Agents who are paid a larger fraction of their client’s income have a stronger incentive to promote and advise those clients. Thus the tax career agent idea makes more sense for governments that tax a larger fraction of citizen income. So they make less sense for city or state governments. But a national government may not be willing to try it without seeing results from a smaller experiment. So how could we make a smaller experiment to test the concept?
To pick a concrete example, say that there is a tax credit for having children. The tax career agent then has an incentive to prevent the taxpayer from having children, because if the taxpayer gets the credit, their tax burden is less and the career agent gets paid less. This works against the purpose of the tax credit.
Nice to hear my guess of N=1000 isn't crazy. This paper seems to give stats on how much income varies over time; might it give the key income change variance estimate we need? https://www.urban.org/sites...
That's a good point, but still most of what determines a typical person's taxes is their income. We could imagine a system where the government separates taxes into "base rate" (a proportion of income) and "incentive-based" (e.g. tax rebates for installing solar panels or having children), and the tax career agents are only contracted to work with the base rate taxes.
The notion of a tax career agent seems to be someone who, to optimize his own income, steers the eareer of his clients (ordinary workers) so that they will produce (pay) more tax revenue. But that puts the tax career agent directly in conflict with the tax system itself, which is already designed to push taxpayers into making both career choices and investment choices the government wants them to make, by rewarding them with tax breaks when they do. The government, then, is trying to have its cake and eat it too -- which probably explains why tax career agents are unlikely ever to exist.
Should we instead auction off a perpetual stream? X% of the revenue from the current generation, 0.5*x of children’s revenue, 0.25*X grandkids etc.
To pick a concrete example, say that there is a tax credit for having children. The tax career agent then has an incentive to prevent the taxpayer from having children, because if the taxpayer gets the credit, their tax burden is less and the career agent gets paid less. This works against the purpose of the tax credit.
I don't see the conflict. The taxes give incentives to taxpayers, and getting paid those taxes also gives incentives to tax career agents.
Nice to hear my guess of N=1000 isn't crazy. This paper seems to give stats on how much income varies over time; might it give the key income change variance estimate we need? https://www.urban.org/sites...
Was this the kind of analysis you were thinking of?
tax-career-agents-sample-size.ipynb
For 80% power at significance level p = 0.05, I get n~=1200 (but see the notebook for assumptions, which are important).
Edit: after looking at some data on income volatility, and fixing some assumptions, it now looks more like n ~ 10,000. Updated link.
That's a good point, but still most of what determines a typical person's taxes is their income. We could imagine a system where the government separates taxes into "base rate" (a proportion of income) and "incentive-based" (e.g. tax rebates for installing solar panels or having children), and the tax career agents are only contracted to work with the base rate taxes.
The notion of a tax career agent seems to be someone who, to optimize his own income, steers the eareer of his clients (ordinary workers) so that they will produce (pay) more tax revenue. But that puts the tax career agent directly in conflict with the tax system itself, which is already designed to push taxpayers into making both career choices and investment choices the government wants them to make, by rewarding them with tax breaks when they do. The government, then, is trying to have its cake and eat it too -- which probably explains why tax career agents are unlikely ever to exist.