Governments act like the only way to get revenue is to extort money from the people. Threaten to hurt them until they pay. We all learned in grade school to scorn such behavior, but we all accept it from government.
But what if government ran on voluntary contributions instead?
According to the Giving USA report on charitable giving in this country (quoted in Non-Profit Trends), American people and organizations donated over $290 billion in 2010, with about three quarters of that money coming from individuals. We like to give.
Of course, the federal government spent more than that in 2010 — over ten times that amount, in fact. But if we could handle a government that spent less, we could fund the federal government entirely from voluntary contributions just by donating a dollar to the government for every dollar we already donate to churches and charities and other non-profits. And without taxes to pay, we’d probably feel a lot more able to donate.
But could we tolerate such a lean government? Well, the last time we had a government that ran on so little money was in 1949.
(The Government Printing Office publishes a chart that shows annual budgets back to 1901, and you can check the data yourself — just remember to adjust for inflation. I adjusted to 2009 dollars using the GDP deflator at Measuring Worth.)
It’s not like 1949 was a Dickensian nightmare of cruel poverty. It was post-New Deal, post-Depression, post-WWII. We had Social Security, the GI Bill, and a rising federal minimum wage. President Truman unveiled his Fair Deal at the start of the year.
And we certainly weren’t hiding behind our oceans in terms of foreign policy and defense. We were continuing to develop and test nuclear weapons. We were actively conducting airlifts into West Berlin over a Soviet blockade. We were developing a strong containment stance in the emerging Cold War.
All in all, our government spent enough in 1949 to keep everyone pretty satisfied.
So what if we went back to 1949-style spending, stopped all federal taxes (income taxes, FICA, federal gas taxes, and so forth), and ran the government strictly on donations? Would you be willing to match your current contributions to churches and non-profits in additional donations to the government so we could keep a lean government running strong?
I think I would. Especially if it helped end legalized bullying.