The Tax State: An Outdated Concept

Taxes are compulsory levies for no consideration. Because there is no earmarking, the budget funds are often not spent effectively by the state authorities. In economic terms, the incentive effects of taxes and deadweight losses are counterproductive. The alternative would be state financing that is primarily based on performance and consideration (equivalence). A key component of this would be marginal cost-oriented charges. A second element would be the financing of provisioning costs of public infrastructure from land rents. This would largely avoid the problems of tax financing. States and public companies can be observed that are already successfully moving in this direction.