A tax that gives something back
Can a tax be softened so it does not simply take? Bentham proposes pairing a levy with a grant of monopoly, so the payer receives, in the privilege, an offset for what the tax removes.
Surveying every source from which a government at war might raise money, Bentham hit on this scheme: pair a tax with a grant of monopoly, so the party taxed receives, in the exclusive privilege, something that offsets what the tax takes. The state gets its revenue; the payer is compensated rather than simply mulcted. It is Bentham the fiscal engineer, turning his calculus of gain and loss on the dry machinery of public finance, hunting to spread the pain more cleverly than a blunt levy. A minor and technical piece, it had almost no influence and survives mainly as a specimen of how relentlessly he costed everything.
- incentives
- property rights
- legislation
- security
- legislative procedure
- institutional design
Enter a dialogue
- Someone dreads a new tax as pure loss; how does pairing it with a privilege change what they actually give up?
- Handing a monopoly to offset a tax sounds clever, but doesn't the public pay twice, once in the tax and again in the monopolist's higher prices?
- How does your scheme differ from an ordinary tax dressed up, if the privilege it grants comes out of everyone else's pocket?
- To soften a tax by granting exclusive privilege, what competition and open trade must a state be willing to sacrifice?
- A merchant is offered a monopoly in exchange for bearing a levy; what should they weigh before calling it a fair bargain?