TAXATION AND THE SIZE OF THE PUBLIC SECTOR
People have different opinions about the services provided by the government, but they generally agree on the total amount of services needed if they feel they receive a fair return for their taxes. This suggests that the level of taxation should guide the total size of the public sector, rather than individuals covering all costs of services. For rational decisions on government spending, everyone voting on expenditures should be aware of their share of the costs. However, public finance often misleads taxpayers, encouraging them to support spending while thinking that others will bear the cost.
This creates a situation where spending grows beyond what individuals actually want, as people may believe that others will pay for it. People tend to vote for expenditures without considering their own financial contribution, thinking about who else will pay instead. This leads to irresponsible expenditure decisions.
Historically, government spending has shown a tendency to increase steadily, with some countries now having governments control over 50% of national income. This growth often misses the need for efficient resource use, as government's growing role replaces individual needs with bureaucracy-driven decisions. Some argue that the public sector is not providing enough services, but this doesn’t mean overall government spending is too low. Instead, the current system might push government expenditures higher than individuals realize or agree with, as shown by opinion polls indicating a preference for lower taxes among many citizens.
People have different opinions about the services provided by the government, but they generally agree on the total amount of services needed if they feel they receive a fair return for their taxes. This suggests that the level of taxation should guide the total size of the public sector, rather than individuals covering all costs of services. For rational decisions on government spending, everyone voting on expenditures should be aware of their share of the costs. However, public finance often misleads taxpayers, encouraging them to support spending while thinking that others will bear the cost.
This creates a situation where spending grows beyond what individuals actually want, as people may believe that others will pay for it. People tend to vote for expenditures without considering their own financial contribution, thinking about who else will pay instead. This leads to irresponsible expenditure decisions.
Historically, government spending has shown a tendency to increase steadily, with some countries now having governments control over 50% of national income. This growth often misses the need for efficient resource use, as government's growing role replaces individual needs with bureaucracy-driven decisions. Some argue that the public sector is not providing enough services, but this doesn’t mean overall government spending is too low. Instead, the current system might push government expenditures higher than individuals realize or agree with, as shown by opinion polls indicating a preference for lower taxes among many citizens.