# The biggest flaw with a Democratic Taxation system? [closed]

Imagine a country where once a year, the citizens file a sort of vote with their tax return, where each return decides how taxes will be spent. Each citizen controls an equal portion of the taxes, regardless of income.

Taxes are allocated to programs. Anyone can establish a program by getting 0.5% of the citizen population to provide their signature endorsing the program. Programs are not allowed to violate any existing laws, and must publish an itemized report of where the tax money was spent.

Each citizen who files taxes gets an equal say. They are allowed to split the vote between any number of programs with up to 0.1% precision.

For example, suppose our country earns 1 billion dollars in tax revenue and has 1,000,000 citizens as population who file taxes. In this example, a program would require 5,000 votes to become established and each citizen would be responsible for determining the allocation of $1,000. Someone might choose to put 50% on a program to cure cancer, 20% on a program that repairs a highway they use regularly, 7.5% on a space exploration program, and the remaining 22.5% on a project to end homelessness by providing affordable housing for people. In that case, 500 dollars of the tax revenue would go to the cancer program, 200 dollars to the highway repair program, 75 dollars to space exploration, and 225 dollars to the homelessness project. Each year the projects would receive their budget based on the votes and the total taxes collected. Votes would be collected securely and projects would not be told who had voted for them. Now, I want you to come up with ways to break or game this system. Please assume the following: • The country has a democratically elected leader. • The country has free speech and nobody removes that right. This is in the modern age, so there is easy communication. • The country has functional laws preventing theft, murder, coercion, rape, dangerous drugs, etc... ie a standard functional legal system. • Programs do not ever find out who contributed to them. They only receive the total dollar amount. • The voting is properly counted. • There is a working secure way to verify the identity and authorization of the filing citizen. I want you to find the worst fraud or corruption that could happen under this system. I want to figure out how this proposed system could fail, in the worst way you can think of. In short, I want to figure out what negative outcomes could or should develop in this proposed country. • How do those "functional laws" work without adequately funded law enforcement, courts, and correctional systems? (Oops, not enough people chose to fund the prisons; gotta parole a few thousand offenders....Double-oops, not enough people funded the parole program, guess those paroled offenders won't get supervised this year after all. Everybody promise to be nice...) – user535733 Nov 30 '17 at 0:49 • This is so systematically flawed that refuting all the problems in it could easily take someone over the 30K character limit. – sphennings Nov 30 '17 at 0:55 • This system can work if "democratic distribution" applies only to discretionary portion of the budget. All mandatory, and even some of traditionally discretionary spendings need to be mandated. – Alexander Nov 30 '17 at 1:27 • I'm voting to close this question as it is not about worldbuilding but about storybuilding. For examples of how to game this system you need only learn about present-day marketing. Winston Churchill had a perfectly good reason for saying, "Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…" – JBH Nov 30 '17 at 1:55 • @VilleNiemi, keep in mind that 99% of "democracy" today is actually republicanism (the governmental style, not any political power) or "democracy through representation." I don't think there is any modern society that embraces true democracy... it's too chaotic. – JBH Nov 30 '17 at 6:21 ## 9 Answers # Why pay for productivity, when you can pay for advertising? Your country has a space program. This program has a budged of 1 billion dollars, but wants a budget of 5 billion dollars to develop more awesome space stuff. The space agency decides to spend \$200 million dollars on advertising, and \$800 million on reasonably awesome space stuff. The advertising is a success! By spending \$200 million, they raised their budget the next year to \$1.5 billion! Drunk on success, the agency's leadership increases advertising again to$500 million!

In the end, why even spend money on space stuff? Instead, we can make computer animated videos of space stuff and use those to raise money for your space program!

# Who wants to pay for bad news?

Your country has a center for disease control. This CDC is a responsibly run organization that doesn't waste its budget on advertising. Investigating a new threat, the CDC releases information on the mega-super-Zika virus which is incubating in the tropics to the south and could spread like wildfire next summer.

The virus doesn't spread as planned. Everyone defunds the CDC, since mega-super-Zika isn't a problem. The next year, 150,000 people die of mega-super-Zika.

# Sorry about those planes we ordered...

Your country has an Air Force. It also has an enemy, the nation of Foot lead by evil dictator Oroku. The Air Force starts an ad campaign to buy a new fleet of F-5000 Awesomesocket jets, the most advanced stealth designed ever made, to defend against the vile Footers. The public responds, and the contract is signed for Aweseomesocket delivery in three years.

The next year 150,000 people die of mega-super-Zika. The public, now more scared of viruses than Feet, defund the Air Force in order to fund the CDC. The Air Force can't make its yearly payment on the F-5000 program, and the company making them folds, having delivered no planes. Your nation is now a province of Foot.

• Not to mention the problem of adding 2,000 pages of budget proposals to every tax bill - if they weren't enough difficult to fill already. – Rekesoft Nov 30 '17 at 11:22
• Nice storytelling, they only flaw is that there is only 1 billion total tax income, so if the space program gets 1 billion it's doing a pretty good job, but will never increase it to 1.5 billion the next year ;) – Hans Janssen Nov 30 '17 at 12:27
• I feel that this could be prevented quite easily by creating laws that limit how much agencies are allowed to spend on advertisements per year. – Revetahw says Reinstate Monica Nov 30 '17 at 12:53

Lack of effective coordination: Everybody loves curing cancer, everyone thinks it's important, so somebody decided to put all of their money towards curing cancer. Little do they know, all of their neighbors did the same thing. Society immediately begins to collapse as schools shut down and roads crumble, all while every penny of government revenue is shoveled into a cancer cure, even though there aren't nearly enough scientists to justify the expense. Huge sums are wasted as diminishing returns kick in.

Fortunately, the next year everyone realizes their mistake and chooses not to put their money towards the cancer cure. Suddenly the funding spigot cuts off, millions of newly-recruited cancer researchers are now out of work and must retrain for new positions, abandoning the year of research they did.

One way to correct for this is to have the total amounts of funding publicly available in real time. This way, people can see what programs are over/under funded, and change their allocations in real time before the election "cutoff".

• I can see how, if someone or someone's family member is dying, they might decide that cancer is the only issue they care about. It would have to be explained what is happening that everyone sees cancer as the only issue that matters. – azoundria Nov 30 '17 at 1:11
• Well it's not that they see it as the only issue. They all just think it should get MORE than it currently is. Like how people award 10s and 1s on IMDB to shift the score, even if they think the movie is really more of a ~7.2. If everyone tried to nudge the amount without coordinating with each other, you have a problem. – Bert Haddad Nov 30 '17 at 1:38
• So basically, your example is that cancer is overfunded, then underfunded. The smart cancer program would save some of the money for the following year, understanding that the budget is not guaranteed, but I definitely can see that many programs may not do this. The bigger issue is that other programs are underfunded, which as you stated would end up reversed the next year. But there is nothing to prevent a coordination, something like pre-polling surveys which would give everyone a rough idea of how others would be voting. – azoundria Nov 30 '17 at 17:33
• @azoundria But if the program starts saving lots of money for the following year, is that not disobeying the will of the voters, who decided to allocate a certain amount this year? For a simple example, if voters fund a local transit program with whatever it costs to operate 20 bus lines at reasonable frequencies, they'd surely be upset if the program's administrators just decided on their own to only operate 10 lines and save the money in case voters change their mind next year. – Zach Lipton Dec 1 '17 at 10:46
• The smart program should establish any savings policy upfront, I would think 10% is a good amount for most programs. It's in the best interest of the program to listen to voters, and continually expand and optimize the routes offered. It's in the best interest of voters to continue to fund the program that's providing them the best service. I don't see a lot of people dropping support for transit if it's something they use daily and they feel the program is still effectively meeting their needs. – azoundria Dec 2 '17 at 18:25

I'm starting a new club. It's called the Gimmee club. We will have at least 5000 members and all of them will be taxpayers. We will be directing our taxes to a new program whereby cash money is distributed to the members of the Gimmee club. The money will be distributed to the Gimmee club members in proportion to the amount of taxes they paid.

In this way, we will effectively be paying no tax. If other people choose to fund programs that benefit the nation as a whole, we'll get that benefit as well.

Would you like to join?

• I would join the Gimmee club, but not direct my taxes to the Gimmee program. – user7139 Nov 30 '17 at 9:59
• @Pakk, direct your taxes? You direct a portion of all taxes, not your part of it. Your argument still holds tough. – Hans Janssen Nov 30 '17 at 12:29
• It sounds to me like this would end up as a form of universal basic income with just a limited membership. Since there's no way to actually verify that anyone gave their vote to the club, that part would be impossible to enforce. The end result would simply be an equal distribution of that portion of the taxes to members. (Which would be a lot of members since 0.5% signatures are required.) – azoundria Nov 30 '17 at 17:36

You're basically asking how a capitalist market or referendum system can be abused.

In short: advertising and marketing can be used to get people to spend money on projects which will not benefit them. Instead they will benefit someone else, probably the people doing the advertising and marketing. Just as advertising and marketing is used to get people to buy stuff they don't need. For the worst abuses, just look at the junk people buy today that they don't need or can't really afford.

What you're proposing is very similar to a referendum voting system. Anyone who gets enough signatures on a proposal can get it on the ballot. People then vote on it directly. If it gets enough votes, it becomes law or even a constitutional amendment.

We do this here in Oregon. Usually it works out well, and the minimum signatures keeps a lot of crackpot measures off the ballot. But sometimes people are tricked into voting for something that doesn't have the effect they were promised. For example, Measures 82 and 83 were about allowing a private casino operated by a specific developer. People gathering signatures for the ballot measure would lead by saying "do you support Portland public schools?" Their logic was the casino would provide tax revenue, some of which would go to public schools. Nevermind that tax money would come from people gambling at the casinos.

These were shot down by 70% of the voters, but you can imagine a situation where citizens are successfully duped into allocating their money to a project that simply lines the pockets of some business.

• I think this is a valid point. I assume that in your Oregon case, the local media had something to do with this. So there would need to be a strong and able media body to inform the public for this system to work. – azoundria Nov 30 '17 at 18:07

### Open proposals

Anyone can establish a program by getting 0.5% of the citizen population to provide their signature endorsing the program.

Find some group that makes up .5% of the population. Then they can

1. Direct funding to themselves.
2. Spend more money than they contribute.
3. Fund bad things. For example, neo-nazis make up .5% of the population in some countries. Perhaps the rules prevent concentration camps, but what else might they find to fund?

I can foresee big posters at work.

Expand the Mars program. They give us money! Vote all your budget to keep your job.

Perhaps some people will vote differently, but many will vote as the employer suggests. And large employers could vote in programs that subsidize themselves.

I tend to think that we should shift budgeting power from politicians to individuals. But this doesn't limit responsibly. By allowing individuals not just to spend on approved programs but on whatever they choose, it shifts control of government power from the majority to a minority.

My similar suggestion was to allow people to budget the spending of their own taxes. Then someone can't just provide their entire income from the government spending they allocate because they can only allocate that portion of their income that they pay in taxes.

Currently ownership and responsibility are separate. If I pay a lot in taxes, it just means that I lose the ability to spend that money. If I specified how the taxes were spent but within the government system, then I still spend the money. But I spend it within the societal options. I earn the money and spend the money. Society provides the options. Like the cake cutting problem this balances two goals: majority rule without disenfranchising the minority.

Allowing individuals to do both has the same problem as allowing people to cut their own cake. There's no incentive to limit the size of the piece that you select. Just grab the whole cake. When they run out, you can sell pieces to everyone else.

### Deals

I offer to give you .1% of my budget if you vote for my .5% program. Sure, that's supposed to be private. But what if you let me look over your shoulder as you vote and I let you look over my shoulder as I vote? Hard to prevent.

Note that without the .5% programs, that would be useless. There's no incentive to swap voting. It's easier to just vote for my own stuff. But with the .5%, it makes sense to spend a little to get support.

### Small programs

How do I pass a small program? Say I want to spend just \$100,000 on something. Do I now have to recruit .5% of the population to make one small expenditure?

The .5% requirement is too low to promote responsibility and at the same time too large for some programs.

• I see, something is needed to provide a veto on particular programs. (ie the Neo Nazi program where most people would not want that.) That's one I definitely see could happen, and even with perfect laws they'd hold rallies and ultimately that would negatively impact the lives of others. – azoundria Nov 30 '17 at 18:03
• But for your other points, I think that if employees want to support programs that provide funding to their employer I don't necessarily see how that's a bad thing. There's nothing that forces them to. Also, as I stated, the assumption is that there's no way to verify who voted for what, which was done to prevent the specific deals you talk about. Regarding your last point about small programs, I would recommend that program find an established program with a similar objective and see if they could work together. – azoundria Nov 30 '17 at 18:05

What is "the worst fraud or corruption that could happen under this system"? The electoral agency itself is corrupted. Yes, the votes are counted properly. But that's done in small batches compared to the whole. So whoever collates the votes publishes fraudulent results.

Those parts of government that need funding the most could offer bribes. Also, there will be government institutions and instrumentalities that have the capacity to influence staff in the electoral agency will benefit most. For example, the military and intelligence agencies will be able to bring the maximum pressure to bear to ensure they get the funding they need and want.

Corruption at the heart of the system itself will do the utmost to pervert this democratic taxation system.

• Programs have no way to know who voted for them, so bribes should not be possible. (They would have to trust that voters are telling the truth.) I would assume that every stage of the counting would be verifiable. I understand that of course, if that counting system were imperfect and any part was improperly verified it would be abused. – azoundria Nov 30 '17 at 17:50
• @azoundria You have missed my point. It is the electoral agency itself and its staff who are bribed. They fake the results. The voters can vote however they like, the counting system can be perfectly honest, but this is all subverted by corrupt officials in the electoral agency. Nobody is bribing the voters. – a4android Dec 1 '17 at 7:30

Thrashing would be a big issue especially in any areas with long lead times. This refers to a system that repeatedly flip-flops from one state to another. If the people voted for one set of priorities one year, but the next year changed them drastically due to changing circumstances, political scandal, bad publicity or exceptional marketing it would cause chaos. One year the officials at NASA have loads of money and plan their big rocket, whilst the army is laying off soldiers left right and centre due to lack of funds. The next year NASA has no money so has to cancel the big rocket program they had already started, whilst the much diminished army has loads of money but no trained soldiers.

• I think the biggest solution to this is that organizations save funds in times of plenty for the following years. I understand that many organizations wouldn't, but through trial and error and/or natural selection I imagine these programs would eventually be replaced by ones that would. – azoundria Nov 30 '17 at 17:53
• @azoundria that would work in theory, maybe even in practice, but the ever present danger would be the temptation to spend tomorrow’s savings to pay for today’s needs. Fortunately for us we all have sensible politicians who refrain from doing this or running up big debits that put the global financial system under threat ;o) – Slarty Nov 30 '17 at 18:42
• Yes I'm glad we have such great politicians saving for the future and such efficient government programs getting more efficient every year. – azoundria Nov 30 '17 at 21:00

You may want to take a look at switzerland. The referendum is a very common thing there. As are the faults of that system.

We all know that democracy is the worst system, except all others, which was meant to point out that democracy by itself is not a very good idea, you also need checks and balances and at least a group of fairly alert people with the will and the ability to counteract imbalances.

Your system will fail almost immediately, because people can vote on their spending, but are not held responsible for the consequences.

Should we build this new nuclear power plant? no.
Should we build this hydroelectric dam that is going to flood a wildlife preserve? no.
Should be wuild windmills, coal or gas plants? no.
Do you all want to live in the cold and dark? no.
Okay. Where is the energy going to come from? yes.

Hm. Yes is not a useful answer here. But your system only allows for yes and no, and it is dearly missing any means of enforcing that the consequences of a decision be known and taken care of.

Or, in other words: Your system can only work as lnog as an overwhelming majority of voters is well-informed and has the best intentions.

Which is just a synonym for it cannot work.

• The proposed system works on percentages, not yes versus no. People allocate a % to various programs. I suspect that energy is something that would be easily provided by corporations, without the need for a government program. If there's a government program (for example, providing free energy to poor or low income individuals) then those affected individuals would raise the % in the next year to get the desired energy. – azoundria Nov 30 '17 at 17:44
• @azoundria It does work on yes vs. no. You can choose to allocat money (yes), or not (no), for any given proposal. Powerplants were meant as an easy-to-grasp-example. – Burki Dec 1 '17 at 7:39

Every answer so far points out one or more flaws. One more that affects all of them: consider how USA has “free speech” but that doesn’t stop politicians and journalists on both sides from lying.