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devil.gifLike many others that believe the tax code is unnecessarily complex, that tax rates are too high, that government spending and regulations are exhorbitantly excessive, I often point to research that shows how many billions of dollars and how many millions of hours Americans spend preparing their taxes each year.

But suppose I get to live in the classical liberal state that I often dream about. This would be a state where individuals and groups would privately contract for most services that are now provided by governments. So while our government tax burden might be far lower than it is today, wouldn’t the total transactions cost of living in such a voluntary society be far higher than the costs of dealing with an oppressive tax code and bloated government? Even if the actual expenditures for the privately provided services are much lower, would it not be true that negotiating with a road company, a police company, various private insurers, etc. would take up far more resources than these actions constitute today? Wouldn’t a truly free society grind to a halt from these transactions costs?

Loyal readers know my answer, perhaps an upcoming post will address it fully.

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