In the comments to my post about the large amount of tax revenue lost when even a relatively small number of very wealthy people leave Rhode Island, Jason Becker posed a few questions to me.  On a snowy day when much of daily life in Rhode Island is paused, I thought I’d take a stab at them.

Jason Becker: Would you support increased taxes on higher income levels if it were for federal income taxes?

Justin Katz: No.  Taxes at every level of government are too high.  We’ve reached the point that more money does not create better services, but more funding for policies and activism aimed at growing government and limiting the freedoms of Americans. Lenin quipped that capitalists would sell Russian Communists the rope to hang them with, but we’re now at the point that voters are letting the government confiscate the rope to hang them with.

Look at PolicyLink, the organization responsible for the “equity” piece of the state planning office’s RhodeMap RI initiative.  The group is largely funded with federal government money, especially stimulus dollars through the Dept. of Housing and Urban Development.  In 2010, the PolicyLink filtered $200,000 of its money to MIT Professor Otto Scharmer for a detailed plan of how to “transform” capitalism into a something to the political left of European socialism.

RhodeMap RI is primarily an effort to identify local sympathizers who can then be guided into areas of local power in order to impose top-down centralized plans from the bottom up.  And the maps that the group is traveling the state developing show public use of private land, the owners of which have never been contacted about the activists’ intended usurpation.

Or turn to healthcare.  The state is spending hundreds of millions of dollars to develop a “unified health infrastructure,” by which they mean an integrated system of government welfare programs to rope people into dependency on government and add detail to the profiles that state operatives have on all of us.

So, no, I don’t support any increase of resources for a government that is doing this to its people.

JB: Do you believe there is a quality of government services that becomes attractive such that people will move to more expensive locations because of it?

JK: Sure, in the abstract.  But the same government that has money for the freedom-killing projects I just described hasn’t managed to maintain a short, straight bridge across the Sakonnet River and had to replace it and wants to make it even more expensive to live in the area with no increase in services.  All of the billions of dollars that we pour into education don’t produce a better product, but stronger teachers’ unions to act as the enforcement arm for the far-left movement.

You also have to consider the value side of the equation: No matter how good they are, do the services that we’re getting from government justify the money that we’re paying into it?

It will always be difficult to make that equation work for at least three reasons.

1. The one area in a society where you can legally take people’s money away and tell them what to do under the threat of fines or prison will attract people and groups with causes that society would never accept, given an honest choice.
2. Given the ability to confiscate money, it’s inevitably easy for government agents to rationalize using some of it for personal gain or advancement of an ideology, as with PolicyLink’s socialism.
3. It’s always easier to get more money for things that people consider both essential and well within the purview of government, so the value side of the equation goes out the window.  The incentive is for government officials to start by funding things that the public would never willingly pay for and then to come back for more money, whether taxes or tolls or fees or surcharges, for the things that have to be done.

This is why I have to chuckle when some well-meaning and intelligent person who has nonetheless bought the big-government sales pitch says something like, “We’ll just have to have strong protections to keep that from happening.”  You can’t, because nobody has incentive to be vigilant like the bad actors have incentive to sneak in.

The solution is to keep government’s activities as narrow and local as possible. The public can just about keep an eye out for corruption of a construction project; when the government’s into everything, there’s no hope.  And at the local level, the immediate interests of residents can just about equal the large-scale interests of corporations and activist groups.

The big organizations and shadowy 1% that progressives claim they oppose would obviously much prefer decisions to be made centrally, because they’ve got the advantage of money and influence, and it’s easier to buy off one president than thousands of mayors.

To push back, the dispersed individuals would have to organize outside of government.  As we’ve seen with the IRS targeting of the Tea Party and many smaller examples at all levels of government, the people who control government don’t treat it as a neutral playing field, but as a warship from which to attack their opposition and keep them from effectively organizing.

JB: Is there a level public goods that is so low it becomes unattractive for people to live/move/create jobs there?

I don’t know.  Ask the pilgrims.

Look, that sounds glib, but you can’t really ask that question in general terms about “people” generally.  The things that motivate each of us are different, as is the environment of any given area at any given point in time.  What do people want to achieve?  What can they get in the next state over right now or in the future?

If there’s a highly populated area, like Rhode Island, in which there’s a great deal of economic activity, unlike Rhode Island, families would be happy to pay for private schools.  We’re content to pay a private company for energy and Internet access.  Why does my water have to come via an expensive government structure?

The type of people we attract is another question.  If we want to attract people who are inclined to rely on government (because those people will vote for the political party that promises more), then there’s no maximum to the services that will create incentive for them to “live/move” here.

If we emphasize the “create jobs” part, then the answer’s different.  Your question isn’t about what’s moral and just for our disadvantaged neighbors, so I won’t go there, but as far as what’s necessary to make a place sufficiently attractive for people to immigrate for the purpose of economic activity, there are some basics.  There has to be some basic infrastructure that is available to everybody.  There has to be a level of safety.  And most importantly, there has to be a rule of law — some way to enforce contracts and prevent fraud, as well as a fair, orderly process for affecting government policy.

Across the board, but especially on the rule of law, Rhode Island is notably deficient, and increasing government resources will make the problem worse, not better, because the entire civic system has essentially become a structure for the fraudulent benefit of special interests.

JB: Do you believe in any form of taxation that is progressive?

Not in the way you probably mean “progressive.”  I’d argue that a flat tax on income is inherently progressive, because those who make more money pay more taxes inherently.  It’s the nature of percentages.  But if what you mean is that the people who control government get to decide how much a person really needs each additional dollar, on a curving scale, and then decide who deserves to be subsidized on the other end, then absolutely not.

That’s plainly immoral and subject to all of the incentive problems I’ve already described.

There are basically four measurements I’d use for judging methods of taxation:

• It has to be structurally fair. In other words, it can’t be designed to hurt targeted groups more or to favor privileged activities to any greater degree than is unavoidable whenever you pick and choose something to tax.
• It has to be straightforward. Enough with loopholes and capricious, indecipherable rules.  Here’s your exposure; here’s your bill.  Period.
• There has to be a clear rationale.  How is the government contributing to the thing being taxed in order to justify taxing it?  If people can’t see that direct link, then at the most basic level, there’s no way to judge whether government is doing what we’re paying it to do.
• The incentives have to be properly aligned. There are two sides to this.  We don’t want to create disincentives to good behavior; a tax on friendship would be horrible.  But we also want a tax structure that gives government helpful incentives.

It gets a bad rap in Rhode Island, but by these four criteria, I’m increasingly favoring property tax.  The value of a property is a relatively objective measure that doesn’t really favor any group or activity.  It’s a straightforward calculation.  With respect to rationale, if you want to enjoy the society that we’ve collectively developed (not just through government, but through communities), then you’re paying to be here.

Maybe most important, though, if we start concentrating on the tax rate rather than the tax levy, which is completely backwards, then the people collecting the taxes in government will have incentive to make our property worth more.

If I could wave a wand or start from scratch, I’d base our system on a local property tax and have the money flow upward through government, from the town to the state to the feds, rather than flow down.  As a government activity gets farther from the individual, the emphasis would shift to user fees for tolls and licenses and such.