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evolutionary economics

Eight Simple Rules to Save My World (an evolutionary approach to societal change)
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I love markets. Capitalism is great. It's only problem is that the price of goods and services do not include all of the costs. Not that this is news. The price of potato chips doesn't include the cost of atherosclerosis treatment for some percentage of the consumers.

But it's impossible to figure out the true cost of everything.

So here's the solution.

First, you abolish income tax. But goods and services have heightened sales tax that reflect their costs.

You set up a government agency, supplemented heavily with industry, academic and public expertise, which evaluates costs. We start with what we do know, which isn't very much. But we know the approximate cost of road maintenance associated with driving a car ten miles down the road. So we should build that cost into gasoline pricing. The government agency is responsible for making recommendations. You sum up all of these things we know, and you factor them into sales taxes for associated costs and services.

As soon as scientific studies demonstrate additional cost associations (to the satisfaction of the government agency and its varying committees), you factor that into the sales tax (further research might even suggest that a sales tax should be lowered, especially if new technology comes along that lowers its costs).

Finally, you allow people to make decisions about what's important to them with their own pocketbook. Some underlying sales tax would be the same for all products, to support things like education, police and fire protection, military, etc., which aren't directly tied to any given class of products or services. But the rest of the sales tax would vary depending on the product or service and its societal cost.

This sets up an evolutionary scenario. Mandated sales tax changes give consumers a chance to modify their behavior if they so choose, and allows companies to come up with innovations that would lower the product's cost and its market place.

jkling, Jun 13 2004

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       While I approve of a consumption tax in lieu of an income tax, the rest of the idea smacks too much of a nanny state for my comfort.
Guncrazy, Jun 13 2004
  

       Where as I prefer an income tax to a sales tax that affects the poor more than the rich.   

       That aside though, the cost of a lot of things are already factored in. eg. tabaco, alcohol, petrol etc.
RobertKidney, Jun 13 2004
  

       this is an interesting argument [jkling], but am concerned that it smacks of advocacy.
jonthegeologist, Jun 13 2004
  

       Only one part of it that I saw smacks of advocacy, "demonstrate additional cost associations ... factor that into the sales tax". I happen to agree with one implication of that structure, that of a tax break due to tangibile cost. Example: Development company XYZ patents a new drug. When the patent is approved, company XYZ gets a permanent income tax break on sales of its new drug. Off-patent "me too" companies that seek to produce generic substutes for XYZs drug must pay full tax on their profits. This has the net effect of raising the cost of entry for generic competitors into XYZ's drug market
dpsyplc, Jun 13 2004
  

       It would be a good idea if we could be sure that the governments are honest. As I know them they will charge you happily for additional medical cost, but they won't give you apenny back for for lowered life expectancy.
kbecker, Jun 14 2004
  

       heh. As I see it, the government hasn't a patent on lifestyle, real property creation, exercising privileges (except, possibly, inalienable rights), mass destruction, or even its own bylaws.
dpsyplc, Jun 14 2004
  

       //But we know the approximate cost of road maintenance associated with driving a car ten miles down the road. So we should build that cost into gasoline pricing. //
Why not build that cost into driving ten miles? If it's part of the cost of your gas, you effectively pay more if you have a more economical car.
angel, Jun 14 2004
  

       So, with a different rate of tax for every product, how would I know whether a retailer is ripping me off without having to carry a tax reference book around with me all the time?
DrBob, Jun 14 2004
  

       You wouldn't. Assume you're being ripped off anyway; you'll not be far wrong.
angel, Jun 14 2004
  

       Ha!

< Imagines angel as one of Harry Enfield's 'old gits' :0) >

Please add 'more than usual' after 'ripping me off' in my previous anno.
DrBob, Jun 14 2004
  

       criticism of advocacy leaves me confused. The whole point is to *avoid* advocacy, unless you want to say I'm advocating the infusion of science into economic policy.   

       Trust of government: point taken. But if you want to assume that everyone is ripping you off, well, you're left with anarchy as the only trustworthy system. That's why I included industry, academicians, and citizens on my hypothetical agency's oversight committees.   

       The structure could work a little like FDA's drug advisory committees. Each committee has its own area (infectious disease, diabetes, medical devices, etc.) and are called whenever there's a question about whether to approve a new product. Similar committees could have product categories that they consider for tax determinations.   

       This would be ongoing -- as new information, taxes would be raised or lowered as appropriate.
jkling, Jun 15 2004
  

       I like the idea of accounting for all costs, however I am surprised no one has picked up on the fights that would errupt trying to cost in the impact of global warming, air pollution etc. It would be one continuous argument. Also the tax rate could change drastically as new costs are 'accounted for' and old costs revised, planning would be extremely difficult. I don't think this could be implemented in as technocratic a fashion as seems to be suggested, but as an example, the UK does have a fossil fuel levy - so specific taxes on specific commodities do exist, but even these one offs are problematic to administer   

       Don't like the idea of doing away with income tax altogether, unless there is a safety-net that prevents the 'additional costs' costing a working family out of food and home.
eldon, Feb 27 2005
  
      
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