All prices are relative; a price is how many As it takes to buy one B. So we can only say that prices are generally high or low relative to some reference asset, like land or hours of work. Relative prices says that all taxes of
Most of them aren't actually bad. You look at the details of the big things that are described as corporate welfare, and from a centrist pov at least you'll generally shrug and think 'well there are good reasons we have this policy.'
Is it even true that we have more taxes than subsidies? Government often implements subsidies as tax credits or exemptions from taxes, e.g., credits that individuals or businesses can claim on income tax returns or exemptions of food and clothing from sales taxes. So, each tax has corresponding to it many subsidies. One income tax corresponds to multiple tax credits. One sales tax corresponds to multiple exemptions. In number at least, subsidies would seem to outnumber taxes.
If the argument is that many (actually almost all) *items* are covered by general income and sales taxes and, thus, those outnumber items subsidized, then I don't think it's true that it's harder to enforce these general taxes than subsidies, at least not in developed nations. In developed nations, governments seem to be able to enlist private businesses to enforce all sorts of regulations and collect general taxes, e.g., sales and income taxes. If a government can manage to collect one general tax, then it has a mechanism by which it can and does implement many subsidies (through exemptions and credits).
My initial thought was that the dominance/submission explanation sounded implausible. Then I thought about it some more and I was like, wait, lots of people complain about subsidies being "corporate welfare", and consider them as evidence that businesses are controlling the government. (Admitedly, many or most actually existing subsidies may indeed be as bad as they're reputed to be; I wouldn't know.) So, actually, that seems plausible...
How would the government fund these subsidies if it didn't apply taxes first? Or are your talking about penalty taxes on things like alcohol and cigarettes? Even if public schools are shutdown and you only have subsidies for private schools, you'll still need to spend the same amount of money on schooling?
Let's say there are three people, Amy, Bob, and Claire. All have 10 dollars. They want to buy goods A, B, and C, all costing 5 dollars. Amy buys good A, Bob buys good B, and Claire buys good C. The government levies a $1 tax on A. Amy has 4 dollars remaining, Bob and Claire have 5 dollars remaining, and the government has $1.
Now, let's say that the government levies a $1 subsidy on goods B and C. Amy now has 5 dollars remaining, Bob and Claire have 6 dollars remaining, and the government has -2$.
Now, are these situations equivalent? Are all parties equally well of at the end of situation 1 versus situation 2? After all, if a tax on A is equivalent to a subsidy on not-A, then these situations must be equivalent, because the same intervention (taxing A, subsidizing not-A) was performed.
I *am* explaining the pattern: ease of enforcement. Abstract symmetry says that either method is equally good at achieving the goal, which means that in practice we pick whichever is easier to enforce, which is frequently taxes rather than subsidies. (You write that taxes are harder to enforce, but I give examples where I think it goes the other way - do you disagree with them?)
You are missing the point: the fact that there is an abstract symmetry and an in practice asymmetry says that there is a pattern in need of explaining.
- It seems like in many cases it would be prohibitively difficult to transform a direct tax of A into a direct subsidy of Not A. e.g. a general sales tax, or any of the related taxes on sales of individual goods/services (gasoline, hotels, etc) - how do you pay a subsidy to everyone *other* than the pair performing the transaction? or an income tax - would you collect data on everyone's income, then send out subsidy checks to each person proportional to everyone else's income? Similarly, many existing direct subsidies would seem difficult to convert to direct taxes. e.g. to subsidize crop production, it seems much easier to find the comparatively few people who are producing crops and then hand them money, rather than trying to tax everyone who is not producing crops. So my overall hypothesis is that most of the time, we will find that each existing tax or subsidy would be easier to enforce than its hypothetical *direct* alternative. (Of course there may be ways to accomplish similar goals with somewhat less direct alternatives.)
- To convert many taxes to subsidies, it would seem you'd have to print a lot more money, causing massive inflation. Is there a different way? or perhaps you'd be ok with this - the one remaining tax is a massive tax on holding on to the currency?
Most of them aren't actually bad. You look at the details of the big things that are described as corporate welfare, and from a centrist pov at least you'll generally shrug and think 'well there are good reasons we have this policy.'
Is it even true that we have more taxes than subsidies? Government often implements subsidies as tax credits or exemptions from taxes, e.g., credits that individuals or businesses can claim on income tax returns or exemptions of food and clothing from sales taxes. So, each tax has corresponding to it many subsidies. One income tax corresponds to multiple tax credits. One sales tax corresponds to multiple exemptions. In number at least, subsidies would seem to outnumber taxes.
If the argument is that many (actually almost all) *items* are covered by general income and sales taxes and, thus, those outnumber items subsidized, then I don't think it's true that it's harder to enforce these general taxes than subsidies, at least not in developed nations. In developed nations, governments seem to be able to enlist private businesses to enforce all sorts of regulations and collect general taxes, e.g., sales and income taxes. If a government can manage to collect one general tax, then it has a mechanism by which it can and does implement many subsidies (through exemptions and credits).
My initial thought was that the dominance/submission explanation sounded implausible. Then I thought about it some more and I was like, wait, lots of people complain about subsidies being "corporate welfare", and consider them as evidence that businesses are controlling the government. (Admitedly, many or most actually existing subsidies may indeed be as bad as they're reputed to be; I wouldn't know.) So, actually, that seems plausible...
How would the government fund these subsidies if it didn't apply taxes first? Or are your talking about penalty taxes on things like alcohol and cigarettes? Even if public schools are shutdown and you only have subsidies for private schools, you'll still need to spend the same amount of money on schooling?
Let's say there are three people, Amy, Bob, and Claire. All have 10 dollars. They want to buy goods A, B, and C, all costing 5 dollars. Amy buys good A, Bob buys good B, and Claire buys good C. The government levies a $1 tax on A. Amy has 4 dollars remaining, Bob and Claire have 5 dollars remaining, and the government has $1.
Now, let's say that the government levies a $1 subsidy on goods B and C. Amy now has 5 dollars remaining, Bob and Claire have 6 dollars remaining, and the government has -2$.
Now, are these situations equivalent? Are all parties equally well of at the end of situation 1 versus situation 2? After all, if a tax on A is equivalent to a subsidy on not-A, then these situations must be equivalent, because the same intervention (taxing A, subsidizing not-A) was performed.
Your expiation seems on point and quite plausible to me.
I *am* explaining the pattern: ease of enforcement. Abstract symmetry says that either method is equally good at achieving the goal, which means that in practice we pick whichever is easier to enforce, which is frequently taxes rather than subsidies. (You write that taxes are harder to enforce, but I give examples where I think it goes the other way - do you disagree with them?)
You are missing the point: the fact that there is an abstract symmetry and an in practice asymmetry says that there is a pattern in need of explaining.
re taxes vs subsidies:
- It seems like in many cases it would be prohibitively difficult to transform a direct tax of A into a direct subsidy of Not A. e.g. a general sales tax, or any of the related taxes on sales of individual goods/services (gasoline, hotels, etc) - how do you pay a subsidy to everyone *other* than the pair performing the transaction? or an income tax - would you collect data on everyone's income, then send out subsidy checks to each person proportional to everyone else's income? Similarly, many existing direct subsidies would seem difficult to convert to direct taxes. e.g. to subsidize crop production, it seems much easier to find the comparatively few people who are producing crops and then hand them money, rather than trying to tax everyone who is not producing crops. So my overall hypothesis is that most of the time, we will find that each existing tax or subsidy would be easier to enforce than its hypothetical *direct* alternative. (Of course there may be ways to accomplish similar goals with somewhat less direct alternatives.)
- To convert many taxes to subsidies, it would seem you'd have to print a lot more money, causing massive inflation. Is there a different way? or perhaps you'd be ok with this - the one remaining tax is a massive tax on holding on to the currency?