If people allocated taxes to undervalued public goods, then wouldn’t the incentive of every agency be to make their services worse? Why would anyone allocate taxes to an agency that was efficient or effective?
For example, let’s say that the police have two divisions: 1) Crime patrols, and 2) Sleeping. If more police officers are assigned to a sleeping detail, crime would increase. (Yes, debatable, let’s assume it’s true.) And when crime increases, taxpayers might think that police services are undervalued and allocate more taxes to a lousy service.
In fact, isn’t that exactly what governments do right now when they want to persuade taxpayers that they should vote for high-tax politicians? Do they ever say, “If our tax base declines, we’ll have to scrape our cubicle parasites off their desks and fire them”? No. It’s always, “If taxes go down, you can say goodbye to your safe streets and emergency rooms. And good luck using your kids’ sand bucket to put out the fires that will devour your house because you’re too cheap to pay for a fire department.”
This is not to defend the present system. But how can we be certain that the agencies’ incentives would change with tax choice?
Your thoughts, please.