Yet another tax question
March 26, 2009 12:20 PM Subscribe
Yet another tax question: How can I calculate the value of all the public services I consume?
It's payday, and when I got my stub I went through my biweekly ritual of shaking my head incredulously at the amount of income tax that gets knocked off.
It's finally got me thinking, however, that I have no clue what value I consume as a citizen. I'm in Canada, so I'm taxed for everything from police and military to universal health care and special schools for religions of which I'm not a member.
So how much am I actually costing the government? I realize that there are some unquantifiables (protection from reduced crime via police, cleaner air via environmental regulators, etc.), so should those simply have their cost tallied and divided by the number of citizens?
What about future services? Should I be counting some of this as pre-payments for services I'll use later in life?
For more about my consumption situation: I don't drive, I use health care in the sense of getting a yearly checkup, I work full-time, and I currently have no legal problems.
(Despite the pay stub experience above, this isn't a complaint about high taxes. I'm just curious.)
It's payday, and when I got my stub I went through my biweekly ritual of shaking my head incredulously at the amount of income tax that gets knocked off.
It's finally got me thinking, however, that I have no clue what value I consume as a citizen. I'm in Canada, so I'm taxed for everything from police and military to universal health care and special schools for religions of which I'm not a member.
So how much am I actually costing the government? I realize that there are some unquantifiables (protection from reduced crime via police, cleaner air via environmental regulators, etc.), so should those simply have their cost tallied and divided by the number of citizens?
What about future services? Should I be counting some of this as pre-payments for services I'll use later in life?
For more about my consumption situation: I don't drive, I use health care in the sense of getting a yearly checkup, I work full-time, and I currently have no legal problems.
(Despite the pay stub experience above, this isn't a complaint about high taxes. I'm just curious.)
It's an unquantifiable thing, really. However, you benefit not only from the direct benefits you receive, but the positive feedback from benefits your fellow citizens receive. For instance, in Canada, the fact that everyone has health care means they're more likely to remain healthy, and thus you benefit by getting sick less. Can you put a price on avoiding a cold?
Reduced crime, etc. acts as an economic multiplier, and even though you don't personally drive, the roads bring goods to stores you patronize, and generally helps business along. Generally speaking, government expenditures are very efficient, because they take "economy of scale" to the extreme.
It's not really an answer to your question, but I'd advise you to think of citizenship as a membership to a club, and taxes are your club dues. Given all the benefits of being a member of the Canada Club, it seems that it's well worth your dues. Some are always going to take advantage more than others, and contribute less or receive more, but it doesn't mean there's anything wrong with that.
posted by explosion at 12:41 PM on March 26, 2009
Reduced crime, etc. acts as an economic multiplier, and even though you don't personally drive, the roads bring goods to stores you patronize, and generally helps business along. Generally speaking, government expenditures are very efficient, because they take "economy of scale" to the extreme.
It's not really an answer to your question, but I'd advise you to think of citizenship as a membership to a club, and taxes are your club dues. Given all the benefits of being a member of the Canada Club, it seems that it's well worth your dues. Some are always going to take advantage more than others, and contribute less or receive more, but it doesn't mean there's anything wrong with that.
posted by explosion at 12:41 PM on March 26, 2009
It is easy for me to grumble that my taxes here in Ireland are going towards a million and one things to do with children when I have no kids. Occasionally I complain that I should get a tax rebate for not having kids, instead of all those people who get tax credits for having them.
Realistically, however, things like prenatal care and free inoculations for kids mean lower critical care demand on the health system overall, and more medical resources for me. Educating children means less poverty and therefore less crime, which means a safer city for me. Like you, we don't own a car, but better roads mean more fuel efficient carriage of goods and people, which means more oxygen for me.
So even if you look at your tax payments on a purely selfish basis, it still works out pretty well for the average citizen, even when their money is supporting parts of the system from which they draw no direct benefit.
posted by DarlingBri at 12:56 PM on March 26, 2009
Realistically, however, things like prenatal care and free inoculations for kids mean lower critical care demand on the health system overall, and more medical resources for me. Educating children means less poverty and therefore less crime, which means a safer city for me. Like you, we don't own a car, but better roads mean more fuel efficient carriage of goods and people, which means more oxygen for me.
So even if you look at your tax payments on a purely selfish basis, it still works out pretty well for the average citizen, even when their money is supporting parts of the system from which they draw no direct benefit.
posted by DarlingBri at 12:56 PM on March 26, 2009
It might be hard to quantify exactly, but if your question is one of direct government expenditures, it's easy to say that so long as the government is not running a deficit, what it spends on you is less than what you pay in taxes. Assuming that you work, pay taxes, and aren't employed by the government directly, of course.
But as you realize, a lot of the government's expenditures that aren't directly spent on you do provide you with some utility. This is the nature of a public good. Quantifying the total utility of all indirect benefits you get from the various public goods provided by the government is going to be difficult or impossible.
What about future services? Should I be counting some of this as pre-payments for services I'll use later in life?
I don't think it matters, so long as you're consistent and you don't count the utility you receive from these services twice. It seems like it would be best, for the sake of simplicity, to account for the services only once you receive them. Takes out the guess-work. Of course, you could argue that there's a utility associated with knowing that you will be covered in the future... You could make comparisons to health insurance costs in the US, maybe? I'd love to hear what an accountant has to say about this.
posted by mr_roboto at 12:58 PM on March 26, 2009
But as you realize, a lot of the government's expenditures that aren't directly spent on you do provide you with some utility. This is the nature of a public good. Quantifying the total utility of all indirect benefits you get from the various public goods provided by the government is going to be difficult or impossible.
What about future services? Should I be counting some of this as pre-payments for services I'll use later in life?
I don't think it matters, so long as you're consistent and you don't count the utility you receive from these services twice. It seems like it would be best, for the sake of simplicity, to account for the services only once you receive them. Takes out the guess-work. Of course, you could argue that there's a utility associated with knowing that you will be covered in the future... You could make comparisons to health insurance costs in the US, maybe? I'd love to hear what an accountant has to say about this.
posted by mr_roboto at 12:58 PM on March 26, 2009
The focus should not be on what you yourself "consume" now, or will in the future. It is the society as a whole paying for what it needs.
If you have parents who are living, the fact that they are receiving, or will receive, old age benefits is a benefit to you as well, since you otherwise would have to shoulder the burden.
posted by megatherium at 2:23 PM on March 26, 2009
If you have parents who are living, the fact that they are receiving, or will receive, old age benefits is a benefit to you as well, since you otherwise would have to shoulder the burden.
posted by megatherium at 2:23 PM on March 26, 2009
Take total government expenditures, divide it by the population. This is your share of government spending. Is it more or less than the tax you pay? If more, you're getting a deal. If less, you're overpaying.
As for the not-driving part, do you take public transit, walk on sidewalks, or eat food or have clothing you didn't make delivered to you? Then you're using government sidewalks.
posted by blue_beetle at 2:40 PM on March 26, 2009 [1 favorite]
As for the not-driving part, do you take public transit, walk on sidewalks, or eat food or have clothing you didn't make delivered to you? Then you're using government sidewalks.
posted by blue_beetle at 2:40 PM on March 26, 2009 [1 favorite]
Best answer: Take total government expenditures, divide it by the population. This is your share of government spending.
I did this calculation back in 2004. In 2003, total GDP per capita was about C$38,000, and total government spending per capita (federal, provincial, municipal) was $15,000 (about 40%): roughly $5000 for social services, $5000 for health and education, and $5000 for everything else.
posted by russilwvong at 11:14 PM on March 26, 2009
I did this calculation back in 2004. In 2003, total GDP per capita was about C$38,000, and total government spending per capita (federal, provincial, municipal) was $15,000 (about 40%): roughly $5000 for social services, $5000 for health and education, and $5000 for everything else.
posted by russilwvong at 11:14 PM on March 26, 2009
As chrisamiller points out you should really look at lifetime taxes you pay versus lifetime benefits in order to take into account the fact that you recieve most of your benefits back when you are either in school or retired. blue_beetles suggestion becomes more difficult though.
posted by Catfry at 11:55 PM on March 28, 2009
posted by Catfry at 11:55 PM on March 28, 2009
This thread is closed to new comments.
What about future services? Should I be counting some of this as pre-payments for services I'll use later in life?
Absolutely.
Sure, you're young and healthy now and only use one checkup a year now, but you have to factor in that health deteriorates with age. So to be fair, you'd have to calculate lifetime expected medical expenditures and divide by the number of years you pay into the system. Also factor in the expected cost times liklihood of catastrophic medical events like getting hit by a car, stroke, cancer, etc. You'll find that it's much more than you might think.
posted by chrisamiller at 12:38 PM on March 26, 2009