Tax Reduction without Sacrifice: Private-Sector Production of Public Services

Abstract

This article investigates an alternative which permits tax reduction without significant effects on the output of public services: private-sector production of public services. Empirical evidence on a wide variety of services is examined: refuse collection, fire protection, debt collection, health care and hospital services, claims processing, ship repair, and the operation of utilities and airline services. The evidence indicates that the economies achievable are real and not hypothetical; the private-sector provision of public services offers an excellent opportunity for tax reduction without sacrificing services.