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Of course - if governments could raise funds by donations they would not tax. I hate taxes, but I hate the absence of taxes more :)


Are you saying that if there are more effective ways of raising money, governments necessarily know about them? I'm on your side with regards to taxing, but governments are slow-moving beasts that are often controlled by ideological moves rather than practical ones.


Indeed, they already do it right now:

http://www.fms.treas.gov/faq/moretopics_gifts.html

They obviously don't take in anything more than a trivial amount of money. If you think that people would donate an equivalent amount of money if their taxes were eliminated - then you must have an awful lot of faith in people's inherent generosity in the face of their own self-interest. The economically optimal decision for any one person is to not give, but in the aggregate that means we don't have funding for infrastructure, research, etc.


I'm not saying that the conclusion is wrong, but that the reasoning is, if it assumes that a government knows the most efficient way to do something.


Governments have tried plenty of ways of raising money other than tax (inflation is the classic one), but I don't think we have found a better way. While governments are not nimble, they have had a long history of testing alternative ways of paying for the things other than taxes and so far all have proved worse in the long term.

The one exception to all of this is war where people will effectively donate by buying things like war bonds or agreeing to charge non-market rates for goods, but as a solution for taxation war is hardly ideal. As I said I hate taxes, but I hate no taxes more.


Governments are well-known to use every trick in the book to get more money.




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