> >why is such a large fraction of state funding based on sales taxes? > I notice a lot when I pay income tax; I am only, and only occasionally, > mildly annoyed when I pay sales tax. > Michael
Indeed. I've always thought that economists should develop a cognitive taxonomy of taxes. What kinds of taxes do people notice? When do consumers percieve something as "payment" rather than tax? How big does a tax have to be before it gets observed as "tax"? How big does it have to be before it's seen as burdensom? Such a theory, I think, would have some interesting implications. For example, if a tax were small enough to fall below the perception thresh-hold, then nobody would mobolize to oppose it, or politicians would have little to gain campaigning against it. A conclusion is that many regulatory agencies may survive because of funds generated from such small taxes - the phone tax, auto registration, cable taxes, etc. This would imply at least two kinds of political survival - bureaucratic survival could happen because of voter approval (Social Security) or voter non-observation of taxes (phone taxes). Fabio
