From Megan McArdle’s blog, on the story of the State of California withholding more money because it needs it more than its citizens do:
Frankly, I think in this, as in so many other areas, California is providing a valuable example for other polities to follow.
In an ideal world, all income would be directed (“withheld” if you must straight to the government. Then, at an appropriate time, members of the public could petition for the return of funds they feel they are entitled to, within the limits of total allowable refunds as set by law.
This way we would never again run into the awful situation of the government having to go about groveling for extra money or engage in tedious debates about the “appropriate” level of taxation. The government would simply collect all money in the economy, decide how much it needed to perform all of its many vital functions and then determine how much of the remainder to return and to whom.
The whole system would be much more efficient and result in a significantly more just & rational final distribution of income. Thank goodness we have California to spearhead the first tentative steps towards the kind of bold, new thinking on government’s powers of taxation that we so desperately need in this country.
It’s just part and parcel of the semi-conscious notion on the part of the bien pensants that all the money belongs to the government, which graciously allows you to keep part of it. The sort of thinking that calls tax cuts “giveaways” or that they’ll “cost the government” something.
Next step: in 2010, the State of California will issue more IOUs, or figure out some other way not to give it back. Why have a messy debate on raising taxes when things can be done by administrative fiat?