - or, he could enjoy himself for the rest of his life! In the case of the business, those half-cents that he collected together make a big, real difference - an ability to divert capital from other sectors of the economy.
So yes, even taxing one half-penny of everyone's wealth creates misallocation.
ability to divert capital from other sectors of the economy
Clayton -
The issue is also how practical this would be.
Schools are labour camps.
Haha the costs alone of taxing everyone half a cent would make in incredibly cost ineffective.
Not if they charge an administrative fee of $49.99.
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
Now you're thinking like a statist!
"We didn't raise taxes on you, you are only paying half a cent in taxes. See, that $49.99 fee is not a tax. So we couldn't have raised taxes on you."
$.005 from each person in the US would not get you $150 million. That would take $.50 from each person.
And of course the government taking just a little, is like playing "just the tip".
Good catch. Wow. Yeah. It would be $1.5 million. That's still enough to start a good business.
a national government with 1.5 million in funding would have a rather poor defence ability.
if government got all money by donations, it would be getting billions if not trillians probaly. some church with 10% and 350 million members would be making trillions if its 10% gdp
That's not what I'm suggesting at all...
so national defence, wise, are you suggesting a national defence means economic inefficency and misallocation?
is it the same if it's a .5 cent fee from citizens rather than called a tax?
does that make it different from a defence company charging .5 cent for each client?