I, Taxpayer

EconTalk Extra
by Amy Willis
PRINT
Vanessa Williamson on Taxes an... Erica Sandberg on Homelessness...

read lips.jpg What are you glad your tax dollars pay for? What are you upset your tax dollars pay for? These are just some of the questions this week's EconTalk guest, Vanessa Willamson of the Brookings Institution, asked a group of American adults. What she found about the way Americans think about their taxes may surprise you...

So let's hear about it. Have you read Willamson's new book, Read My Lips: Why Americans Are Proud to Pay Taxes? If not, will this week's episode encourage you to do so? How did this week's conversation influence the way you feel about paying your own taxes? Share your thoughts with us today...As always, we love to hear from you.

1. The conversation begins with a discussion of some of the most common misconceptions Americans have about the taxes they pay. Which of these most surprised you, and why?

2. Regarding tax policy, Williamson says that, "part of policy-making is making what government does visible." Arnold Kling has talked a great deal about what he calls "the three languages of politics." How would the adherents of each "language-" progressive, conservative, and libertarian- react to this claim? To what extent are people's views about taxation a reflection of their ideology?

3. What sorts of small changes to tax policy do Roberts and Willamson suggest to make tax incidence more visible to taxpayers? What suggestions can you add, and to what extent do you think such changes can be successful?

4. Williamson suggests that the most important thing to remember when thinking about tax policy is that we share common goals. To what extent do you think that's true? (And who is the "we" of whom she speaks?)

Comments and Sharing



TWITTER: Follow Russ Roberts @EconTalker


COMMENTS (21 to date)
Greg G writes:

regarding question 4:

You link to Pierre Lemieux's essay "The Vacuity of the Political 'We'. "

I would like to title my response "The Vacuity of the Libertarian's Failure to Understand the Conventional Use of Plural Pronouns."

Pierre says, "The truth is that this collective "we" has no scientific meaning." This is true. So what?

Language is not based on science. Language is not based on logic. Language is entirely based on social convention. Ironically, this is the most libertarian thing language could possibly be based on. Language is the most libertarian of all human creations. Every human gets to decide for himself what the words he hears and uses mean. Of course one of the risks of a libertarian arrangement is that you might not like the decisions that most other people make when they are free to make those decisions. Be careful what you wish for.

Often groups of people have to come to decisions as groups even though some individuals in them disagree. When that happens the prevailing language convention is to use the plural pronoun in referring to who made the decision. That doesn't mean that anyone is assuming the decision was unanimous within the group.

A lot of 20th century analytical philosophy went into an effort to find a logical foundation for language and discover a way that people could talk to each other with something approaching mathematical logical precision. That effort went down in flames. There is remarkable consensus now among linguists and analytical philosophers that language is conventional all the way down. If anyone thinks language is not based on convention I would like to know what that thing is they think it is based on.

I don't like every language convention. No one likes every language convention. But any time you have to resort to claiming that most speakers are using their own native language wrong that that is a sure sign you are losing the argument.

Kurt Luckenbill writes:

As usual, there were parts of this podcast that I liked and parts that drove me crazy.

When you call people opposed to illegal immigration racists and xenophobic, do you consider how condescending and racist it is for you to believe that Mexicans and other foreigners are incapable of managing their own countries and economies? It also seems rather racist to think (as most open borders advocates do) that Americans (code word for black Americans) are too lazy to take the jobs done by illegal immigrants. Americans did those jobs before we opened the borders and drove down the wages.

On taxes, unlike you, I do check my tax rate every year. This year I paid 39c of every dollar I made in taxes (federal, state and local) including municipal income and long term gains; thanks AMT. I am (barely) into the 1%, but it does seem unreasonable that I must work more than 3 hours every day for various government programs, many of which I do not support.

It also annoys me that whenever anyone talks about Social Security, they miss the incredibly progressive nature o the benefits. I am your age (62) and plan to work to 70. If I do so, I will have to live to be 140 just to get back the Social Security taxes I have paid. If I compare it to a real pension, with modest investment returns, I will never get back my contribution. It doesn't bother me so much that I'm getting a bad deal as it bothers me that no one understands how the benefits work.
Having said all that, this is still my favorite podcast.

Greg G writes:

Kurt,

You write as though the fact that you are able to make enough money to put you in the 1% and the fact that you live in a country with a government that charges you a lot in taxes to do the things that governments do are unrelated. I don't think they are unrelated. Capitalism needs government to create the conditions where it can thrive and government needs capitalism to create the wealth that it taxes to fund its operations.

Have you ever wondered why we don't see prosperous capitalist economies develop without modern governments?

I don't believe that you ever get the kind of trust and social stability and predictability that facilitate the investment that modern capitalism depends on without that. And I don't believe history has shown that happens in a system where taxes are voluntary and not progressive.

jw writes:

Greg G,

More Jedi mind tricks. Kurt Luckenbill never said that he didn't believe in paying taxes, that he didn't believe in progressive taxation (for some taxes, semantics are important this week), and never said that capitalist countries develop and prosper without government ("modern" needs to be defined).

I believe in all of those concepts (* with a clarification to follow). What Kurt and I are talking about is the DEGREE of taxation. If you look at the Tax Foundation tax table, you can see that the top 1% earn (an important concept - "earn") 19% of all income yet pay 38% of all income taxes.

The bottom 50% pay only 2.8% of income taxes (so naturally the top 50% pay 97.2%). Remember, the bottom 50% includes almost all casual and part time workers, so it is hard to estimate a full time equivalent annual wage.

But in any case, the question back to you is what is their duty and obligation to support the modern government that you describe? What is their contribution? Their flat payroll taxes do not come near to the benefits that they receive from those programs, and various tax credits almost completely offset their payroll taxes anyway. So again, what is their moral sacrifice as patriotic citizens to support your modern government?

* Taxes are NOT voluntary.

Greg G writes:

jw,

I understood and acknowledged that Kurt's complaint was that he paid "A LOT (emphasis added) in taxes." I never claimed that he "said" that "that capitalist countries develop and prosper without government." We agree he didn't say that. I never said that he thought he should pay zero in taxes. I said that he wrote "as if" his success and the fact that he lives under a government that charges wealthy people a lot in taxes are "unrelated." And he did write that way in his short comment. He seemed to think that if wealthy people payed a lot less of the cost of government and there was even more economic inequality, that would be better.

He did complain about the progressitivity of the Payroll Tax which is slightly progressive at ordinary incomes but for 1%ers like himself disappears entirely once you get substantially about 100K in payroll income. He called that "incredibly progressive." In fact, for very rich people payroll taxes are an insignificant part of their income while for low income people they are a very large part.

The income tax is very progressive but it funds only something like 46% of the Federal Budget. Most, but not all, of the other federal taxes are regressive and take a larger percentage of income from poor people than wealthy people. Those poor people have a duty to pay those taxes and they usually do because those taxes are a lot harder to evade than the taxes that wealthy people pay.

Sorry you feel I have employed some "Jedi mind tricks" here. I am writing in as simple and straightforward a way as I can. Even so, my writing skills are clearly inadequate to the task of not leaving you feeling tricked.

Seth writes:

3. I think the 'we' she is referring to is her sample of 1,000 survey respondents and 49 deep-dive interviews she did, inasmuch as they represent us.

Were the 47% who do not pay net fed income taxes were represented in those samples? Do they feel they cannot say, "As a taxpayer, I think..."

jw writes:

Greg G,

After detailing exactly what you said, you then leapt to this conclusion about Kurt Luckenbill, "He seemed to think that if wealthy people payed a lot less of the cost of government and there was even more economic inequality, that would be better", which, of course, he never said.

Besides again putting words in his mouth, you are assuming that there is general agreement on the premise that paying less progressive tax rates leads to income inequality and implied that income inequality was a bad thing.

I contend that the current fixation on income inequality is a hoax and am completely indifferent to it. Instead, I look at after tax income and after redistribution benefits and income and most of all, the standard of living of the bottom 20%. You will find that the standard of living of the bottom 20% of US citizens approaches the average of most European citizens whose governments employ much more progressive tax systems (don't forget to add US state and local taxes as well) and advertise lower GINI indexes.

And although you may have thought that you successfully begged my question on the civic responsibility of the 47%, I still look forward to your response.

In the meantime, I am off to SFO, where I will pay a 50% tax on my rental car...

Greg G writes:

jw,

I don't think the civic responsibilities of the 47% need to be described any differently than the civic responsibilities of other citizens. I though that was clear but apparently my Jedi mind tricks have obscured the point so I will be happy to provide more detail.

The civic responsibilities of everyone include paying the taxes they owe, paying their bills, becoming informed and voting, obeying the law, taking care of their families, and finding a way to make their various communities better places by either volunteering or contributing to charities or both.

Not all of these can or should be legally mandated but, in my view, they are all important civic responsibilities. Both individuals and groups of individuals vary somewhat in how well they fulfill these various civic responsibilities. In general, low income people vote less than they should but carry a larger portion of the load when it comes to military service, for example.

The 47% is not composed of the same people from years to year. Most people will be in the 47% when they are young and old. The overwhelming majority of people will pay income taxes during their peak earning years. I think the fact that Donald Trump is so often a part of the 47% should be more of an issue than the fact that young and old low income people are often included.

By the way, the state and local taxes that you ask us to remember tend to be regressive, not progressive as is the tax on rental cars.

Mark Crankshaw writes:

@ GregG

Often groups of people have to come to decisions as groups even though some individuals in them disagree. When that happens the prevailing language convention is to use the plural pronoun in referring to who made the decision. That doesn't mean that anyone is assuming the decision was unanimous within the group.

This is precisely what you seem not to grasp. The resistance towards "group decision making" does not exist because of an absence of unanimity, but rather because certain individuals within the group systemically can exercise political power and effect the outcome of the decision and other individuals within the group systematically can not exercise political power and are then subject to the decisions of the small subset of politically powerful individuals. There is a massive disparity, asymmetric inequality in political power and influence within any society that is "governed". Only some small set of individuals do the "governing", most are merely "governed".

This is precisely why the term "we" is so intolerable--not because I am losing some argument. If you systematically make every decision and I systematically can make none, then the plural pronoun "we" when ascribed to the decision making process between us is highly inappropriate. Using "we" in the political context denies the tremendous polar (all vs. none) political asymmetry that clearly exists even in a so-called "democracy".

Greg G writes:

Mark,

This is in no way something unique to government. In almost any group you can think of some individuals have a lot more influence than others. This is true whether you are talking about a family, a club, a corporation or just a group of friends.

There are dramatic disparities in power between individuals in almost every human group. Some people are more persuasive than others. Some are more attractive than others. Some are more intelligent than others. Some are healthier than others. Some are born with a better work ethic. Some are wealthier than others. Some have all of those advantages and some have none. All result in disparities in power and influence.

There are also severe limits on everyone's power. That's why dictators are so fearful. I don't know if you've ever known anyone who held elected office but I have. In every case, the first thing the learned was that they had less power than they anticipated.

You are a member of a social species. Get used to it. Like everything else there are trade offs. You have a much better than average ability to express yourself so your influence is probably much greater than the average person.

Mark Crankshaw writes:

@GregG

Have you ever wondered why we don't see prosperous capitalist economies develop without modern governments?

I don't believe that you ever get the kind of trust and social stability and predictability that facilitate the investment that modern capitalism depends on without that.

This is the nub of our disagreement. I believe that first the culture must imbue in its members a sense of trust and the culture/society must provide the "soil" necessary to maintain social stability and predictability. Only if it does can "capitalism" flourish. Government cannot impose trust, stability, or predictability (though it can disrupt all of those aspects of society). If a society is characterized as such, then even government, predatory animal that it is, can be tolerable. You seem to give government credit when I only it see "free-riding" on the culture.

Culture is generally transmitted in the home rather than through political dictate. One does not need to look far even in the, as you describe, "most prosperous" of societies to find communities that exhibit highly dysfunctional culture (East St. Louis, Detroit, South Chicago, South Central LA, Baltimore spring to mind). Maybe working within a few hundred yards of a very dysfunctional community colors my opinion: the US has quite a number of these types of places for my taste. Scale up those communities into a nation and its economic and social deplorability would rival that of Haiti. Those are places where that prosperity just never seems to show up despite having a "common government" with the rest of the country.

Those communities do not share a common civic culture with the rest of the country however (they have a high percentage of very dysfunctional families). They share more in common with Port-au-Prince then most upper income suburbs of the country. That's why a find your arguments unconvincing. The government has tried to overcome those deficiencies within those communities and without much success. The government has spent a lot of money to impose "trust and social stability and predictability" within those communities without any success. Those communities don't often have healthy "capitalism" and their political culture is uniformly deeply dysfunctional as well. Why then give government credit for doing so overall in the country? What about good parenting, the beneficial civic culture of those few parts of the country that are generally prosperous?

My contention is that government is neither sufficient nor necessary. In a really healthy culture, government force and imposition would be both superfluous and unnecessary. Where families are functional and promote trust, understanding, care and concern for others, much of what government does would be unnecessary. In an unhealthy culture, government seems to make little to no difference (the outcome has been shown again and again to be chronically poor). We have government because too many of our communities are dysfunctional, too many of our institutions (especially those funded by the government) do not promote trust, understanding, care or concern. We have government because too many people in this country are unsound mentally, socially, and psychologically (often as a result of political neglect, incompetence and the socially toxic effect of government enforced segregation and government run schooling). We don't have an unwieldy spendthrift government because it promotes "prosperous capitalism".

Mark Crankshaw writes:

@GregG

You have a much better than average ability to express yourself so your influence is probably much greater than the average person.

I agree with everything you wrote except the line above (the most relevant to argument at hand). I have exactly as much political influence as the average person--absolutely none. I contend that I have no political power whatever and play absolutely no role (have no part) in the political "collective decision process". Williamson's' use of the word "We" was meant to imply that, simply as being a citizen, that I do. I would deduce from her interview that she believes she does have political influence and that she is participating in a political "decision making process". In my reality, political decisions are imposed upon me without any regards to my opinion (and usually interest), I play no role in the political process whatsoever. These decisions are made for me, not by me. I am apart, detached and alienated from the process entirely. It is not the use of the word "We" per se I object to, it is the entire philosophical point she is trying to make by using that word that I object to.

I disagree with Williamson that I share many goals in common with most Americans, but sharing goals is rather irrelevant and unimportant. The politically important aspect is not that goals are held in common, but deciding by what process they will be attained, at what cost, and upon whom the costs will be imposed and upon whom the benefits bequeathed. Because I have absolutely no say about any of that, therefore I think the use of the word "We" is highly inappropriate in this context. Some (rather small) group of people will be deciding those more important aspects and will be imposing their political will upon me; I will never be among those persons.

Trent writes:

If Americans are so proud of paying taxes, so appreciative of the common goals we all share,so approving of all the stuff that tax dollars provide, then why do we need the IRS in the first place? Seems that Americans would just voluntarily pay taxes eagerly.

No, not blind to free riders...simply skeptical of the findings that presuppose the questions.

jw writes:

Greg G,

You are not getting off that easily. Military service, credit worthiness, voting record, group mobility and Trump's taxes are all independent variables that are not associated with the income tax or payroll taxes. A top 20% can do all of those things and still have to pay a high tax rate.

Again, 47% of people pay NO income taxes and for the vast majority of them, the benefits that they receive from payroll taxes (either current or net present value like SSA) far exceed their contributions. Why do they have no moral responsibility to financially support their government?

We agree that the 47% are not always the same people, as neither are the top 20% or 1%. But the majority of the bottom 20% will not one day pay the peak rate although a majority of the top 20% will almost certainly pay a very low rate at some time in their lives (like Trump's n=1 tax return). The distribution curve just doesn't work that way. Only about 10% of bottom 20% people ever get to the top 20%. There are myriad reasons for this, education, drive, sometimes sheer luck, but it cannot be described as discrimination or a systemic failure.

You don't get to the top 20% just because it is your turn. We are all supposed to be guaranteed the same opportunity, not the same outcome.

Greg G writes:

jw,

>---"So again, what is their moral sacrifice as patriotic citizens to support your modern government?"

>---"And although you may have thought that you successfully begged my question on the civic responsibility of the 47%, I still look forward to your response."

If you didn't want an answer that included "moral sacrifice as patriotic citizens" and "civic responsibility" then you shouldn't have asked about those more general things. But you did.

I did not say and did not mean that low income people have no moral financial responsibility to support their government. They pay many taxes other than income taxes. As I said, they have a moral responsibility to pay those taxes. No one has a moral responsibility to be a net taxpayer every year regardless of their financial circumstances.

It is not only low income people who sometimes receive more in government benefits than they pay in taxes. Sometimes very wealthy people do too. Donald Trump comes to mind. For many years he paid no income tax due to a loophole that allowed him to deduct losses that were really suffered by the banks that lent him money. In all of those year the benefits he received from income taxes far exceeded his contribution. Some of us are more disturbed by welfare for the rich and some of us are more disturbed by welfare for the poor.

If you think it's such a great deal being in the 47% you have the same equal opportunity to join their ranks as anyone else. There is no law requiring you to make a more money than 47% of people in any given year.

Greg G writes:

Mark,

>---"There is a massive disparity, asymmetric inequality in political power and influence within any society that is "governed". Only some small set of individuals do the "governing", most are merely "governed".

This is even MORE true and a much BIGGER problem in societies that are anarchistic and not "governed." In such anarchistic societies, it has always been those who are best at violence, not best at getting people to voluntarily vote for them who wield the most power.


>---"In a really healthy culture, government force and imposition would be both superfluous and unnecessary."

Yes, but human history has never ever seen the kind of "healthy culture" that you fantasize about so often. As we have seen in earlier threads, your system relies on future improvements in human nature to make possible the withering away of the state. It shares that feature with Marxism.

And by the way, the poorest and most dysfunctional communities in America that disturb you so much still have material standards of living far better than most of the rest of the world and have crime rates far lower than they were a generation ago.

Mark Crankshaw writes:

GregG

This is even MORE true and a much BIGGER problem in societies that are anarchistic and not "governed." In such anarchistic societies, it has always been those who are best at violence, not best at getting people to voluntarily vote for them who wield the most power.

Very much disagree. In any society, it has always been those who are best at violence that wield the most power. We call those people 'the government'. The "voluntary" aspect you refer to exists only in your mind. Whether we like it or not, no matter how we vote, one member of the ruling elite will be "elected" and will acquire enormous amounts of power as a result.

Yes, but human history has never ever seen the kind of "healthy culture" that you fantasize about so often. As we have seen in earlier threads, your system relies on future improvements in human nature to make possible the withering away of the state. It shares that feature with Marxism.

And by the way, the poorest and most dysfunctional communities in America that disturb you so much still have material standards of living far better than most of the rest of the world and have crime rates far lower than they were a generation ago.

Disagree with that assessment as well. This isn't a fantasy. There are "healthy cultures" in existence today--though usually they are small. The problem is that our ruling elites like continent sized political structures. Why would that be? Because large, unwieldy, ethnically strained populations work well democratically (easy to administer, high levels of shared values). Well, of course not. However, if the ruling elite is a predatory institution, then the larger the enslaved population the better.

The Greeks, who espoused democracy, thought that there was a definite population limit--maybe 20,000-- above which a democracy devolves into oligarchy. The Romans, however, let their Republic devolve into Empire as their imperial ambitions escalated and their population ballooned. The US resembles nothing less than the Roman Empire--continental in size, ethnically diverse, the worlds foremost imperial power with obvious designs to interfere in other countries whenever and however the powers that be wish. (Real current example: Syria). The US is almost explicitly patterned after the Roman Republic (replete with a Senate). Your narrative doesn't make any sense to me--the facts simply don't fit and the historical parallels between the Roman Empire and the US are obvious to all but the thoroughly propagandized.

It appears that you set the bar pretty low, in my opinion. That's the best we can do, after spending decades and trillions of dollars? Take a tour of Detroit, or St.Louis (using Google Street View, since actually being there isn't wise). These communities are supposedly located in "best country on Earth", a "prosperous" and "capitalist" country. What a joke...

Simon Transience writes:

[Comment removed pending confirmation of email address. Email the webmaster@econlib.org to request restoring this comment and your comment privileges. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

Greg G writes:

Mark,

>----"Very much disagree. In any society, it has always been those who are best at violence that wield the most power. We call those people 'the government".

OK then, get back to me when nobody is best at violence and I will agree at that point we should put your ideas about getting rid of government into effect. But of course by your definition it would already be gone by then.

You have created a big tautology that yields no useful ideas for how to get from here to there.

jw writes:

Greg G,

I feel like one of those Sunday morning show hosts, no matter how I try and ask the question, I never get a direct answer to the question, only a talking point - "in rare cases some of the rich don't pay income taxes and I know that Trump didn't in 1995 so I assume that he never has and I further assume that that banks bailed him out and I am pretty sure that his well done steak and ketchup are paid for with EBT cards."

Greg G writes:

jw,

What is the question you think I am unwilling to answer? I get accused of a lot of things here but this is the first time I have been accused of being reluctant to give my opinions on anything.

If you want a "direct answer" then ask a direct question instead of making a vague complaint.

And who are you quoting in the "talking point" you cite above?

Comments for this podcast episode have been closed
Return to top