Tax me baby one more time

The folks at Blue Oregon love love love paying taxes. “It’s an honor and a privilege to do so,” wrote Carla Axtman on Monday. Today Steve Novick goes even farther and willingly pays more than he is required to:

In completing my tax forms, I decided to make a symbolic statement of concern about what’s going to happen to our state: I didn’t take the $50 tax credit for political contributions, even though I made several times that amount in political contributions. I’m not exactly rolling in dough these days – I made a little over $40,000 last year – but I figured the state needs the $50 more than I need to be subsidized for making political contributions I would have made anyway.

As a libertarian I’m glad to see Steve spending his income however he sees fit. I’ll also give him credit for putting his money where is mouth is and voluntarily raising his own tax bill; I wish other tax advocates were equally consistent.

But that said, this is a very weird thing to do. Steve wants to see children educated, the elderly cared for, addicts treated, and the sick provided with health care. These are all noble goals. They’re not, however, goals that only the government can achieve. Charities address these needs too, and by contributing $50 to them Steve could ensure that his donation is directed to the right ends.

Instead he donates to politicians who share some, but perhaps not all of his views, who might get elected and who might succeed in putting his agenda into action. Then he gives them even more money that might or might not get spent wisely. At the end of this process, I wonder how much of his political contributions actually end up benefiting the people he wants to help?

Steve gets near the truth when he says that the Oregon tax credit for campaign contributions is “subsidizing the political contributions of the relatively wealthy.” It’s a subsidy for the politicians too, transferring money from the state treasury to their own campaigns. It’s a neat trick: the relatively wealthy get to feel good about donating to their favored politicians and the politicians get more money to crow about the good things they’ll accomplish in office.

The downside of having such an active government is that we tend to forget about civil society’s private solutions to public problems; the importance of people wielding the levers of power looms too large in our view. Steve’s extra $50 in taxes is, as he says, a “small symbolic gesture.” I’d humbly suggest that a more effective gesture would be cutting out the political middlemen and donating that money to a cause that directly addresses his concerns.

Comments

  1. Ben says:

    And I’d humbly suggest that anyone who believes charity alone will lead to “children educated, the elderly cared for, addicts treated, and the sick provided with health care” is deluding himself. Certainly charity helps and is necessary. It’s why I donate 10% of my (pre-tax) income to charity.

    But those problems are too large for a disorganized smattering of private organizations to adequately address. They require something bigger and, yes, more powerful to address them. Big, like government…for all its flaws, it’s still the best institution for addressing large-scale problems. It may fail because of bad policy. But charities and private action don’t stand a chance at even solving the problems.

    Case in point: I’m a proud supporter of International Justice Mission, which works around he world to literally free slaves and other victims of violent oppression. Among other things, they investigate child prostitution rings and present evidence (and sometimes media attention) to local authorities to get them to raid the brothels and free the kids. Then they provide aftercare for the kids. I love the work they do and am seriously considering whether I might one day seek a job with them. But I can’t help but notice IJM depends on the power of local authorities to break slaves out of their captivity. If there is no law enforcement to speak of…..or if they are all so unspeakably corrupt as to support the slave-drivers (sadly common), then there is little this charity can do. Government action is needed – reform of this government, or pressure from other, more powerful governments (like the U.S.).

    Also, I don’t buy the argument that active government reduces giving. But I could be convinced, given statistics from a trustworthy source.

  2. Marty says:

    I don’t have time to convince you of the evils of government, Ben. You’ve already made up your mind it’s the best thing going. Without bothering to do any research.

    That’s too bad, because you sound like a good guy.

  3. Jacob Grier says:

    @Ben: I knew someone would misinterpret my post this way, but I didn’t think it would be you. Wasn’t it just last week that you criticized me for saying that Obama’s economic policies are steps in a fascist direction? Yet as soon as I make some modest claims about the effectiveness of private charity you paint me as an anarchist. Freeing child slaves is a far cry from the subject at hand (and an act of government I totally support).

    The question here isn’t whether government social programs are necessary at all, but what the best use of marginal funds is. Given the current state of affairs, if one has $50 to spend on helping the poor, should one give it to the government or to charity? I think there’s a solid case that giving it to charity would be more effective.

    For what it’s worth, I think it’s a very interesting question how much private alternatives could replace and even outperform government social services. However I’m not ideologically wedded to the idea that they should replace government completely. If at the end of the day there’s no better way to provide a social safety net than by government programs, I’m not going to lose any sleep over their existence.

  4. Ben says:

    Jacob –

    I certainly never meant to paint you as an anarchist. We’ve been friends since college; even if I were a fan of such childish name-calling, I certainly wouldn’t do it to you. To the extent my comment came across that way, I apologize.

    I understood your argument to be this: Since money given to charity is more likely to directly affect the causes one cares about (an obvious point that I’m willing to concede) and since government is chock-ful of wasteful, power-hungry, pandering politicians (of the type you constantly lampoon on this blog)……it would therefore be better to take all (or most) of the money everybody gives to government (via taxes or this guy’s donation or whatever) and give it instead to charity. I understood you to be arguing that doing that would get children educated, the sick cared for, etc. while government never will.

    I disagreed with that argument based on my own experience working with poverty and charities. The charities I’ve worked with have effected great and wonderful changes on the individual level, but at the systemic level the problems are simply too big. That’s why we have government. Also, based on human nature and the theological arguments (never something that would convince you, I know) of Reinhold Niebuhr, I don’t think people would voluntarily give to charity in large enough amounts to truly address all these problems.

    Also, the only reason I mentioned freeing slaves is because I’m familiar with a charity that does so….and with its reliance on government action (even though it doesn’t take government funds, as I recall). Of course I didn’t mean to imply that you’re in favor of slavery or oppose government action to free slaves. It was simply the example that came most readily to mind based on the charities I support.

    I see now that you are not talking about wholesale replacement of government with charity. You’re talking on the marginal level about what would be the most effective use of that $50. And, in this case, speaking on this individual level, I agree with you. Giving that $50 to charity is more likely to directly address this Steve guy’s concerns better than giving it to the government. Sorry that I misunderstood your argument.

    And speaking of misunderstanding arguments…..

    Marty: I don’t think government is “the best thing going.” I’m fully aware of its inefficiencies, its potential for abuse, etc. Nevertheless, I think it’s necessary. I don’t think the major social problems of our time (or of any time) can be adequately addressed by private action alone. You’re not going to find me cheering government as such (perhaps particular policies). But I will argue for its necessity in addressing more than just the basic purposes of national defense and roads.

    It’s one thing to say the government is flawed. It’s another to say those flaws are so extreme that government cannot, under any policy, address society’s social ills and we should go with private action (charity) instead. Upon further reflection, I realize it’s all a matter of degree. Doubtlessly some government action and some private action is needed to address any range of issues. Each has its sphere of effectiveness. The disagreements between me (and the likes of frequent commenter Matt Novak) and Jacob (and his large libertarian readership) probably come down to the proper balance.

  5. lsmsrbls says:

    I’ve never taken any deductions over the standard (I don’t take credit for charitable donations, etc.). I’m sure I would have back when I was poor if I hadn’t gotten to improved circumstances by tax time.

    Your points on the things the money goes to and opportunity cost are well-taken. However, I’m comfortable and feel like my tax burden should increase in order to provide less of a burden on people with less. The idea of advocating for higher taxes on people with my means and then doing my taxes in order to get “THE MAXIMUM REFUND POSSIBLE!!!” always struck me as a bit too hypocritical. I’m afraid my head would explode from cognitive dissonance.

    Now, I’m not sending in extra checks to the government or anything, and I’m not at all convinced I’m using my money for the best ends, but I thought I would at least let you give you my reasoning for why I do this.

  6. Marty says:

    Ben, I wish people had as much faith in each other as they do in government. I cannot fathom why people continue to want to invest in and make this government more powerful. The more these politicians take, the more powerful they become. Our freedoms (what’s left of them) depend on us scaling back the scope of this behemoth. There is a direct link between freedom and taxation.

  7. Matt says:

    Marty –

    Setting aside the fact that the government is people, I think you’re overlooking Ben’s very well-made point in your rush to espouse an ideological position against taxes. Ben’s point seemed to be that the question isn’t “government action vs. private action,” the question needs to be “what is most effective?” He (and I) come down with some frequency on the side of government, specifically where we feel it can be effecient. This in no way diminishes our support of private action, which we would both promote 1. where it can be more effective than government and 2. where it can serve a supplemental or corrective role to government (see Ben’s charity example).

  8. Carla Axtman says:

    Please forgive my late joining of the party. This post only just hit my radar.

    Jacob writes:
    They’re not, however, goals that only the government can achieve. Charities address these needs too, and by contributing $50 to them Steve could ensure that his donation is directed to the right ends.

    While not speaking for Steve Novick (a task I’m most certainly not equipped to do, even on my best day), I suspect that there isn’t a lot of disagreement on this point. Most liberals that I know understand and support charities that work toward the goals articulated in the post.

    While charities are laudable and often wonderful entities, they cannot and do not do all that which is necessary to education children, care for the elderly, etc. Even Thomas Jefferson believed in a free, public education for all Americans.

    I’m unaware of any historical or current society in which charities alone could open the doors to “the pursuit of happiness” by providing such things. Taxes are the dues we pay to live in and perpetuate our civilized society.

    The Bush Administration made great strides in their attempt to bring about private solutions to public problems. Blackwater was one piece of that effort. So is Halliburton. I submit that these were not a successes.

    There is such a thing as too much privatization. My concern is that in an effort to promote privatization as the most effective, a myopia is created that blinds the proponents to it’s problems (and the reverse can be said about those who shun all privatization). The difficulty is finding a balance.

    Either way, I’m genuinely proud and pleased to pay my taxes. I feel a swell of patriotism when I do so.

  9. Jacob Grier says:

    Hi Carla,

    Thanks for the thoughtful response. I agree that there may be limits to what private actions an accomplish, but as mentioned above the question is what’s the best use of one’s money on the margin, giving it to unaccountable government or to accountable charities?

    I should clarify that I advocate voluntarism, not privatization per se. Giving to charity is a mutually voluntary act. Blackwater and Halliburton received money that was forcibly taken from taxpayers and dispensed at the will of the president and Congress. They are private companies, but the decision to direct our money to them was not voluntary on our part. I’m sure we’d agree that that kind of privatization opens the door to all sorts of corruption.

  10. Carla Axtman says:

    I should clarify that I advocate voluntarism, not privatization per se. Giving to charity is a mutually voluntary act. Blackwater and Halliburton received money that was forcibly taken from taxpayers and dispensed at the will of the president and Congress. They are private companies, but the decision to direct our money to them was not voluntary on our part. I’m sure we’d agree that that kind of privatization opens the door to all sorts of corruption.

    Indeed we do agree on the corruption piece.

    I’m wondering where you draw the line however between what is voluntary and what is compulsory for taxpayers? Should it be a requirement to pay for the military/national defense? Border security? The salary of the President and the other elected representatives? Infrastructure? First responders? Education? Health care?

    What is the appropriate metric for making this decision?

    How do you square the idea of voluntary direction of money with say, the failure of the Articles of Confederation, which were implemented on a similar basis?

  11. Carla Axtman says:

    giving it to unaccountable government or to accountable charities?

    Forgive me, I neglected to answer this question.

    I submit that the government is the people and we are accountable to ourselves. One way or the other, that accountability eventually shows up at the ballot box in some form.

    We may choose, as an electorate, to give greater authority or influence to entities or certain individuals in the form of campaign contributions or influence peddling, etc. Whether or not this is the wisest course or the proper course is a different argument. But this isn’t a “government is unaccountable” problem. It’s a decision by the people to allow it by continuing to hire those representatives who engage in it, via the vote.

    We get the government we deserve because we choose to hire that government. It is only our adversary to the point that we are our own adversary.

  12. Jacob Grier says:

    @Carla Axtman: “I’m wondering where you draw the line however between what is voluntary and what is compulsory for taxpayers? Should it be a requirement to pay for the military/national defense? Border security? The salary of the President and the other elected representatives? Infrastructure? First responders? Education? Health care?”

    I’m not dogmatic about this. I have no objections to using taxpayer dollars to fund a minimal state, and am in the pragmatic stream of libertarian thought with Hayek and others that’s ok with the idea of a state-provided social safety net. I’m more interested in continually trying out voluntary, market-based solutions to social problems than in imagining libertopia. Where these approaches work, we should keep pushing the boundaries. Where they don’t, government might be the best (or least bad) alternative.

    To attempt brief answers to your more specific examples, I think public goods like defense, border security, and elected officials’ pay are all legitimately funded by taxes. Some infrastructure too, though some should be privatized (toll commuter highways, for example, seem like a particularly successful private infrastructure enterprise). The case for publicly funding education seems fairly solid, with the caveat that publicly funded doesn’t need to entail publicly administered. Similarly with health care: Some public funding may be necessary, but the system as a whole would likely perform much better with fewer third party payments and more direct market interaction between providers and consumers.

    So in short, I don’t want to wipe the slate clean and start from scratch, but I would like to tinker at the edges with more market-oriented approaches and see how they perform.

  13. Carla Axtman says:

    Jacob:

    First of all, thank you for the fascinating and intellectually interesting exchange. I appreciate it.

    Now that I (think I) understand better where you’re coming from, I wonder if the reverse principle also applies: for those social principles managed and funded in the voluntary, private sector that aren’t currently working to the detriment of society , would you be an advocate for government spending? Even at great monetary expense to the taxpayer?

    Health care comes to mind off the top. While I recognize that the government does provide some health care (veterans and medicare/medicaid), it’s apparent that the private, for-profit, market-based system is badly broken.

    A public health care system (even one that competes with the private system) would increase the size of government a great deal, as I understand it. Would that be appropriate in your view?

    I hope I’m not overstepping in peppering with all these questions. I’m genuinely interested in seeking out the span of your beliefs.

  14. Jacob Grier says:

    @Carla Axtman: Thanks to you too! The more stimulating comments here, the better.

    Health care’s a tough case and I don’t want to pretend to know more about it than I do. The current system is deeply flawed, but I wouldn’t describe it as a market-based system. It’s one of the most regulated industries in the country. The barriers to entry of becoming a doctor are huge, medicine is strictly regulated by the FDA, many hospitals are publicly funded, many patients pay through Medicare and Medicaid, and incentives for ordinary care are wildly skewed by the tax code. Our system is profit-driven, but it’s definitely not free market!

    I linked to a paper a few days ago arguing that Americans actually pay for a smaller percentage of their health care out of pocket than do consumers in more “socialized” countries. I can’t vouch for its accuracy, but it’s an interesting read:
    http://www.petersoninstitute.org/realtime/?p=595

    So what to do? One option is increased government involvement. Another would be ensuring coverage for the truly needy while trying to better align market incentives for ordinary care. Exactly how to do that is for people better informed than me to explain, but the latter is the option I’d rather see explored.

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