Focus on Incentives
We divide government spending into two main categories: cash compensation and general spending. Cash compensation consists of the cash payments to citizen-residents (paid via the National Dividend, National Income Supplement, and Assisted Savings Program), and to businesses (via the Sectoral Banks).
General spending consists of the remainder of government spending. For the correct Physiocratic incentives to be in place, all general spending must come solely from the ULT and the SVAT. Even building taxes (part of the ULT) must be returned to the population as cash compensation, so as both to compensate the public, and to ensure the government is not incentivized to promote inappropriate buildings. By relying on the ULT (whose revenues are split between the national and regional governments), the incentives would be aligned for governments to develop infrastructure, educational facilities, workplaces, and beautiful spaces, as these would raise land values (thereby further raising tax revenues). A reliance on the SVAT incentivizes the government to promote rises in median incomes, as sustainable, rising consumption growth would be the only way to raise revenues from this source.
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