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I worry about the complexity of, in addition to having to set a budget, also having to set earmarking rates for each area. I also am concerned about counterfactual trust; even if the legislature tried to be counterfactually trustworthy, I think it would be impossible to ignore the foreseeable earmarking, and I think people would pick up on it after it happened a few times.
In general, the interaction between the people's representatives setting the initial budget and the people earmarking on top of that seems weird. Will the public end up paying more in taxes than they want to offset each others' earmarks? Will they cut taxes in response to this and end up with a post-earmark budget identical to the old pre-earmark budget? It seems like there's a lot of game theory to be done here.