Also, people here know they can report a business for not giving out receipts. They might get a share of recovered taxes for that.
I don't know all the pros and cons of that setup but it seems there are ways to maintain a cash based system and still collect taxes.
If this is truly the reason for the lotteries, is the government / tax agency giving out the prizes? I never bothered to look closely but it always seemed something run by those businesses.
Yes of course. Every country has trouble collecting taxes. In Taiwan they memorialize the day when the police were too heavy handed with a woman selling untaxed cigarettes. A citizen died in the skirmish.
This day is 2/28 and largely remembered as the beginning of a 40 year period of martial law in Taiwan. I recommend visiting the 228 museum in Taipei's peace park. Even though the current government, KMT, revised the history in this museum to downplay the fact that 20,000 people went missing in Taiwan during this period, the museum still tells a great story. It's great because the story wouldn't exist at all in a place without free speech, such as China.
Though as I understand it, it requires a dot matrix printer to populate these receipts (or writing them by hand).
Edit: reading further I see China is rolling out their lottery in more areas the last few years
We asked for them quite often and they gave them each time. Total, we won 2 cans of Coke and maybe 10 yuan :)
Fun fact - fapiaos you get might be fake. Once I got fake fapiao, printed from fake printer, in fake taxi. I know it's fake because I tried to validate it online (there's service for that) after I noticed I got fake bill :/
One thing I wonder is if you have an increased likelihood of winning if you buy more. Does a $1 purchase give you the same chance to win $100 as a $20 purchase? I don't really know. Over 100 receipts you usually win like $5
In a cashless society, it becomes possible (if not inevitable) the enforcement of that taxation will become even more onerous.
$20 from grandma for your birthday? Gift tax.
You and your co-workers decide to split a large lunch? Temporary incorporation tax.
Your friend buys a 50 pack of DVD-Rs and you split them by reimbursing him half of the cost? Sales tax, again.
Sell an old comic book to a friend for more money than you paid for it? Capital gains tax.
Cash acts as an inhibitor to the impulse to tax everything or to tax it too greatly. It's understood that if you make a tax too burdensome, people will avoid and evade it.
It's not that simple. Scandinavia has a higher tax rate than Italy (and Russia), but much less tax evasion.
If the people of Scandinavia feel that what they're getting in return is worth it, they'll pay the taxes.
People in Scandinavian countries have a higher amount of trust in their governments too. I'm sure that has a lot to with it.
Someone who believes that their tax money is going to be used for the legitimate(In his or her mind) needs of society has a greater incentive to pay them than the person who believes that their tax money is going to be used to pay kickbacks to the political allies of the people in charge.
When that trust erodes, through government sinecures and throwing too much money at a brother-in-law's construction firm to build infrastructure, etc. Then people are unwilling to fund that activity and limit their tax payments as much as they can. And when they really lose faith as they did in Greece it seems, well not paying taxes seems to be more common than paying taxes and the whole thing breaks down.
Automation
You meant "cost for government," right?
It sounds like the slice of society that gets the cash discount is benefiting greatly from this "hidden economy." Saving 50% on a venue is a big win for the newlywed's pocketbook, leaving more money in their pocket to buy goods for their new household.
Well, until the bridges start falling down, anyway...
No, I don't believe the government is necessary to do those things.
But if you look at actual government spending, these sorts of infrastructure projects are dwarfed by things like military spending, which could use a reduction.
I live on a very long (two miles) private road that I jointly build and maintain with an association, etc. There is no government role whatsoever, and we even have bridges.
So it would appear that my experience validates your libertarian fantasy world. Look - we're actually doing it!
I've got sour news for you. Even a wealthy, well educated collection of fair minded and well intentioned people find it very difficult to maintain a dirt/gravel road to an acceptable condition. It's very difficult and costly. We are right on the edge of success or failure in this maintenance.
Further, if we were to actually pave the road (a true fantasy) it would be completely, totally unthinkable with regard to cost. Asphalt is paid for by the square foot and it isn't cheap. When you drive by a very quick section of asphalt road being resurfaced ... say 200-400 meters or something - very short ... understand that that is millions of dollars in asphalt work. Millions.
Can you build some roads and bridges without the government ? Sure, of course you can. Will they approach, in any category, even the bare minimum acceptable standard that you hold ? No.
Here's a link: http://www.dot.state.fl.us/planning/policy/costs/costs-D7.pd...
Florida says 2-lane roadway is $3.3M per mile. So a few hundred feed, costing millions? Nonsense.
1. Your parent actually actively maintains a private road, and has probably done their research...
2. It costs them so much because they just have a single road, so they can't amortize the cost over an entire city or country of roadway. Public utilities tend toward monopoly for exactly this reason -- providing the utility to any small fraction of society is enormously expensive.
Make no mistake, natural monopoly is what happens when you privatize utilities. Ever met a Comcast customer who feels anything short of contempt toward Comcast? Now imagine dealing with Comcast any time you need to drive to the grocery store. Or even leave your house.
3. Parent's numbers actually make sense when compared to Florida's, once you realize Florida has an entire state over which it can amortize costs.
Source:
Maintenance a private road outside the USA. Labour is cheaper, however, everything else is more expensive so it balances out vs US numbers last time I checked.
Again, I was giving my own anecdotes about my own road, but then mid-comment switched to a hypothetical "stretch of road" that someone might drive by, being maintained, and in my mind I was thinking of a four-lane highway. It was unclear.
I will say, however, that with all due respect - things are more expensive here in California than they are in FL, so while 400 meters of four-lane @ the Florida rate posted above comes out to ~1.2 Million, it's probably a fair amount more in California.
It's expensive.
Again, $M for a few hundred feet is nonsense.
Especially for a previously unpaved roadway with bridges that probably also needs widening, leveling, etc. That isn't patch work cleaning up existing paved road...
The number is high but not unfathomably so...
Anyways, either parent is telling the truth or not. But I find it hard to believe parent helps maintain a 2 mile private road and also you know better than him the cost of paving that particular road.
Which raises the question: should this very expensive road, which is primarily used by members of this specific and admittedly wealthy community, be subsidized by the rest of (relatively) poor taxpayers of that state?
Also, shifting the cost of such roads to everyone encourages even more construction in remote areas, which doesn't seem like a good thing to promote...
And actually, here in the country, there are many cell networks that do very poorly. Houses still have land lines mostly because connectivity can be very spotty. A govt-mandated tower utility would help that.
Lastly, its not about subsidizing. E.g. REC was not subsidized, just a protected class of business that was mandated to provide service to everyone in their area. Subscribers pay the whole freight. Its like insurance; those near the generation plant are kind of subsidizing those far away, but everybody gets service.
"Florida says 2-lane roadway is $3.3M per mile. So a few hundred feed, costing millions? Nonsense."
I was thinking of a stretch of highway or freeway - four lanes - when I asked the reader to "think of a stretch of road being worked on". Sorry - wasn't clear.
Also, I was measuring in meters. So, 400 meters of four-lane @ 6.6M per mile ... that's ~1.2M, give or take.
It's expensive.
1) If it's expensive to do for the private sector, it's expensive to do for the government, no part of the cost equation changes.
2) It only seems "cheaper" b/c the private sector would have to ask for money by providing enough value enough for you to part with your money, while government doesn't, and raises money by pointing guns at people. However, to avoid the free-rider problem, you can use assurance contracts to raise the construction money and tolls to pay for maintenance, similar to what governments would do anyways.
3) American infrastructure was rated a D+ by the ASCE, so in what way is having government the sole provider of infrastructure a guarantee of quality?
4) slightly unrelated, but do you really think we'd have the same level of urban sprawl, needing a car to get anywhere in suburbia and such a heavy reliance on fossil fuels if roads were built through market forces rather than government subsidy?
The same thing is true in most other parts of the world (i.e. who is financially responsible for building and maintaining the roads). In general you will find that the milder the climate is, the nicer the roads are.
> 4) slightly unrelated, but do you really think we'd have the same level of urban sprawl, needing a car to get anywhere in suburbia and such a heavy reliance on fossil fuels if roads were built through market forces rather than government subsidy?
It is already mostly financed through market forces by local governments and via various use taxes (e.g. fuel tax, property tax, etc)
http://www.voxeu.org/article/public-sector-inefficiency-and-...
I worked as project manager for a contractor doing public works at one point. The government (at least in the US and probably everywhere) wastes a staggering amount of money.
Not saying the government doesn't need funding. They do. But they could certainly do a lot more with less.
Imagine a programmer who has to document what they do every quarter hour of their work day to ensure accountability to auditors looking to reduce waste. They end up wasting more time documenting what they do than you end up saving.
And actually-enforced penalties for individuals in government who stonewall the auditors because they know an honest auditor would want to reduce their budget.
We cheered when that scumbag Reagan talked about starving the beast. It was clear that even George HW Bush, Reagan's running mate knew it was a stupid idea. The problem that neocons won't talk about is that we don't have a single preferential way of allocating budget. Imagine we shrunk government income by one trillion dollars. That's the easy part but where will we cut our expenses? We haven't dealt with the difficult problem at all.
Remember that every dollar "wasted" goes to someone. If they are loud and influential, they will probably get to keep their money/credit. So basically the rebalancing brought upon by starving the beast is nothing more than a cash grab by the more powerful more influential over those less so.
I invite anyone who talks about cutting taxes to first come up with a plan to cut government spending. If the spending cut is palatable and can survive the mobs, I am in favor of starving our babies to cut taxes for the wealthy. But we can't put the cart before the horse. No new tax cuts without at least a matching spending cut that we can keep for at least a decade or so.
I don't mind discussions of cutting the federal government drastically even with overblown threats of riots and unrest. Why continue to prop up a federal system that was never designed to scale up to the size it is and that is out of control? It can't be fixed by any amount of tinkering so just let it collapse back to the original limited powers concept.
U.S. state and local governments do a much better job spending taxpayer money, just revert all these poorly run federal agencies and programs back to the state level.
We can talk about our successes with independent school districts where communities proudly fund their own schools with taxes at rates that they think are the best. Or take local police and EMS or local utilities for that matter. It is glorious when it works as it creates a sense of ownership and responsibility towards a community resource.
I agree with you in broad strokes that we can and should support devolution. However, I assert that we should not do this because our federal government was not "designed" to do this but because it is the right thing to do and it is in all our best interest to do it. We should not do something or avoid doing something based solely on what the system was "designed" to do. We should be willing to make changes to the system as we learn new things. I cringe on the amount of reverence with which we hold our founding fathers. The United States is a well recognized nation throughout the world and we do not need this crutch. (:
Any power or service the federal government was not designed to own is reserved for the individual states. All the wealth transfer programs, pension plans, and public services we have now federally can be delivered by the states. So yes, there is a "design" there, we're just not adhering to it.
And when it all reverts to the states, then we can have real fights over what's the "right thing" for the state to do and where the dollars go.
A good solution would be to create a universal basic income at the federal level funded by a no-exceptions flat tax on consumption, which keeps the federal government simple, and then let the states do everything else.
You can believe that churches and governments can easily match and surpass whatever the federal government can dish out once economic power reverts to the States.
The difference is, as already mentioned, citizenship. The US is under no obligation to provide welfare benefits to foreign nationals or grant them citizenship. US states have no equivalent way to prevent low income US citizens from moving there and claiming benefits.
> Every year around springtime, hundreds of homeless will literally start a trek from Portland OR to Berkeley CA to get enrolled in their generous welfare programs. What you describe happens already.
How is the fact that it actually happens supposed to disprove it?
Perhaps when the States have to administer their own welfare programs, it will no longer be profitable for the individual states to shoulder the burdens of hosting the underclasses when neighboring states will not. Sanity might return to the immigration debate, it could be a really good thing.
That was kind of my point. It isn't profitable already. Increasing the magnitude would make it unsustainable. There just wouldn't be any states offering the same level of welfare programs as the federal government currently does.
> Sanity might return to the immigration debate, it could be a really good thing.
Federal universal basic income to all citizens as a replacement for existing welfare would do the same thing. Immigrants who cut the line wouldn't get it (and all the other welfare programs would be gone), which would make living here too hard to be worth breaking the law. Then we could correspondingly increase the number of legal immigrants we accept because we'll have more capacity to integrate new legal immigrants without the people who cut the line.
No? I'm glad you caught that. Illegal immigration IS profitable, that's why it continues to happen. The advocates seem to cross political lines too, everyone must be profiting from cheap labor.
I love unsustainable pants-on-fire arguments like this. Any country or state that is being overrun in a truly unsustainable way either ejects the invaders (or does worse to them) or ends up conquered.
> Federal universal basic income
It's fun to imagine how one would tinker with the system, but you're just rearranging the deck chairs on the titanic.
I am afraid this 12% tax will drive a lot of our economy underground forcing us to raise rates. How do we prevent that from happening?
Imagine you're an IT contractor that needs to bill international customers for your services. In Italy you have to pay very high taxes since being an independent worker you fall in the same category of those who can easily dodge taxes although you're not in exactly the same position: the government treats you as a thief by default and puts you up to a taxation level that makes sense only once that it's assumed that you will only declare about half of your revenue.
This is actually a big problem and has severe repercussions on the ability to spawn new businesses in Italy.
Well, depends on if you want a government capable of affording to pay for public education, roads, military, etc.
I mean if you care about none of these things and want the government completely destroyed, a 50% revenue cut might seem okay to you.
If you want to argue governments act in part to facilitate waste and fraud, i.e. those airports and bridges don't really cost that much, I agree, but unless there's aggressive auditing attached to every project, I see no way around it. Enough people are sufficiently dishonest and greedy they will take if they can get away with it.
There is an excellent EconTalk expisode[1] with Tooley, as well as a lengthy article here[2] by the author.
[1] http://www.econtalk.org/archives/2014/12/james_tooley_on.htm...
2) His argument still would fundamentally function as a regressive tax burden greater than the existing tax burden [for education] on the poor.
3) A fee-for-service regressive tax burden will ultimately cut the poor off from services.
> With a minimum wage of about $33 per month in the area, monthly fees in the private unrecognized schools are thus about 12 percent of the average monthly earnings of an adult earner.
You do understand in the US the poor aren't paying 12% of their income to send their kids to school right?
https://www.nationalpriorities.org/campaigns/military-spendi...
http://taxfoundation.org/article/summary-latest-federal-inco...
The full federal tax burden for education, infrastructure, etc. on the poor is ~3%.
http://taxfoundation.org/article/state-local-tax-burden-rank...
If you factor in the state-and-local burden, the full burden is barely higher at ~13%. So for literally one service, the cost is nearly the entire tax burden for the poor.
There! Done in one :)
Either you have privacy and accept that sometimes, some people are going to use that privacy to commit crimes (such as dodging taxes), or you don't have privacy. If there can be an exception to privacy because tax, then there can also be an exception to privacy because terrorism.
When one is quite ok right now and that he/she needs to spend energy and think, and take responsability, for what's going to happen way later, it's rarely done.
So "privacy but" are going to win. Because it takes thinking and effort to fight it. And what for? Righ now, i'm alrigh.
Banks would not accept this deal, as they need the customer data for data analyzes and market research. It is also a resource to be sold in some places or to be "shared" by "partners" like insurance companies and marketing firms.
Government would not accept it, since if the tax department get this then a dozen other department also want it. Police, secret police, and prosecutors want to dig for dirt, and has a long history of ignoring anything that would benefit a defense. Social security want to dig through it in order to skip doing a real assessment of a person (having dept is a good sign, and a buffer is a sign that the person should be denied help). Political parties and political research wants to analyze it and draw conclusions without having to talk to people and do polls.
I do not want someone else to analyze my transaction, and if they have to, I want safeguards that prevent incorrect conclusions to be drawn. As it stand, there isn't any, and its barely even recognized that I am a stake holder with any rights over the data.
It's the big businesses who practically need to log all sales and transactions by the book. Companies which have lots of employees and locations can't possibly maintain such double books in practice, not to mention keep it secret. (They can try smart "tax planning" via remote jurisdictions and tax havens though, which on the other hand isn't generally available for the local entrepreneurs.)
However, if you buy a lunch or pay your barber with cash, is it right that he gets your cash and the government gets nothing? Wrong. The minute the bistro owner or barber goes buy food from a chain store or fills up at the petrol station, VAT and other taxes will be paid and the money will re-enter the official circulation.
At best the money will bounce a few times between a few local entrepreneurs until it eventually becomes taxed again. How much effort is worth spending trying to chase these pennies?
What if efficient taxation reduces the amount of transactions? This happens all the time, and then both the tax man and the entrepreneurs lose.
What if all that unaccounted local cash flow actually lubricates the economy, making better and more efficient use of money, and thus generates larger total taxable flow of money?
The percentage of untaxed cash flow also serves as an indicator of how aligned people are with the government taxation level. If people are willing to make lengthy efforts to avoid taxes repeatedly, then maybe taxes are too high. If they only do it when it's convenient or for local shops, then maybe everything is close to fine.
It's not so black and white whether it's a "huge cost for society" as it's also "beneficial to society". The question is about trade-offs which need to be balanced, not overruled.
Instead of "the most dominant market players are the ones with the best products", we get "the most dominant market players are the ones who have some combined aptitude in product value and tax evasion". That is, some resources are wastefully diverted to tax evasion instead of to making better products.
A smart dude who could have been working towards self driving cars is instead finding ever-cleverer ways to hide money or game the tax code.
1) make taxes impossible to avoid. Problem: tax code is written not by the few tax-evading small businesses, but by the many tax-evading large businesses, who won't be spending less on getting loophole-filled laws written. So this plan won't work.
2) force people to pay less taxes, such that they cost of evading is higher than the cost of paying them.
I think Mitch Hedberg put it best: I give you a dollar, you give me a donut. End of transaction.
What's a consumer's interest in asking for a receipt? Especially when you can get a discount instead?
Because some people need an alibi. Patrice Oneal put it best: https://youtu.be/RrBPmoIAyts?t=100
You incentivize compliance through monetary awards for reporting offenders.
Donut with receipt: $ 1.49
Donut without receipt: $ 1.00
Taxable reward from
gov't for reporting
non-compliance: $500.00Nothing about that practically requires a receipt. If I'm denied a refund when I go back with an insect-laden donut, I can make enough ruckus in the shop to get my entertainment value's worth. I don't really need the $0.75 anymore than I need the donut...
This already exists and is in wide use in China. It's quite interesting.
If you go to a restaurant in Shenzhen, for instance, you are issued a stack of scrip whose denomination matches (to the nearest ten, IIRC) your total bill.
Those little paper slips are lottery tickets which award real cash prizes:
Italy fines the customer rather than the shop keeper, or did I misunderstand what you said?
1) Require receipts for all transactions.
2) Offer 10% of recovered cash for anyone you report who doesn't follow #1. Add the penalty on top of any recovery [e.g. Current Fines + 10%]
3) https://www.irs.gov/pub/irs-utl/cashchapter4_210632.pdf
4) Taiwan-style receipt lottery [ http://www.tealit.com/article_categories.php?section=living&... ]
Cash businesses here do exist. My mechanic only takes cash, and he's a lot cheaper (and, incidentally, better and more honest with his customers) than other mechanics I've dealt with. I wonder how the IRS deals with that. I know that with people who get tips (waiters, hairdressers, etc.) they assume a certain percentage of income from cash tips.
There are two stable equilibrium points in a society, one where most people play by the rules most of the time and one where most people ignore the rules most of the time. It's quite difficult to shift from the latter to the former; it seems to be historically associated with Protestantism, which itself could be seen as a movement to ""clean up"" religion from corruption.
The reason we go back to '2000 year old [not sure if 'misty' or 'mostly', both work in interestingly different ways] fantasy document[s]' is because there are universal truths about the human condition. The value of a statement is not in its newness or its antiquity; it lies in the truth of the thing being said. Brashly rejecting an idea because it is old has the same merit as rejecting an idea because it came from a woman - that is to say, none.
Once you are big enough, it gets easier and you can go full legal, but to start, it's terrible.
Technically true but useless for evaluating the cost/benefit of any specific proposal. If the question is, is it worth pervasive mass surveillance, the answer is no.
Any where, where there are cash transactions this is an issue. In India, apart from salaried people taxed at source almost anybody else rarely if ever pays taxes. Its assumed taxes are only what stupid people pay.
And since they make up for a huge vote bank, any move to introduce reforms for cashless payments are resisted. Plus contribution to political parties happens in cash so politicians themselves don't want it.
This leads to a situation where the tax burden is expected to be endlessly on the salaried middle class and they are expected to pay up unfairly all the time.
Privacy aside, the true reason is people just don't want to pay taxes.
I don't know the details, but plausibly could you argue that India's real problem lies in government inefficiency and/or corruption?
Your are assuming corruption is an phenomenon that is generated in total isolation without other factors contributing to it.
Both government inefficiency and corruption have roots in lack of accountability.
It wasn't really about India but about the idea that people somehow inherently dislike paying taxes, rather than feel like they are getting ripped off when paying them. It's a complex issue regardless of the country and culture.
Has a huge cost for the government, yes, but whether or not its a cost to society depends on the marginal benefit of the government having that dollar, vs the marginal benefit of keeping that dollar in public hands.
A corrupt government would be the extreme case of where that dollar is likely best kept from the tax man, but this is far from exclusive to corrupt governments.
These sort of problems run quite deep and have unintended consequences.
If money is not traceable, you also give way accountability. Opening up a door for corruption to happen easily, unchecked and unaccounted for. Rinse - Repeat for some time and you will see there are new problems due to corruption, which breed other new problems and so on..
In Brazil this practice is also pretty common.
The more untrustworthy/incompetent/reckless the government is handling taxpayers' money, the more often one sees this kind of behaviour.
First politics should do something about this!
(when prices go down you have to pay a bigger percentage of your income to serve the same debt)
A couple of friends got married recently and I found out they paid over half of what the owed in cash to get pretty decent discount.
So before we talk privacy and company let's remember that this kind of hidden economy has a huge cost for society and it's very widespread in southern Europe.