If taxes were reduced to an absolute minimum, would the economy be more efficient?

Question

Minimum taxation might be used towards external defense, but everything else; ie. industry, welfare, education, etc. even internal security would be privatised. This would remove the need for the tax system, and the public would know where their money was going. - It might almost cut out the government altogether!

Answer 1

Yes, I believe so. Think about the leakage from our economy into the bureaucratic mess which is our government via taxes. Some respondents might state "But the economy benefits from Govt expenditures, multipliers etc.". My answer to that is that the $$ the govt is using was private $$, taxes are just a transfer of wealth from efficient uses to inefficient uses. The reduction in private efficient spending and increase in Govt spending reduces efficiency. Money is a representation of value, a private company using their tax $$ to buy computers will get valuable assets which in turn the computer company is compensated for building these assets from scratch (adding value to the overall economy). The Govt paying a city employee to take 10 cigarette breaks and stare at his computer screen is not adding any value to the economy and makes it more inefficient.

Answer 2

You are absolutely right - I think so. Defense and internal security are the only major fields where government interference is needed. In fact the present Indian PM showed how economy can be boosted by reducing taxes. But do you think our politicians will agree to that?. Never. They want control of every thing.
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Answer 3

How do you define minimum? There are many goods and services that a government has to provide -- national defense, police, firemen, roads, dams, utilities (water, gas, and electric), judges, etc.

What would you cut out in our current budget?

It's very easy to make noises, but at least offer up a concrete example!

You can find the 2007 budget here:
http://www.whitehouse.gov/omb/budget/fy2007/

Answer 4

Privatization has shown to be as inefficient as government control. The scandal at Walter Reed happened because it was given to private contractors. Haliberton has had control over supplying the troops and they provided bad food and water at extreme prices. Government can do the job better as long as there is strong oversight of the process. Privatization aids the rich because their tax burden is less but it costs Americans more. A fair tax system would be a better answer.

Answer 5

Well the stock answer is that certain functions must be retained by the government, and if taxation is too low to support the rule of law and adequate infrastructure, that would harm the economy. Etc Etc.

But I'd like to see some country try your scheme. No one has the balls to try it, who knows, it might work.

Answer 6

How do you define "absolute minimum"?

Isn't it a rather subjective term? If you're talking about maximization of the Laffer curve, it's a little difficult to know exactly where an economy is currently at.

Answer 7

i cant imagine a private company wanting to provide welfare payments.