How much should we be taxed?

There are two intellectually honest ways of determining the overall tax burden. Both start with a list of things on which we want to spend taxpayer money.

Both of them are hard to do.

The first method puts a price tag on the list of spending items and then determines how what taxes, and how much, must be raised to pay for all this largesse. The second ranks the spending items in order or priority/necessity, determines the level of taxation that the voters can be forced to tolerate, and then only spends until the receipts are entirely consumed.

In practice, the system is a little more sophisticated since people, pension funds, and other institutions really want to lend money to the government.

Government debt, being the closest thing to a risk free investment that we have, provides an interest rate benchmark for the rest of the economy. This is a useful service and allows us, if we use the deficit spending for wisely chosen real investment, to become richer in the long term. Home mortgages are a form of deficit spending and are normally a wealth creating mechanism as opposed to the recent speculators' leveraged nightmare.

Unfortunately, the left believes in spending more than the taxpayer will support and is entirely unwilling to set priorities. Meanwhile, the right chants "no new taxes" regardless of the fact that real needs may be neglected.

Worse, "no new taxes" ignores that fact that many taxes are counterproductive, and should abolished, while others should be increased. There is also a good argument (more another time) for the creation of entirely new taxes in response to changed circumstances.

Until both parties, and the voters, are willing to undertake the really hard job of setting priorities, we can expect little progress. So, just keep holding your nose and writing checks to the taxman.