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Tiebout in Space

I’d love to see a simple econometric study that correlates the rate of increase in taxation in American before and after the closing of the American West (sometime in the late 1800s).

One reason a poll tax was popular with governments of the past is that we don’t get fewer people when we tax them directly (or do we?), unlike most other goods. America’s vastness was a blessing for individuals before the closing of the frontier and the advent of communication and transportation technologies. A vast and wild Western United States made it easy for individuals to avoid the grasping hand of the state.

Fixed assets like land have always been at risk of expropriation (recall the feudal system) because owners find it hard to avoid the taxes. But when land was abundant, as it was in early America, you simply picked up your family and headed West if the tax burden grew too large.

Since I don’t envision many forces today that provide an impetus for the federal government to ease the tax burden, about the only way I can imagine constraining the ability of the government to tax is if it became relatively cheap and easy for Americans to flee. Within the US there are certainly some low tax areas that have become popular havens, but that is at the state and local level. As internal migration escalates, you can expect more pressure by politicians from unpopular areas to practice fiscal federalism.

The only place I can imagine fleeing to … is space. So, if you are concerned about the size and breadth of government, perhaps you should support federal boondoggles like NASA and other efforts to explore space. It might be the only long run solution to reduce the government burden.

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