The Selfish Way To Raise Money? Taxes!

Some may wonder if they misread that title.  Can that taxation really be the selfish way to raise money?  How can that be when taxes are supposedly the way to spread the expense among the largest number or people in order to make the amount paid by any one person as low as possible?

On the surface, taxes may seem the most fair and equitable way, but in reality, there is another side to the story.  The truth is that taxation has become the de facto easiest way to fund things.  And I believe it is very likely the most selfish way to fund things.  Here's why.

Say a person or group of people--often absolutely well-intentioned and well-meaning--decide that there is something good for an entity (for the purposes of this writing, please note that the word "entity" can be anything from a village/town/city, to a school district, a county, a state, or even a country). The idea is that the people of the entity would benefit from "whatever it is" (let the reader decide what "whatever it it" is).  That "whatever it is" costs money, and so funding needs to be in place in order for the project to move forward.  So a person or group of people--again, often well-intentioned and well-meaning--decide that since this will be a benefit to the entity as a whole, a tax should be levied so that the "whatever it is" will be paid for by everyone in the entity.

While this may sound fair and right, I really must say that it is not necessarily so.  What if someone from the entity does not think that the "whatever it is" would be such a good idea, or would be something that might be nice, but that the entity could get along without--especially if getting the "whatever it is" would cost the person money for which the person would have a different use such as funding his or her own more important or immediate needs?

So, the levy is put on the ballot, and let's say it passes.  Then taxes are assessed, and the project is (at least theoretically) funded (I won't get into things such as cost overruns here).  The majority of those voting have decided that this "whatever it is" should be paid for by everyone within the entity, in one way or another (through income taxes, property taxes, etc...).

The result?  The majority of those voting will pay what they agreed to pay towards the "whatever it is".  The rest of the people will be forced to pay for the "whatever it is" even though they did not agree with it being funded through the entity.

What if the levy would have failed?  Then the majority of the voters would have decided that the entity could do without the "whatever it is" (at least until the next time, or the time after that, or the time after that, when the people convinced that the entity cannot do without the "whatever it is" have to keep asking the people of the entity to fund it).

But are those the only two options?  Here's what I suggest. If people of an entity are so convinced that the entity needs "whatever it is" but a majority of the voters don't approve a tax for it, then the people who were in favor of funding the "whatever it is" are still free to donate a similar amount of money as they would have been taxed by the entity had the levy passed.  Maybe the "whatever it is" wouldn't be fully funded if only those who supported a levy would donate an amount equivalent to what they would have paid in taxes to fund the "whatever it is", but it wouldn't hurt to get partial funding.  Who knows, perhaps other funding could be derived from other sources, without forcing every person within the entity to contribute to it, whether or not they wanted the "whatever it is."

I have a challenge for people who are planning to support voting for any tax levies: agree to donate the money to the "whatever it is" equivalent to the amount you would have been assessed had the levy passed.