Russ Roberts

Vanessa Williamson on Taxes and Read My Lips

EconTalk Episode with Vanessa Williamson
Hosted by Russ Roberts
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Midtown Mysteries... I, Taxpayer...

Read%20My%20Lips.gif Are Americans overtaxed? How does the average American feel about the tax system and tax reform? Vanessa Williamson of the Brookings Institution talks with EconTalk host Russ Roberts about her book, Read My Lips. Williamson shares the results of her survey of American attitudes toward taxation and government spending. People misperceive much about who pays what and the structure of the tax system, particularly the payroll tax. But some of what appears to be errors--about foreign aid and government waste for example, come from the average person's definition of these terms being different from the narrow meaning.

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Readings and Links related to this podcast episode

Related Readings
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This week's guest: This week's focus: Additional ideas and people mentioned in this podcast episode: A few more readings and background resources:
  • Taxation, by Joseph J. Minarik. Concise Encyclopedia of Economics. Definitions of terms such as progressive taxes, etc.
  • Marginal Tax Rates, by Alan Reynolds. Concise Encyclopedia of Economics.
  • Social Security, by Thomas R. Saving. Concise Encyclopedia of Economics.
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0:33

Intro. [Recording date: March 16, 2017.]

Russ Roberts: ... Vanessa Williamson is the author of Read My Lips: Why Americans Are Proud to Pay Taxes, which our topic for today's conversation.... Your book is about the attitudes of Americans toward taxes and government spending. And before we get into what you found, tell us a little more about where the numbers come from. You did a survey, as well as a set of interviews. So, give us some of that background, please.

Vanessa Williamson: Yeah. So, I was looking at survey data about taxation, and, you know, there's a lot of surveys out there. So, some of the information comes from other people's surveys. But there were some serious gaps, too. And so I also conducted my own survey of 1000 U.S. adults. And I did interviews with an additional 49 people to fill in--to understand really how they think in addition to what they think, and so to see how their train of thought worked when they are thinking about different parts of the tax code, because obviously it's very complicated and we don't really have a total picture of, you know, what most Americans even understand about the taxes they pay. So I wanted to get more grounding.

Russ Roberts: What I like about the interviews--of course, it's just 49--it's not an incredible cross-section of the American people--but it allowed you to go deeper into people's attitudes rather than just checking off a number from 1 to 5 or giving a blunt response in a multiple choice question.

Vanessa Williamson: Exactly. So, one of the things I wanted in the book was make it have sort of people in it that you could remember from "to quote," [literally in audio: 'from quote to quote'--Econlib Ed.] so that it wasn't just a bunch of anonymized, you know, random opinions sort of aggregated together. You actually got a sense of actual human beings through the book. And so I think, and that's one of the things that interviews really provide.

Russ Roberts: So, let's talk about the point in your subtitle. You say that Americans are proud to pay taxes. That will surprise some people. Elaborate on that.

Vanessa Williamson: Absolutely. So, one thing that I noticed--my previous book was about the Tea Party, right? So these are some folks who are very angry about what they thought government was doing. But it struck me--you know, when I was at Tea Party rallies or at meetings, people referred to themselves as taxpayers--you know, 'As a taxpayer, I--something.' And what was interesting was, the end of the sentence was never really about taxes. It was always sort of a frame that they used to express their right to have an opinion or that they deserved to be heard. And so I was interested by that. These people who were very angry about government were nonetheless locating themselves as taxpayers. And so, I thought it would be interesting to find out what other Americans thought about that question. And also, what you tend to hear a little bit more from the extremes of the political spectrum. And so, I was curious about what folks in the middle had to say. And so what I found is--and this is true across all kinds of survey data: Americans have a very strong civic commitment to taxpaying. You know, if you ask people whether it's their civic duty to pay their fair share, then like 95% of Americans agree with that statement. That is an overwhelming majority. By way of comparison, when 5% of Americans say something, it's usually something like that they don't believe the moon landing existed. You know. Or that Elvis is still alive. So, 95% agreement in America is an exceptional number. And you find, you know, across a lot of survey questions very high percentages of people agreeing that it's wrong to hold back on your taxes or that you have a responsibility to do your part; even a moral responsibility to do your part and pay your taxes. And what's interesting is that carries over into tax compliance. Tax compliance in the United States is very high by international standards. And economists often describe that compliance as having to do with our tax morale--that is to say, our sense that this is our shared responsibility and we all have to chip in.

Russ Roberts: Yeah. I was--that was fascinating, the different--I would say it's a sense of identity for a lot of people, that claim, 'As a taxpayer, I--filling in that blank.' What do you think is the source of those emotions? Of pride and responsibility as well? And not just for themselves but for others?

Vanessa Williamson: Well, I think it's a very human feeling to want to feel that you contribute. Right? There's all kinds of studies showing that, as people get older, one of the things that keeps them healthy is the belief that they are still contributing--that they are useful. It's a very human feeling. And one thing that I think people can feel about their taxes is that, 'Here is evidence of me doing my part.' Now, I might not be happy about where the money is going. Or, I might be very unhappy--and this is the most common thing for people to be unhappy about with taxes--is the idea that other people aren't chipping in. Right? So, 'I'm the one doing my part but other people aren't doing their part?' But, nonetheless, that feeling of, you know, 'I'm an adult. I'm a contributing person. I do my bit. I'm an upstanding citizen'--that's something that really appeals to people.

5:29

Russ Roberts: And, one of the things that your book talks a lot about, and I found extremely interesting, was the misperceptions people have about who pays what and how much. And, of course, I'm aware that people are not fully aware. We all know that. But, the degree to which they are not aware, and why those misperceptions persist was extremely interesting. And in particular, you write that people misperceive both what the poor and the rich pay in taxes. So, let's start with the poor. A lot of people in your results make the point that the poor "pay no taxes." So, talk about what's correct and incorrect about that, and how that affects people's attitudes.

Vanessa Williamson: Absolutely. So, one thing that misguides Americans about how much people pay in taxes is the details of the taxpaying process. Now, the income tax is very salient. It's at the front of almost everyone's mind. Even when it's not a particularly expensive tax to them, personally. Because it's a hassle. Right? Every year you have to think about it; people are probably thinking about it right about now, actually, this year. And even if at the end of the day the cost is small, it's the hassle is high. People tend to get a little confused. Right? And so they sort of confuse hassle with cost. And over-estimate how much the income tax costs them. Now, the income tax, of course, is a progressive tax that falls more heavily on wealthy people than poorer people, at least until you get to the very, very, very incomes. And so, uh, people sometimes focus so completely on the income tax that they neglect to think about the many other kinds of taxes, which fall quite heavily on lower-income people. So, one question I asked survey respondents is: Which is the most expensive tax for their household? The biggest tax they pay? And, you know, people who--for--and then because we are a third demographic and economic information, I tried to calculate their taxes. Right? And I found that people, generally speaking knew the biggest tax they paid. But they--when people forgot the taxes that they paid, it tended to be the ones that are easy to pay. Right? So, many, many, many people forgot almost entirely about the payroll tax. Right? Which pays for Social Security and Medicare. And everyone chips in on that if you are working. Or, alternatively, middle income people tended to forget about the sales tax--because they don't have to do any work to pay it. Right? You go to the store; they take it out; you don't really think about it. And you certainly don't add up that total over the year. But for lower-income people, the sales tax is a very real expense. Lower income people are very aware of the cost they are paying when it's 6%, 7% at the grocery store, because they are watching every penny in their budget. So, what I found is that, because people focus on the income tax--which does hit the rich more than the poor--and because they tend to forget about the taxes that are easier to pay but are actually very expensive for lower-income people--overall they underestimate taxes paid by low-income people. And this is really compounded when there is rhetoric about the 47%--you may remember from a few years ago--47% of Americans don't pay net income taxes. So, that sort of rhetoric in the public sphere really compounds the mistakes people make drawing from their personal experience.

8:31

Russ Roberts: And you give a bunch of reasons, just now and also in the book about why people might forget about certain kinds of taxes: that they are not salient, that they are not in the front of their mind. They don't have a hassle. They get paid out immediately. But the other reason I always think about--and I'd be curious about your reaction, I don't think you talked about this, is: the fact that we've been told, over and over again, that our payment in the payroll tax to fund Social Security and Medicare is a "contribution" rather than a tax. That, I think a lot of people that it pays for their own Social Security or is put aside for them, or is saved or invested in some dimension. Of course, it's not. It goes out the door immediately. And, until recently and in the near future, it went toward everything. It was no different than the income tax in terms of where the money went to there was such a surplus in the so-called Social Security account that the money went to pay for food stamps and war and everything else. So, I always have felt that our people's ignoring of the payroll tax is just a--I think a terrible flaw in how this program, those programs have been marketed. And I think, to be honest, it's been marketed dishonestly to the American people. What do you think?

Vanessa Williamson: Well, one thing that struck me was that people, if I asked them their biggest tax, they would not mention the payroll tax. Right? But if I asked them to name the taxes that appeared on their paycheck, they did mention it. So, this was a really striking difference. It wasn't a salient idea. It wasn't at the forefront of their minds. But, if you asked them, they would say, 'Oh, there's the income tax, and then there's the FICA.' And I was actually--I mean, it always depends, you know, what level of expectation you have. But I was actually pretty positively struck by the amount of information people tended to have about the Social Security and Medicare taxes. Right? They tended to: One, remember them--about, so it was slightly lower and I'm going to forget the number off the top of my head, but it was something like 70% of people remembered the income tax when I asked them. On the survey, when I asked them to name the tax from their paystub. And 60% of people remembered the Social Security or Medicare tax or both. And so, I mean, it was a relatively high level of understanding that those costs exist. In the interviews, I found people tended to know. They didn't tend to think it was in an account for themselves. In fact, a lot of them were worried that there wasn't going to be any money in Social Security. That was a very common concern--

Russ Roberts: Most[?] yeah--

Vanessa Williamson: Yeah. I mean, that was, which is it's own sort of policy-error[?era] problem that deserves its own book and examination of that question, I think. But, so, in a way, they had this understanding, if you drew their particular attention to it. But they had almost no opinion about the tax at all. Because they would name the tax; and then if I followed up and asked them about what they thought about it, they'd just talk about Social Security and Medicare, the programs. They didn't have any thoughts about how the tax was collected; how much they were charged versus other people. Certainly things about the cap were not common knowledge. And there wasn't--you know, a comparison point might be the gas tax. Right? So, if you ask people about the gas tax, they are upset about two things. One, the quality of local roads--because they know it goes, it's commonly known that the gas tax goes to local roads. But, two, they are worried about the actual cost. Like, why can't I see it? Doesn't it cost a lot, people who drive a car for a living? They have thoughts about whether the tax itself is fair. And it was very uncommon for people to have any opinion at all about the tax component of the Social Security and Medicare tax program. Right? So, I think that you are right, that there is on the one hand this complete lack of information--people really forget that cost. But on the other hand, you know, a piece of that program is quite visible, because they at least get to see the number on their paystub. So it was sort of an interesting mix of visibility and invisibility.

12:21

Russ Roberts: Now, the problem with the paystub, of course, is that after a while you never look at it. At least, I rarely do. I don't know how much other people look at it. Your book forced me to realize that if I had to guess at what my actual taxes paid are--and I'm an economist, who is interested in taxes--I would have trouble. I don't know how close I'd get. I mean, after thinking about it overall to get close, and even then I wouldn't. So even though--part of it, of course, is that, unlike some of your surveyed folks and interviewees, I get deeply depressed by my taxes. So I try not to look at them. And so, I'm in a separate category, maybe. But I think it's interesting how little we look at that generally, when we don't have to write a check. As sometimes. Of course, sometimes you do. But a lot of times you get a "refund." And it's because you paid in too much. But there's a lot of psychological, I think, problems that we have in perceiving those things accurately. But my preference would be, for a lot of reasons, just to get rid of the payroll tax: roll it into the Federal income tax. And have it be--people would be a little more aware of what those taxes are. And as you also point out, the fact that the employer share is part of it is another reason people may not perceive it fully. So, I don't think that's good for democracy. I think that's a form of obscurity that is not good for us.

Vanessa Williamson: I think that's actually one of the most important takeaways from the book, right? That, when we think about policy, you know, I'm here in Washington, D.C.--when we think about policy, we're often sort of imagining that we are going to do things in an invisible, behind-the-scenes way that just creates good in the world, in some way. But we forget that part of policy-making is making what government does visible. Because people out in the world are not just supposed to respond to little economic nudges, right? They are supposed to make decisions about who to elect to implement policy. So they have to able to perceive it. And they should be able to perceive it accurately. And one of the best ways to make people perceive these accurately--I mean, people learn by doing; that's just a fact--is to make, particularly for the issue of taxes, it's much more easy than on some issues, like what we're doing in foreign countries: it's very hard for people to perceive that on a regular basis. But with taxes--you know, people have a day-to-day experience of these policies. And we can use that experience to make a more informed citizenry. So, I think that's one of the most important takeaways: exploring ways that we can use the taxpaying process to make people better informed.

Russ Roberts: You mentioned the gas tax. I think I'm older than you--maybe by a substantial amount. When I was younger, the gas tax was posted. There was a sign on the pump, and it gave you the price of the gasoline; and then I think it gave you both the State and the Federal taxes. And of course the State taxes vary quite a bit across states; and that explains a good chunk of variations in gas prices across states. But most people aren't aware of that. If I remember correctly--and I have to check this--I think they made it illegal to post those prices. Which I found just--given what you just said, it's just a really bad policy response to that.

Vanessa Williamson: Yeah. I think that's exactly right. I don't know about making it illegal. That's fascinating. I'll have to look it up. But I think that it's--sometimes, you know, and certainly I've heard it, hear it in the Beltway--there's a desire to just make taxes something people can't see. Well, the gas tax is a good example of why that's a bad idea. Because people do not like the gas tax. Right? Even though they understand that it goes for roads, and they like roads. They should like the gas tax, by that standard. But, because they don't know how much it is--and because gas taxes vary so dramatically based on things that don't make a lot of sense to the average person--people tend to sort of ascribe a lot of that to taxes. You know, because it's invisible. They don't really know. And, of course, the other thing about the gas tax that's quite unusual--you actually have something like a cigarette tax--is that it's based on the volume, as opposed to the price. So, you know, it's natural to think, given the sales tax, that when gas prices go up, taxes are going up too. Or, at least the government's getting more money. Right? So, that's obviously not how it actually works. To some extent it would work the other way. Because you can see that people consume less. So, the gas tax has really all of the bad parts of making a tax invisible, and none of the benefits of, you know, the visibility that might come from, 'Hey, this is a tax for people who use roads that pays for roads.' Which is the sort of system that, you know, normally is the kind of thing that people find appealing, when the cost and benefit seem linked.

Russ Roberts: Yah. Yah, no, it's one of the best--it's by far--I can't think of a better tax by far, actually, in terms of--well, maybe the one on playing cards. No, I'm kidding. The fact that it's more like a user fee, or something akin to a user fee. It obviously--well, I just think it's a lot--I'm a fan of that. A quick Google search suggests that maybe it differs by state, on whether you can post or not.

Vanessa Williamson: Ahhh--

Russ Roberts: So, we'll do a little research on that. And we'll put something up more generally, I hope.

17:29

Russ Roberts: Let's talk about the rich--higher-income folk. A lot of people misperceive, in your survey, and in your views, what they pay. What's the nature of those misperceptions?

Vanessa Williamson: So, I was not sure when I started this process whether most people actually understood the difference between a flat and a progressive tax. That is to say: Did people have the sort of numeracy necessary to make a distinction between taxes that are set at a flat rate, and therefore wealthy people pay more because 5% of a million dollars is more than 5% of $100? Or, are they really clear on the distinction between that and rates that actually go up themselves? Right? And I was actually--there's some good survey work on this. And it fits with what I found, which is that people are actually pretty good at that. They are not always great at explaining it out loud. Which is understandable, because even I, you know, I have to speak very carefully to say it exactly right. Right? But they actually do understand, for instance, that there are graduated brackets in the income tax. It's a general rule. It's relatively well understood. And when you, you know, ask them questions about what tax systems they prefer, they, you know, can answer those questions in meaningful ways, with percentages that go up. Right? Most Americans support taxes that are progressive taxes, and it falls more heavily on the rich. And when you ask them to actually do the math on that, they tend to, you know, continue to hold that opinion. So, that was good news, right? That basic level of [?] exceptionally important, if we are going to have real, any engagement, any sort, on tax issues. But, because, it again--in part, because of the experience of taxpaying, people tend to think that the income tax, with the graduated brackets, is undercut at the top end by loopholes. Now, of course, to some extent that is true. What you--wealthy people do have access to certain parts of the tax code that average people can't really access. They don't have the money or they don't do the right things with their money. But, you know, as a whole the income tax is in fact progressive, at least until you get up to the very, very, very high numbers. It's mostly a progressive tax. But people underestimate that. In part because, when they are filing their own taxes, the thing that matters is their quote-unquote "loopholes". Right? So--and I should say, when average people, and also when I use the word 'loopholes' I don't mean it in the technical sense of an accident to the tax code. You know, they are referring to all kinds of things that were done absolutely on purpose.

Russ Roberts: Right.

Vanessa Williamson: So. But at any income level, when you are filing your income taxes, you are thinking about what you might think of as loopholes. Right? Lower-income people are going to get their Earned Income Tax Credit. Maybe you've got to remember that you've got your mortgage. Or your student loans. Or you've got books. Or you've got an office at home. I mean, there are a million little things that you've got to remember that aren't about the rates, that have a huge impact on how much you personally pay. Right? And we all--the income-tax paying process doesn't draw very much attention to rates. Now, if you do your tax the very old-fashioned way on paper, you might look at the rate chart for a minute--

Russ Roberts: Sure--

Vanessa Williamson: to look at that last number. Yeah. But first of all that will show you the marginal rates, which is, by the way, exceptionally poorly understood. And most people--you know, you've got an accountant who doesn't--you [?] get on to H&R Block, you get on to TurboTax, you get your TurboTax software--and you know, maybe it shows you first, second what your effective rate was. But that's not information that's really salient, because you can't do anything about it. And because you use enough [?] to remember anything on your own. So, because the income tax playing[?] process draws your attention to finding the ways that you can get quote-unquote "your loopholes", the people extrapolate outward to the very rich. And think that what matters for their taxes is the access to these loopholes. Right? And what it does, unfortunately, is mislead people about the likely impact of most flat tax plans. Right? Most flat tax plans that get put forth would substantially lower taxes for wealthy people. But a substantial part of published support for flat tax comes from people who want to raise taxes on the rich. And, for interviewees who I spoke to who held that view, their explanation was that a flat tax system without loopholes would raise taxes on the rich.

21:28

Russ Roberts: You made an interesting remark: you said, except for the very top 1%--except for the very high end. At the very high end, there's a lot of variation.

Vanessa Williamson: Exactly.

Russ Roberts: in what people pay. Because it depends on where their income comes from--whether it's labor income, whether it's investment income. But, the top 1% overall pay a lot of taxes.

Vanessa Williamson: Absolutely.

Russ Roberts: And it's interesting to me how little-known that--there are sort of two things. There are a few things that are little known. One is, you talk about in the book, which I thought you were going to mention just now, which is that, people forget that when you get, quote "put into a higher bracket"--that is, if you earn enough money to have a higher tax rate, that only applies to the extra income. It doesn't cause the lower amount of income to be taxed at that higher rate.

Vanessa Williamson: Right.

Russ Roberts: And, as you say, it's hard to explain: I just did the best I could on my feet and it's not a very good explanation, right? But the second thing is, even with those loopholes, on average, really rich people pay a lot of taxes. So, the top 1%--and of course it's hard--there's different ways of defining the top 1%. You can define it as the top 1% of income earners. You can define it as the top 1% of wealth. The top 1% of adjusted gross income. But, the top 1% earns a very disproportionate share of income and pays a very disproportionate share of taxes. And it's just important. I think that's not well known.

Vanessa Williamson: Right. That's absolutely right. I think that people tend to focus on, you know, the occasional story of a very wealthy person paying a very low rate of taxes. So, Mitt Romney, taxes; or George Soros's taxes; or what have you. Sort of--Warren Buffett is an example used a lot. People talk about these wealthy people. But these people are not just in the top 1%. These people are, you know, people like George Soros are like at the very, very, very top. You know. And so we are really talking about like the .001% and what taxes they pay. And that's actually quite different from people who are, you know, near the bottom of the top 1%; and then maybe they are a wealthy doctor or, you know, a fancy lawyer, or something like that, and they have a lot of earned income--they have a job; it's just a high salary.

Russ Roberts: And there aren't many[?]--

Vanessa Williamson: And they pay quite lot in taxes.

Russ Roberts: So, there's not a lot of loopholes for people who earn a lot of labor income. Right? You're going to pay a big proportion. And you are going to get certain deductions--if you give to charity; if you have a mortgage on an expensive house--sure, then again, as you point out--those aren't really loopholes. Those are just the way the tax code is designed. But you're going to pay a lot of taxes.

Vanessa Williamson: Right. So, the problem with those--a couple of very prominent stories of exceptionally wealthy people paying a rate that's lower than someone that's a doctor or a lawyer is that we forget about all the people who are, you know, by any standard, well off but are not in that astronomical, obscene tax situation of [?] that the rest of us can't even imagine. Getting back to the question about marginal rates, I think it's a really important thing that people--there's a common error that people have in their mind, which is if you go from one tax bracket up to the next one, your whole income is going to get taxed. So, people see that as punitive, which of course it would be if it were true. That would be quite unfair.

Russ Roberts: It's stupid--it's a bad way to design the system.

Vanessa Williamson: It would be a very bad policy. And it's a good thing we don't have it. But, because people perceive the system working that way--that all of a sudden, you go from 10% to 15%, you're going to be paying more than if you made fewer dollars, that it reinforces this idea that, you know, the income tax can punish work. Right? Well, as a matter of fact, if you move up and you make $5 into the next bracket, you're going to get taxed at the new rate on the $5, not on anything else. So, one piece of language I heard in this election year was, Hilary Clinton was talking about a surcharge on incomes. Which was just a very high bracket, basically. But it might have been--I was wondering, and I haven't looked into it yet, whether that might be language that makes people understand how brackets work. It's just a surcharge on that income above the other income. I don't know--it's a hard concept to explain. But it's a really important one and it would be a great place to see an improvement in public financial understanding.

Russ Roberts: Yeah. No. I think it's a common misunderstanding. And part of it's what you pointed out--that most of us don't move dramatically between brackets all the time and think about what the consequences of that. And we don't notice it, necessarily, even if we do move frequently, because our taxes are filed with--our money is deducted from our paycheck, the tax money is deducted from our paycheck.

26:15

Russ Roberts: One of the things that struck me about the book--and you didn't emphasize this, I think for a lot of reasons, but I'm curious to get you to talk about a little bit more, is: Even though--these are small things. This issue of marginal versus the average rate is somewhat important. But there are a lot of--one of the things I took from your book is how widely people misperceive what, say, immigrants pay in taxes. Or, what government does with our tax money. And, you know, one view is: That's not surprising. Most people are not tax experts. They didn't study public finance in college. They are busy with their lives, and of course they don't read carefully--they don't have an incentive to. But what struck me about it is--and you do refer to this indirectly, and sometimes directly--a lot of these perceptions are part of people's partisan identity. You know, they, as Republicans or Democrats, or as liberals or conservatives, they hold a certain view of, say, immigrants, or government spending, or welfare. And they are not going to let the facts get in the way. They have certain perceptions of the system that get relentlessly reinforced by the news that they watch, Left or Right, by the blogs that they read, Left or Right. And those perceptions just outweigh the reality. And I just was struck by how damaging that is for democracy, that unwillingness that we have--and it's a human frailty--to be open and honest about how the world actually works. And particularly in this area that's so central, which is taxation and spending. Do you agree with that?

Vanessa Williamson: I think it's a serious challenge. And I think that--there are things in my book that I think--we suggest that politicians are sometimes unwittingly reinforcing misinformation. Every politician I've ever heard, on any part of the political spectrum, rails against loopholes. Right? Because it's popular to do so. Makes sense, right? But, what you are doing is reinforcing a fundamental misunderstanding about the impact of rates. Now, maybe you did that intentionally in order to promote your tax plan that closes some loopholes over here and then does something to rates, and you hope people only notice the loopholes because the other part is not popular. Or something like that. But I think you hear it on both sides. So, it's not entirely--it can't just be motivated. It's just a bad way of conveying information. So, I'm not so hopeful about changing the incentives of politicians to speak more honestly. Where I am hopeful is, particularly on the question of taxation and what government does, a lot of that stuff is actually visible. A lot of that stuff is experienced in daily life. And if we made, I think, relatively small changes that alerted people to things like, you know, you could, for instance, get a receipt for your sales taxes--not your personal sales taxes but maybe your zip code: People in the zip code who have an income of x usually pay about this much money each year in sales taxes; and that goes to support x, y, or z thing because the sales tax goes to the state. Right? So you could provide people--and this sometimes happens already; I think there was a period where they were doing this for Social Security in some localities do it for the property tax--you could provide people with information about where their money is going that might actually--I mean, it's been shown experimentally, in these small cases, to improve people's understanding. So, I don't have a lot of hope that we are going to get politically motivated people at the top to suddenly do the right thing about having a more engaged, educated populace. I think a lot of people have that incentive and that motivation. But, I think that--I came away from my interviews--you know, people are making mistakes; but they are reasonable mistakes. They are mistakes that come from--they are wrong, but they are not innumerate. So to me, it's a mistake that's actually a source of hope. Because it means that the changes we need to make are not like a fundamental reconsideration of teaching math in schools because people are getting out into the world and still don't understand percentages. That's not what I found. What I found is that people are extrapolating from personal experience, the way we tend to do on all kinds of issues. And because of the way tax information is given to them, they are making mistakes. And smart people are making mistakes. Educated people. Politically engaged people are making mistakes. So, that suggests to me that there's a place there where we could do a better job of getting information to people, who would use it well.

Russ Roberts: Well, I think the key part of that last sentence you said was 'we.' And I think the 'we' in that sentence, as you argue, is not going to be the 'we' among us who are politicians. But it could be the 'we' among us who are think tanks. You are at Brookings; I'm at the Hoover Institution. Certainly a non-profit organization could spend more effort educating people. There [?] organizations that do it explicitly: There's the Tax Foundation and others that try to make people aware of what their taxes are and how much they've paid, etc. Again, I just emphasize that, even myself, one of the thoughts I had reading your book is that one of the reasons people over-emphasize income tax over payroll tax is it's so much larger as a source of income [that is, government income, meaning government revenue--Econlib Ed.]. And I looked it up: it's not that much larger. I was surprised that, I think in recent years, the income tax is 46% of tax revenue and the payroll tax is 33%. So, it's bigger. But it's not as much bigger as I would have said if you'd asked me to guess. And so, you know, we're all imperfectly informed[?].

31:58

Russ Roberts: What I found, the more provocative part of what I was trying to say is this idea that we kind of like being misinformed. We like being angry about the rich or the poor not paying their fair share. And we really don't want to have it pointed out to us, that we're wrong. We like to carry our resentments around because it makes us feel better about our identity as liberals or conservatives, or Republicans or Democrats. And I think that partisan, team identity, tribalism, is just--I really don't like it. And it's just me--I think it's really destructive. And the fact that it engenders ignorance is part of the problem.

Vanessa Williamson: I mean, I think that there are challenges there, and there's some really interesting work being done to sort of assess when and why people actually respond to new information. Sometimes people will just filter it out. And so I think that that's actually kind of a frontier in Political Science, and I think there's work being done and I think really interesting--we'll have some really interesting answers about in what contexts people are actually willing to take on new facts and adjust their views. I'm actually going to do some of this work myself looking at: Can I improve people's information about who pays what in taxes and actually change their views? So, yeah, I think that that's something that requires more attention. The place where I think it's going to be hardest, unfortunately, is on the question of immigrants. Because that's not just a partisan team question; that dives into some really deeply held and really unfortunate aspects of how people think, which is that people are quite--there's a xenophobic strain; and there's a racist strain in how people think about the world and others. And I think it's very hard to overcome those very deep prejudices. So, what is commonly believed about immigrants is that they don't pay their fair share of taxes. And this is wrong. Fundamentally, immigrants pay a great deal of taxes. In particular, immigrants are, particularly unauthorized immigrants, are often paying into Social Security and Medicare without the capacity to receive those benefits, because they're not here with the right paperwork. They are always forgotten. They are propping up our Social Security system because we have an aging population. And of course they pay sales taxes like everyone else; and a lot of people will also pay income taxes.

Russ Roberts: They also pay property taxes indirectly, either directly as owners or indirectly as renters. So, that bothers me. And I'll also add, though, that in my being pro-immigrant as I am, I get a lot of responses when I mention that xenophobic and racist stuff--I think the phenomena--I think a lot of people who are worried about immigration really resent being called 'xenophobic' and 'racist,' and I'm sure there's at least one person listening right now who is in that group. I do think it's an issue that all of us as human beings struggle with people who "aren't like us." But, I do think there are--there are legitimate issues about taxes and spending with respect to illegal immigrants. It's an issue. I agree with you that I think it's overblown dramatically and many pieces are forgotten, because people I think have general views that are not related to the taxes--they just get lumped in.

Vanessa Williamson: I mean, I think that's right. One challenge that I think we face is that--and I saw this in interviews a lot--is that people would sort of [?]. They would talk about immigrants; and then they would sometimes talk about, you know, undocumented people. And then they would sometimes say Mexican. Right? And so there was an idea that--when people talk about immigrants, sometimes they are not talking about--for instance, my mom, who is an immigrant. She's from Scotland. That's not who they have in mind. And so--we are all capable of these mistakes. And I think it's incumbent on each of us to fight those prejudices that we all carry around with us--on many subjects, including about new people to our country. And we are certainly not the first set of Americans to have these concerns about new people in our country.

Russ Roberts: It's only about 200 years old--

Vanessa Williamson: Exactly.

Russ Roberts: 250 years old.

Vanessa Williamson: So, you look back and you see that people were very concerned about whether the Germans were going to integrate. And the Italians were going to integrate. And so--and that's part of what makes me pessimistic to some extent about the extent to which we can change people's views, because that has been such a long-standing problem for us. On the one hand, we are this nation of immigrants. And on the other hand, each new wave of immigrants gets--assumptions are made about them that are not accurate, not factually accurate. Which undercut our sense of social solidarity. Which is one of the things that makes us good taxpayers. Right? We have faith in one another. We have a common project that we need to pay for. We all need roads. We all trust each other to chip in our taxes so we are going to get the roads that we want, we are going to get the schools that we want. Well, you start to doubt whether everyone in the community is actually this us. And it undermines people's confidence in the tax system.

37:09

Russ Roberts: Yeah. So, you know, I totally agree with you; and I'm passionately pro-immigrant, overwhelmingly, in general, in the sense that I think the economic dangers of immigration are grossly overstated. I think the cultural implications are grossly overstated. The worries. But, having said that, and I think this has to be said--and this came up in our recent episode with George Borjas, who is much more anti-immigration than I am. But he makes a point where I think I have common ground with him, and with some others, which is: We have changed the rules of assimilation in the United States over the last, maybe 25, 30 years, and made it much easier for people not to assimilate. We've offered, you know, dual language opportunities and dual language tracks in our schools. I think that's just a fundamental mistake. I think that makes it harder for us to feel like we're part of one country and [?] one project. I don't have a lot of nationalist bones in my body. So, it's kind of awkward for me to talk about that. But there is some benefit from feeling like we are part of one community. That may be unrealistic. That may be a fantasy. But certainly when we make it easier for people to stay separate, I don't think that's a good idea. If people choose to stay separate, I'm all for it, right? If people want to live near people like them, who talk like them, who have attitudes like themselves, who have the ethnic background that they have, I think that's an inevitable part of the human condition; and nothing wrong with that. We obviously mix our integration with each other with our separateness from each other. We move across all kinds of spheres. I just think it's weird that over the last few decades in the United States we've essentially subsidized people staying separate. That seems to me to be a big mistake.

Vanessa Williamson: Well, I mean, sociologists would say that immigrants are integrating at the same rate they always have. They learn English at the same rates; they are opening businesses at the same rate. It's not--there has not been some fundamental shift in this most recent generation of immigrants that's unlike previous generations, to the extent that we have data on this. Now, on the question of whether we should have dual-language schools, though: my son is in a dual-language school. He speaks as much Spanish as English. And that's nothing[?] to me--my Spanish is appalling. And I think that's a wonderful benefit. I'm proud that I live in a diverse community and I'm proud that my son gets to experience other cultures. And I think that--the challenge is making sure that that happens in a way that's, you know, fair for everybody in the community. Right? And that there are ways that we can reach out to one another and learn and grow from each other. And obviously some people, in gentrifying[?] communities I think that there are real challenges of people getting pushed out. This is not some beautiful melting pot story. But at the end of the day, I'm proud that my country is diverse, and I'm proud that we speak a lot of different languages here. And I'm proud that our language develops in new ways. And I think that those are--that is part of the American tradition.

Russ Roberts: Well, I'm not quite sure what the boundaries of that are, in the sense that--I like learning a second language; I don't have any problem with that. I think it's a question of what's mandated and what isn't. And I do think that there is a long, historical fact that parents who immigrate, come to the United States from non-English-speaking places, have a lot more trouble learning English than their children, regardless of how much mandated second-language stuff is going on. But, yeah, no: I think diversity is a good thing, and I love the idea that we're helping people who want to come here, and provide work here, and do the things that provide stuff of value. And I think we should be free to hire those folks, and they should be free to live here. To me it's just a question of where those boundaries are in terms of eligibility for government benefits, taxpaying, etc. And again, how easy it is we make it for people to become part of that melting pot. But I do think it's an interesting phenomenon that we do both: We want to be part of the melting pot, we want to be Americans; but we also want to keep our ethnic identity whatever the hyphen that often we want to keep. And that's a reality, too.

Vanessa Williamson: From my perspective, I think that the most important thing is that we recognize that we have common goals. We do. Right? Like, if we create--

Russ Roberts: I don't know about that. I'm not sure what you mean by that.

Vanessa Williamson: You don't think we have?

Russ Roberts: I don't know what that means.

Vanessa Williamson: Oh, okay. Yeah.

Russ Roberts: Common goals--tell me what you mean by that. I mean, we're off the subject of taxes. But that's fine. Go ahead.

Vanessa Williamson: Well, I'm going to bring it back to taxes. So, when we think about, 'What are the things we want government to pay for?' we want clean air, good streets, decent schools. You know. These are common goals. Because I can't just have good streets for me. That doesn't make any sense. If only my children are educated--then obviously the economy would collapse. But the point is that there are things that are common goods. Right? And I can't just provide them for me and my family even if that was the [?]decision I wanted to make. And so, the question of immigration and more generally, right?--this is a diverse country in a lot of ways, not just because of a new wave of immigration. Different parts of the country are really different; and we're a very large country. And making sure that we focus on the things that we need to do together--that's what taxes are supposed to pay for. And I think it can help us bridge divides, of not just race and ethnicity, but rural/urban divides. You know, we have very different ideas about what are like on a daily basis. But we have shared needs. Right? We need the roads. We need to maintain the infrastructure that lets us be one country. So, to me that's actually the thing that's kind of great about studying taxes, because on the one hand you are talking about a subject that even an economist like you doesn't really want to think about that much. You don't want to get into the nitty gritty of it; you don't really want to go through it; it's a painful experience every March or April, whatever, to get the paperwork done. You don't want to think about it. But you talk to people about taxes, and you tap into their deep down immediately : about who's us and who's them, about whether they feel represented by their government, about what kind of country they think we should be. So that's what the really great thing about studying this question: it's not just about forms and rate tables and marginal brackets--all of which are interesting and important. But it's about the way that we work together to pay for the things we all need.

44:23

Russ Roberts: So, let's talk about that. Because that's where I was going to turn next anyway. I'm going to try to summarize--and then I'm going to disagree with you on this issue of what we all [?] shared goals, so we can see where we agree and disagree. In your survey results, and maybe in your interviews as well, you found that people like roads--I'm reading off a list here of yours--roads, sanitation, fire, police, education, and national parks. You found a lot of interesting stuff about foreign aid and military spending which we're going to come to in a minute. But let's just stick with these more local, within-our-borders at least, activities. So, roads, sanitation, fire, police, education, and national parks--I had two thoughts. One is, a good chunk of those are local, not Federal. The only really Federal part of that is national parks. A little bit of the Federal highway system. A little bit of education, but roads, fire, police, and sanitation most come locally. I'm pretty enthusiastic about those. I'm a libertarian, a classical liberal. I like limited government; I want a bigger sphere for private activity, both profit and non-profit activity. But if you said to me, 'Government is going to provide the roads, sanitation, fire, police, and the national parks,' I'm leaving off education; we'll talk about it in a minute. But, roads, sanitation, fire, police, and the national parks--I'd say, 'Yeah, like you point out, I can't go on my nice road and your road has potholes. We're going to be on the same road.' So, you can make a case for private roads; I don't find it that persuasive. And it's just not that big an issue for me. So, I'm okay with all that. Let's let government do roads, sanitation, fire, police, and--and I love national parks. They are often badly run and they tend to subsidize attendance and wear out the ecosystems, which is a national political response. They take out wolves, often, because wolves are scary--which is bad. So, Yellowstone I think was mismanaged for about a hundred years. But, overall, I love the national parks. You know, I get my quibbles. But if you take roads, sanitation, fire, police, and national parks, you've got a really small government. You don't have--there's no welfare in there. There's no subsidies to corporations. There's no farm subsidies. There's no National Endowment for the Arts. Etc. All the stuff--I think we could do without ¬all that other stuff. And if we just did roads, sanitation, fire, police, and national parks, you'd have tiny government, really low tax rates; and we could all pretty much agree that those are good things. Once we add those other things, we get into a lot of fights. We don't agree. There's a lot of disagreement. And certainly--well, I'll come to education in a sec. Just respond to that, first.

Vanessa Williamson: So, I might as well start by putting your views in sort of the broader context of how other people think. Right? So, what I found is that there is sort of an array of programs--oh, I should be clear. I asked people two questions in the survey. I asked: 'What are you glad the tax dollars pay for,' and 'What are you upset the tax dollars pay for?' And I put that on a graph--

Russ Roberts: Two questions related to this conversation, this part. You asked a lot more questions.

Vanessa Williamson: Yeah, to this particular question. So there are two questions that are relevant for this particular part. And so, I looked at two things. I looked at how often was a program mentioned, positively or negatively. And then I looked at--given that you mentioned it all, how often were your comments positive? And so, the programs that did best, in terms of 'If someone bothered to mention, they were mentioned positively,' tended to be local services. Right? Education, roads were both extremely popular: 90-plus percent support for these programs, that sort of a thing. And also, education and roads were very commonly mentioned--about a third of people mentioned them. And then, other programs were just as popular but were less commonly mentioned. So you'd see things like the sewer system. Anyone who bothers to mention the sewer system thinks that it's a good thing that we have one. Right? But it's not always remembered. So, that's what you'd see. You'd see this sort of swath of programs that were thought of very positively: some more commonly remembered than others. Then, at the very bottom, the least popular programs, which were also not--weren't brought up all the time--were, basically, there were two major things. One was foreign aid, which I can talk a little bit about, how people think about foreign aid. The other was corporate aid of one sort or another. So, no one in my survey bothered to mention bailouts for banks in any way except as a negative thing. So, that was sort of the spectrum. And then in the middle you've got all the major components of the welfare state. Now, Social Security was almost as popular as those local programs you mentioned. And then health care was--had quite high levels of popularity, but had a partisan divide--as you'd imagine, with Democrats much more positive about it than Republicans. The military had very mixed views, because there was generally, unsurprisingly, strong support for American service members but strong concern about the military engagements overseas--as I'd expect anyone who watches the news would imagine that that's how Americans think about that question. And then finally there's welfare spending. Which is a category in which I put any program that was means-tested. Right? So, that's food stamps, but it's also TANF (Temporary Assistance for Needy Families)--I mean it's also all the programs, and then also, a lot of people on a survey when they are asked an open-ended question just say, "Welfare." And it's not clear what they mean by that. So, right. So there are those programs at the top where there was near-consensus approval: Your list plus education and Social Security, I would say. And then some things that no one likes. And then these things in the middle that have people of mixed views. And I think that, you know, there's always going to be a place in our politics for disagreement. Politics needs disagreement. We should not all think alike and we should have an active debate about what our country needs to be like. And so, for instance, your dropping education from your list of programs that you think, 'Yeah, we should definitely be paying for that,' makes you unusual as an American. But that's fine.

Russ Roberts: I [?] that.

Vanessa Williamson: There should be a public debate. So I think that that's sort of the spectrum of people to be used. Right? And, you know, one thing that was good for me to hear is that there are things that we all agree on. And, you know, I think the fact that major other parts of what our government does or something we're discussing, could be signs of vibrance of our democracy, if it were getting channeled upward into our politics in a way that was meaningful. And I think that's where it falls apart. That's not what we see happening. We do not see--you know--a debate going on in our--at least not often do we see a debate going on in our legislatures that really, I think, captures, you know, the essence of these issues so that we can discuss them in a meaningful way.

51:19

Russ Roberts: Yeah, just to be clear on a lot of these. There are a bunch of things that government does that shouldn't be done at all. Like, um, some of our foreign policy adventures. And if government stopped doing them, they wouldn't happen. Because we are not going to band together to make them happen. If government stopped funding education, at the Federal and even at the local level, there'd still be a lot of education. It just would be paid for out of pocket by the consumers and parents--who are the consumers on behalf of their children. And I believe strongly, because it even happens now, that a lot of people would donate money; and schools would be started--not-for-profit schools would be started that would help educate people who didn't have the means to pay for their own education. Which I think would be a much better system than the one that we have now. A much better system for poor people. That's just really important. Obviously there are different reasons people might resent certain types of spending that the government does. I'm against government spending on education because I think it gets--not just ineffective; I think it's a system that has punished poor people for a long time. So, I know you were speaking casually earlier when you said if we didn't have educational spending it would be a disaster for the economy. I don't think it would be at all. Because I presume--I might be wrong--I presume that private spending would respond, and in a very dramatic way, if government got out of that business. I don't think it would respond in a dramatic way to other things the government does--foreign policy adventures, corporate bailouts--I don't think people would be voluntarily giving to charities that give money to corporations. And, I think it would be really hard to organize roads and sanitation privately. So, I think those are examples where the money is very well spent. But I think on education and certain other areas, it's been a disaster. Now, you don't have to respond to that. You can if you want. Otherwise I'm going to move on to a different point.

Vanessa Williamson: Well, I mean, I'll say--and this is my opinion as a citizen that has no particular bearing on my book[?] which is merely to present what most people's views are. But, you know, to explain my earlier comment, I think I'd say that we had historical information about how good education is when it's not publicly funded. And I think if you look at the literacy rates in the United States' South for a long time before there was robust funding for education, you'll find that they were exceptionally high. Moreover, I think I would say that I don't think it should be the case that if you are a child born to poor parents you should have to rely on charity to get an education. I don't think that's the country we should live in. But that's--but this, us having this discussion, is great. Us having this discussion is the kind of thing that needs to happen in our politics. Because when we talk about taxes we are talking about really fundamental things that we think are rights. What do we think? People have a right to access--what do we think American kids should all have, no matter what? Whether people are feeling charitable that day or not? Right? So, this is, I think, exactly why, you know, the sort of discussion of taxes. And you know, people seeing themselves as taxpayers is such an important thing. Because it provides people a sense of this vital question of what we pay for together. But: Let's move on to other things, because I would be happy to talk about education, immigration as just a citizen. But that's not what your listeners want.

Russ Roberts: No, I don't know. I'm just going to make one more thought on the education. I don't think a child born to poor parents should have to suffer through what is currently our public school system. And I think our failure there is--is inexcusable, actually. I can't--I find it fascinating that we have--we as a body politic have let that happen. Maybe you are more optimistic than I am about it getting better. I don't know.

Vanessa Williamson: I mean, I'm a product of the American public schools. And--I think that any examination of my resume would suggest that it didn't turn out terribly--

Russ Roberts: Mine, too--

Vanessa Williamson: But, right. It's not.

Russ Roberts: I grew up in a rich suburb of Boston. My parents weren't rich. They were middle class at the time. But I grew up in Lexington. I got a pretty good education at Lexington High--anyone out there listening who went to Lexington High, hello! But, in Dorchester and Roxbury, I don't think they had a very good education. There's a lot--I just don't--

Vanessa Williamson: I mean, obviously, there are many things that we can improve about all kinds of aspects of, you know, the education system and so many other things. Right? My husband's from Boston, grew up in the city of Boston, went to Boston public schools. And he turned out okay, too. But, you know, I think that there's, um--I think that it's great that these kinds of discussions exist in our politics, because I think that the thing that tax money does is give us a place where democratic decisions get made about our priorities. And the fact that you and I personally disagree on this thing is just an example of that. Right? An example of the system that we need.

Russ Roberts: Yeah, I agree.

56:15

Russ Roberts: Let's talk about an issue that I thought you didn't pay enough attention to in the book. It kind of surprised me. And it's something I hadn't thought about until I read your book. So, it did prompt me to think about it. Which is: A difference between local, state, and Federal taxation. I think when a lot of people think about taxes--and we talked earlier about the salience of income tax versus others. And one of the reasons we think a lot about the income tax is that--we talk a lot about changing it. We don't talk a lot about changing the sales tax. There aren't a lot of campaigns: 'I'm going to raise the sales tax a quarter of a percent!' It happens. Occasionally that's an issue on the ballot in a political discussion. But, the property tax rate, the sales tax, other types of local tax, things that are local taxes are often--they are just not up for grabs the way that the Federal tax code is seemingly constantly in the air. So that's one reason. But what struck me--and maybe you'll agree or not--is that a lot of the taxes that people--a lot of spending that people like is local. Or, as you point out, so security--they actually think that they are contributing to it. You find some evidence that people feel that they are entitled to it because they 'paid in.' Which, there is some truth to--it's hard to--you can interpret that in different ways. But, I was just struck by how often--I think when people are talking about their taxes, they are talking about their Federal taxes. And the reason that's important is that you talked a lot in the book--we haven't talked about it much here--but you talk about it in the book about a feeling of collective sharing, of responsibility and a feeling of identity. And how being a taxpayer entitles you to complain or not complain. And, I kept thinking, 'Well, when you have this perception'--which I think is inaccurate, that 40-something percent of people don't pay taxes because people forget about the payroll tax and they don't think about the local taxes--they are really thinking about the Federal tax part. Which is the--defense budget; it's overwhelmingly the defense budget, not in the sense that it's most of taxes. But once we've taken out Social Security and Medicare, we're going to be, inevitably talking about defense spending. And I just think that's a--that's a lot of what's going on in people's misperception that they, they see their tax identity as Americans as mostly the Federal tax. And that local stuff-which they like--that stuff they don't even notice the taxes for. It's just kind of strange.

Vanessa Williamson: Yeah, I think that's right. And I think that's one of the things that makes taxes controversial in a way that in some sense it needn't be. There are these huge swaths of what we buy with our taxes, we just happened, mostly by locally or at the state level, that we like. Almost all of us agree. Right? And so, yeah, I think you are right: the focus at the Federal level does, to some extent, make taxation seem more controversial than it otherwise could. And particularly not just at the Federal level, because Social Security and Medicare are relatively well-liked programs, in part exactly because of what you say, that people feel they've chipped in and therefore have earned some. But specifically looking at the Federal income tax, that is--that is the sort of hotbed of controversy. Right? It's both a very complicated part of the tax code which people don't like because they feel like it allows for cheating. And, on the other hand it pays for things that are highly controversial. So, yeah, I think that's exactly right.

59:48

Russ Roberts: Before we leave--we've got a few more minutes, but I want to make sure we talk about two more issues that really were informative, that I hadn't thought about. One is: It's very common for pundits to make fun of the American people because they think Foreign Aid is a big part of the budget. And of course, foreign aid is a tiny part of the budget. But you really uncovered something I think really important. Talk about the way people conflate foreign aid and defense spending.

Vanessa Williamson: Exactly. So, this is a common statistic that people regularly use to suggest that Americans are very dumb: 'Oh, when they are so upset about Foreign Aid and they think it's this huge part of the budget: Foreign Aid is in fact about 1% of the budget. If you include all the security aid, maybe 1.5% of the budget. Something on that order.' And when you ask Americans to estimate it, you get an answer that is often like 25% of the budget. Wow, are people ill-informed! But, when you--but when I looked, survey work on this, and I wanted to understand--and I had noticed in the interviews that when people talked about foreign aid, they were often talking about military spending. You know? They would talk about they don't think we should be spending so much on foreign aid, and then go immediately into a long discussion about what was happening in Afghanistan. And of course, there is absolutely foreign aid going to Afghanistan. Then there's also vastly more spending that was military, certainly at the time; there's a particularly large amount of interviews[?] a few years ago. And so the question to me was: Are people using the phrase 'foreign aid' when they mean foreign spending, shall we say? Which includes parts of the defense budget that are spent overseas. And survey research would suggest that was true. In fact, people who were asked to estimate foreign aid and then were asked what they meant by foreign aid, those who said things that were military had substantially higher estimates of the foreign aid budget. So, this does not mean that people have perfectly accurate views of the foreign aid budget. Rather, it means that they use the term in a colloquial way that's different from how policy makers use it. That is to say that when people say 'foreign aid,' they don't just mean the technical part of the Federal budget that is allotted to humanitarian assistance. That's not what they mean. They mean the vast amounts of money that we spend overseas. Which includes a lot of the military budget.

Russ Roberts: Yeah. It's just a fantastic insight. And a related one is this--which really surprised me but I think it explains a lot of what people hear when they hear politicians, which is different from what I hear--which is: when politicians rail against waste, fraud, and abuse, I assume they are talking about--it's a really tiny portion of what government does. Government does, a lot of what government does is send checks out to people. There's not a lot of waste, fraud, and abuse--there could be some fraud: People could be lying about their status, obviously, and being deceptive. And that's real fraud. But in general, waste, fraud, and abuse is a very small part, in my feeling, of government spending. And so when politicians say, 'When I come in, I'm going to cut waste, fraud, and abuse. I'm going to save all this money,' and I always think, 'There's not that much to cut. It's a lie.' But among your respondents, they had a very different perception from what I think about as waste, fraud, and abuse. So, talk about that.

Vanessa Williamson: Exactly. So, right. You're thinking in the technical, policy-term, which is about, over-ordering, double-ordering--that sort of thing--fraud, as you mentioned. These sorts of things--contracts that were just--

Russ Roberts: Overinflated--

Vanessa Williamson: received fraudulently. Right, overinflated: sometimes defense spending is overinflated. These sorts of ideas. And that is part of what Americans are talking about when they talk about waste. But when you ask them about what they mean by waste, first of all, they talk a great deal about programs they don't like. So, on the Left, we're talking about defense spending; on the Right, they're talking about welfare. But, you know, this is what people mention: programs they don't like. Now that is not reasonably described as 'waste,' if in fact the policy maker is doing what the bulk of the American public would like. Now, you might reasonably consider it waste if you think the entire program is ill-conceived. Used in a non-technical sense, you could call that waste, because obviously it's pound foolish. It might be penny wise, but it's pound foolish. So, people commonly use 'waste' in that way. So, when you get estimates of waste that are approaching the 50% mark, if you ask people, 'How many cents out of every dollar do you think the Federal government wastes?' And the answer, often the average answer is, often, somewhere around 50%. People are not actually thinking that 50% of the Federal budget goes to crooks who are over-inflating their contracts or cheating in some sort of program--

Russ Roberts: $400 dollar toilet seat, coffee maker, in some budget.

Vanessa Williamson: Right. So, there's some of this--there's some of those. People definitely remember the toilet seat; and they remember the Bridge to Nowhere comes up; the hammer was commonly remembered as an example of waste. These are well-known examples. But they are also talking about these programs they don't like entirely. And, finally, they are talking a lot about systemic problems they see with our democracy. When people talk about waste, they move, very often, from waste, to, for instance, corporate control of--you know, that congressmen are bought and sold. Or, 'They are all so rich and they live these luxurious lifestyles here in Washington.' And so, the word they use is 'waste.' But the critique is really of some kind of elitism, of a government that's not living up to the sort of democratic promise, either in that they are not responding to their constituents or that the people who are elected live lives so far above and apart from average people that it's sort of fundamentally corrupt. So, people's estimates of waste are often tapping into those much larger sentiments about problems with government rather than the much more specific terminology that you and I would use, technical terminology about waste, fraud, and abuse. But the problem, of course, is exactly what you said: It means the politicians can rail against waste; people imagine there's immense amounts of it; and at the end of the day you are not going to balance the budget easily by rooting out that waste, fraud, and abuse. It just doesn't provide enough bang for the buck, basically, to do what politicians often claim that it will.

Russ Roberts: But it was some comfort for me. Because I understand--it's nice to know that some people might--you earlier said, I'm not like most Americans. I think that's a really accurate observation. But this is one place where I'm somewhat similar, in that I would call, in a casual sense of the word, say, an Amtrak subsidy--which I benefit from, often--or various corporate welfare programs as 'wasteful,' even though they are not wasteful in the technical sense of the word, meaning 'the money didn't go where it was supposed to.' It's going where it's supposed to go. It's just something I don't think is worth spending on.

1:06:43

Russ Roberts: So, just to close. You had an interesting question you asked your respondents about: 'If they were writing a book on taxes, what would be the most important chapter?' So, I want to close by asking you--your book has 5 or 6 chapters, I can't remember; there are a lot of different ones--what's your most prominent take-away that you want to share from your book that would summarize what you think is our overall view of taxes?

Vanessa Williamson: I think the most important thing is to recognize that people see taxpaying as evidence that they are contributing people. And when they are angry about the taxes, the most common thing they are angry about is the idea that someone else isn't paying their share: We have this important civic commitment; we are all in this together; and someone's not chipping in. And unfortunately, as the rest of the book shows, people have real, strong misinformation about that particular question that makes it hard for people to connect their values with policy. And so we need to do a better job of getting them the information that they need so that smart, educated Americans who have misperceptions of the tax code can get their values to be reflected in the policies and the politicians that they support.



COMMENTS (62 to date)
pyroseed13 writes:

The claim that immigrants "pay a lot of taxes" is highly misleading. Yes, they pay sales and payroll taxes, but they are net beneficiaries of the tax system. Welfare use is higher among Hispanic immigrants than natives (overall immigrant use is higher, though for some immigrant groups welfare use is lower). The costs of education immigrants and providing health care to them falls on native taxpayers. The reality is that our tax and transfer is oriented towards rewarding low-income workers, and as such those groups of people will not be taxpayers on net, unless they climb the economic ladder to higher paying jobs.

lloydfour writes:

My take away from this:
We pay taxes to buy government. So let’s have a product choice. On a tax return, indicate how much to spend in the categories mentioned:
defense, social security, education, etc., and a catch-all category, Congress chooses for you. Limit to six categories or so.

Nonlin_org writes:

Russ and guest: you don't really want Diversity.

Look around in the world, Diversity comes with slavery, polygamy, sharia law, drug lords, child abuse, extreme inequality, TB, malaria, etc. etc.

What you want is chocolate ice cream in addition to your plain vanilla and maybe, maybe strawberry.

"Unauthorized immigrants" is a nice touch. At least is not a blatant lie like "undocumented immigrants". Can you can convince your fellow leftists to stop fooling themselves?

Could Americans be more honest taxpayers due to their higher religiosity? Remember: "Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's"?

Nonlin_org writes:

As far as "who should pay what, and where should the money go", the decision should be pushed at the lowest possible level:
Defense - national
Police, firefighting - local
Education - family, community
National roads - national
Local roads - local

When the money is collected locally, goes to state and then is distributed back to local schools, you better believe this is inefficient and bureaucracy self-serving with a touch of the sticky fingers.

You would be surprised what private corporations can achieve with minimal government interference. They can definitely deliver on infrastructure, defense systems, education, healthcare, and anything down. For instance, Elon Musk is shaming NASA, the Russians and all others national agencies with his Space-X.

Mark Crankshaw writes:

Well, it's obvious that Vanessa Williamson is well placed at the Brookings Institute (i.e., way Left of center).

"How the average American feel about the tax system" is the root of the my negative feelings towards taxation. I am very far from how Williamson characterizes the "average American". I do not feel like I am "contributing" to anything worthwhile at all. I am being forced to have a political relationship with hundreds of millions of people that I don't like, that I don't trust, and with whom I have many deep conflicts of interests.

It seems that Ms. Williamson has simply glossed over the fact that failure to comply with Federal, State, and Local taxes will generally result in civil and criminal charges being filed against you and a high probability that the taxes will be taken by force regardless of how you feel about it. How on Earth anyone could consider this type of arrangement as "voluntary" and a source of "pride" beggars belief.

I hate taxation, I hate "collective sharing", and I despise "collective responsibility" and all for reasons not addressed in this interview. Ms. Williamson conjures up a fictional "We" (as in "we share", "we make decisions together") and proceeds to pretends that I am, merely by paying taxes, part of the mental abstraction she has just created. This "We" is a figment of her imagination.

Any collective decision making means that, as an individual, one has absolutely no control or say as to the result. The ability to vote doesn't mitigate that in the slightest: each and every "collective decision" is going to made by someone else and not by me.

Here's a useful contrast. Whenever I go to the grocery store, I have absolute control as to what I am going to buy, how much, at what price. I am free to forgo going to any particular store (for any whimsical reason I so desire), free to be frugal when I choose to be.

In contrast, when it comes to collective "decision making", I have absolutely no control as to what I am going to be forced to buy, how much am I going to be forced to pay for, nor do I have any control over the price I will be forced to pay. In political theory, I can exercise my right to vote, perhaps. Political reality is that your right to vote doesn't even come close to any semblance to the concept of control. You are completely dependent on the "wisdom" and the level of selfishness of the collective that you are forced to be a part of. That is, you are completely dependent on the completely undependable.

I am not free to forgo this lousy "unity" or this horrific "sharing of goals" either, I can not limit it in any way at all. The best one can hope for, usually in vain, is that the "Average American" isn't successful in screwing you over to the extent they would gladly do so if they could do so. Not only does the government not represent me, but neither does the "Average American".

I stand in stark contrast to the portrait Ms. Williamson paints of the "Average American". I could care less about "cheating" on taxes. (I wouldn't do it myself, because I don't like jail or tax liens on top of prohibitively excessive "tax penalties"). But I celebrate tax cheats-- good for them! My problem with taxation is that we all pay too much for everything (especially in education--the cost of "extra-curricular" activities is astronomical, military boondoggles, and mailing checks to the wealthy) not that not enough people pay too little in taxes. There is always a special interest group pleading for ever more spending (on them) that will be forcibly financed by taxpayers.

"We" don't have "shared needs" (a lot people always seem to be needier than I am). "We" are not "doing this together"-- this is being done to me without my consent (and I can do absolutely nothing about it). I am not "proud" to be a taxpayer. I don't "like" any of the overpriced schlock and waste that the government forces me to pay for, even at the local level. Being a taxpayer is not an identity I in any way enjoy.

I only take pride in the decisions I have made personally. I no not desire for "a place for decisions to be made" because I am not in any meaningful way part of that place. Collective decisions are made for me, not by me. Collective decision making essentially amounts to political rape, not romance. I am a taxpayer only because the alternative to paying the well-armed, legally and politically dominant thugs in charge is even worse than being in the deplorable position of taxpayer.

Joseph writes:

I am an entrepreneur who take a larger hit than most people due to the other half of payroll tax. I view my tax payments as a charitable contribution.

Greg G writes:

I thought this was an excellent podcast in the best tradition of EconTalk. Guest and host took on a controversial issue in a thoughtful and fair minded way.

Mark,
No need to worry that anyone here would think you have "average" views about taxation or the use of plural pronouns. You have been clear about that and Vanessa Williamson was clear that she knows that views like yours exist.

There really no mystery about the sense in which she refers to most people's compliance with the tax system as voluntary. She is not "glossing over' the fact that taxes are mandatory. She is simply assuming that is common knowledge. Which it is!

Most people (present company excepted, I know) think that having a government funded by mandatory taxation is preferable to the alternatives and so choose to support that system. That is the sense in which taxes are voluntary for them. It's not that anyone is unaware that payment is mandatory.

She is not saying that anyone likes taxes. She is saying that most people are eager to identify as taxpayers who are pulling their weight in terms of collective responsibility. Yes, I know you reject that concept. That doesn't make her description of more typical views inaccurate. This is analogous to the fact that even most people who hate their jobs are proud of the fact that they use those jobs to pay their bills and take care of their families. You may disagree with any or all of this but you protest way too much about how much it "beggars belief" that other people feel the way they say they do.

Bill writes:

I think the assumption that government can effectively manage a simple program is one that begs critical analysis. Medicare and Medicaid are two of the most mismanaged programs (by dollar count) in human history. The Pentagon and its operations are too.

The guest is obviously smart, but I find coming from her small editorializations of fact that add up to sleazy assumptions about me and my money. Similar to the all-knowing "broad-minded" set who think they, unelected technocrats, ought to decide what I get to do with my money. It always boils down to that, for them. My money is the focus of their life, I believe.

The notion that new immigrants are net taxpayers is, as far as I know, entirely discredited. It was disappointing to see well-informed host and guest portray that as a serious narrative. I still don't know what Russ's endgame is if we have an open and borderless world with global wages. Surely he understands what that would look like. In essence, it looks like Mexico.

Fan since episode 1.

DTB writes:

In reading over the wide-ranging comments, I think it might be interesting to follow this interview with an author interview of "A Fine Mess: A Global Quest For A Simpler, Fairer, And More Efficient Tax System" by T.R. Reid. Among the topics is a comparison of the different tax systems in the world and what it says about those societies (including the US).

Hope you will consider it.

Greg G writes:

Bill,

I do not remember hearing the claim in this interview that you and pyroseed13 remember hearing that new immigrants are net taxpayers after adjusting for benefits received. Can you tell us where you are finding that?

I do remember a claim that many people "underestimate taxes paid by low income people." This is an empirical finding from her interviews which is explicitly stated. It is not an assumption at all, least of all a "sleazy assumption."

pyroseed13 writes:

@GregG

Look at the transcript around 31:58. She doesn't really give a serious treatment of this issue. The man on the street thinks the average immigrant uses a lot of welfare. They are correct but for the wrong reasons. Not because immigrants are lazy, but because they work primarily in low-paying jobs. Given this, it is unlikely that most are taxpayers on net, and this is indeed what the data show.

Rich Berger writes:

Williamson has that NPR tone - so low-key and reasonable; how could you disagree with her? She's extremely slippery and deflects Russ's questions with a laugh and changes the subject. IIRC, when Russ described Social Security as deceptive, she changed the subject.

She is a thoroughgoing collectivist and the idea that the government should do less is totally alien to her. Regarding Americans' approval of taxes, consider the lack of compliance with sales taxes when they could be avoided with online purchases. Here in PA, it is illegal to buy alcohol in neighboring states thereby avoiding the state taxes, but people do it. Also, people leave high tax states for lower tax states.

If you want to get a sense of Williamson's real nature, read the NY Oped that is cited on her Brookings page, where she repeats the liable about Trump's illegally obtained 1996 tax return:

"This does not mean Americans are always happy with their taxes. Of course not. But what really upsets people about the United States tax system is tax returns like Donald Trump’s. Mr. Trump’s 1995 tax documents, obtained by The New York Times this month, show that Mr. Trump could have avoided paying any federal income taxes for nearly two decades. When the rich can get away with paying less than middle-income people, Americans get very angry indeed."

He lost a boatload of money that year; you don't pay income tax when you lose money. If he was able to use the loss to offset gains in future years, that's fair for businesses and entrepreneurs with fluctuating results. And the losses are only recouped in part because the tax is less than 100% and there is no adjustment for interest or inflation.

She should know better, but she pushed forward with the Democrat slander. Our tax system is divorced from ethics. If you can comply with the tax code and reduce your taxes, that's all that is necessary.

Not a good guest.

pyroseed13 writes:

@GregG

But even putting that aside, the author makes no attempt to distinguish between the illegal and legal immigration, and it's very likely that when people talk about immigrants they are primarily talking about illegal immigrants, who by virtue of being illegal are indeed not paying federal income taxes or even payroll taxes, unless they steal SS cards.

Kevin writes:

I think I need a new metric for Econtalk. My old used to be how long until someone mentioned global warming and my new one will be how many minutes until someone calls people who have objections to our current immigration regime racist (very deep prejudices or whatever euphemism). Merit based immigration in the US is long overdue.

This was more of a sociology discussion with about as much useful data as a sociology discussion. There is little empirical about a series of interviews or the numbers that come from them.

I am as proud to pay my taxes as I am to pay the mob enforcer my protection money. Who cares what people say - lets make taxes optional and see what they do. As someone mentioned above, when it is optional people opt out.

Floccina writes:

I have to disagree with Russ on the subject of schools. There are only an insignificant number of truly bad schools in the US (or good Government run schools for that matter.) What is fooling people is that there are some schools with a very good set of students and other schools with a very bad set of students. The former look good and latter look bad. I when for one year to one of the top rated Government high schools in the USA (Classical High school in Providence IR) and the teachers not very good and I went to a school with a very bad reputation for 3 years. If anything the teachers were a little better in latter school. My theory is because any teacher could survive with Classical's students. My brothers who went to classical 4 years joked that it was the school for the mentally ill (pause) teachers.

On funding I think we have gone beyond what is a good level of funding and that most students go to school for longer than optimal.

I think per student funding of schools should approximate what the median income family would spend on schooling if there were no Government schools.

I think you could theoretically achieve that by charging above median income families the full cost for each child that they send to the Government schools. Since that is a political non starter, I think that the way to go is to try to reduce school spend whenever possible.

Mark Crankshaw writes:

@ GregG

Most people (present company excepted, I know) think that having a government funded by mandatory taxation is preferable to the alternatives and so choose to support that system.

This is precisely what I believe that Williamson has failed to prove. Any reasonable observer of history could conclude that generally the majority of the population in any given society accepts the political, social, and economic status quo over any and all alternatives. Slavery, brutal political tyranny and exploitation, and monarchy lasted for millennia, with the approval of a great deal of the populace (and this approval was strenuously re-enforced by the ruling classes and religion--as is, most emphatically, surprise, surprise, taxation). Religion still exists (and is accepted by the majority of the worlds population as a reflection of reality--quite enough evidence in itself for me to conclude that the majority of people in this world can be highly delusional).

Here's a snippet of the British national anthem (which nods approvingly at both religion and the monarchy) and is sung by millions to this very day:

God save our gracious Queen
Long live our noble Queen
God save The Queen!
Send her victorious
Happy and glorious
Long to reign over us
God save The Queen!

Williamson (and I believe you as well) thinks that this funding mechanism is preferred because the majority of people have carefully considered (any? some? all?) alternatives but have chosen taxation instead. Perhaps this is not how the majority of humans go about the "preference process".

Perhaps impressionable children are told that taxation is just, fair, and how we have always done things and so, as adults, they reflexively choose this system over others? After all, there is plenty of evidence that these same people as impressionable children are told that religion or the monarchy (or its illegitimate red-headed step-child, "representative" democracy) is just, fair, and how we have always done things and so, as adults, they reflexively choose that system over others. A quick glance at the World, brimming full with Christians, Hindus and Muslims and the endless grovelling before an endless parade of political potentates (some of them elected) across the world might suggest that is so.

If most members of a society gravitate towards whatever system they were born into, regardless of how good, ethical, efficient, just (or what have you) it is, then pointing out that most members of a society gravitate towards the system they were born into does not itself means that that system is in fact preferable in any way to any other system. I believe that is the case being made by Williamson (and the case you have made repeatedly)--if most people prefer it, then it must be the "right" system, a "just" system, the objectively "better system", better than any and all alternatives. That does not necessarily follow.

This line of reasoning , followed by Williamson, implies that any "objector" to the reflexive status quo is unreasonable, "out of the mainstream" and therefore that opinion should be politically marginalized. It could be that the majority of any population are both reflexive and severely constrained in their preferences (having not carefully, rationally or critically considered any alternatives) and perhaps are then reflexively in error. In that case, unless one believes that the majority have reflexively adopted the best possible system, the objection is not only reasonable, but perhaps may be preferable. I see Williamson's argument as an effort to preclude any objection to the status quo she prefers: massive levels of taxation.

The US Federal Budget in FY2016--at $3.9 Trillion --is larger than the GDP of every other country in the world except Japan and China. State and Local government spending amounts to another $3.5 Trillion. Ergo, US government spending at all levels exceeds the entire GDP of every country in the world, with one lone exception: China. But, to the lefties, that massive spending is never enough. Someone (never themselves, of course) must pay still even more in taxes to finance this excess...

Trent writes:

Along the lines of a previous comment, this episode was tough to listen to because it sounded more like an NPR segment instead of EconTalk.

With all the recent episodes on the problems with studies/data analysis, there was almost no discussion (and no critical discussion) of Ms. Williamson's methodology (50 qualitative interviews?) in writing her book.

There was little/no discussion about the overall issue of taxation in general. We all know Friedman's belief that you spend your own money more wisely than does a third party/people spending your money on your behalf. I don't recall anything close to that being brought up/included in the research.

Likewise, where should the power of taxation end? Per the Supreme Court's ruling on Obamacare, it appears to read that Congress has the power to tax anything.

This seemed like nothing more than a series of reactions to interview questions along the lines of 'how can people be so wrong/so ignorant?' We already know that the typical person on the street can't identify the Vice President, their own Senator, their own US Rep.....we see firsthand that the typical cashier doesn't know how to make change when the computer goes down.....it shouldn't surprise anybody that the typical person doesn't know their overall effective tax rate.

Floccina writes:

Roads and bridges are small part of Government spending yet it is what people always talk about when the discuss taxation and the value of Government spending and it is sensible funded through Gasoline taxes and user fees. Interesting.

Also I would love to for you have a guest on to discuss tax incidence.

Greg G writes:

Mark,

>---" I believe that is the case being made by Williamson (and the case you have made repeatedly)--if most people prefer it, then it must be the "right" system, a "just" system, the objectively "better system", better than any and all alternatives. That does not necessarily follow."

I challenge you to provide even a single example of me advancing this reasoning which you insist I have done "repeatedly." Discussing these things with you has become an endless process of me responding to straw man arguments.

Shad writes:

You made a comment about the frequency with which people move up and down between tax brackets, and if it is noticed. I work in a power plant (and there are many industries with similar effects). There is much equipment maintenance that can't be done when online, and the plant must be shutdown annually for several weeks of scheduled maintenance. During these weeks shifts are doubled up, worked hours nearly doubled and pay more than doubled (time and a half/ double time sunday). The way tax withholding rate is calculated based on projecting the current pay amount as if you would make that much all year and so the autotmatic witholding rate is much higher for overtime hours. Most the guys at work realize that they are not really in that tax bracket and will get more of that "extra" withholding back in their tax refund. Some alter the number of dependents on their W-4 to "correct" the withholding problem. Occasionally one forgets to put it back down from 12 to 4 after the outage and finds themselves owing a lot to the feds when the end of the year rolls around.

APL writes:

I do not identify my views broadly with either political party, but I was disappointed in that the discussion attempted to tackle complex subjects without making important distinctions. Distinctions are everything in complex undertakings. First, immigration and illegal immigration are two completely different things, but are lumped together even here among very well-educated people. The public outcry has always been over illegal immigration, and so for the conversation to turn to xenophobia is both perplexing and disappointing.

Second, as a careful observer, I don’t believe the claims being made are that some groups don’t pay any taxes of any kind. Obviously, everyone knows that sales tax gets paid by everyone at the cash register. But it can’t be disputed that there are many more taxes that undocumented workers don’t pay that the rest of society does. So it is not fair to simply say that because everyone pays some taxes that the public is just misinformed. Going no deeper that that is either lazy or disingenuous in my view, and implies that as long each of us pays some taxes, no further discussion is warranted.

In any case, while I love the podcast, I found this episode unsatisfying.

Sam writes:

You can have diversity or you can have high taxes (in terms of revenue generated as a percentage of GDP), you can't have both. For reference see Alesina's work on the relationship between diversity (racial, ethnic, linguistic, religious) and public trust.

By advocating high levels of immigration, liberals are laying the political groundwork for dismantling the American welfare state in the long run.

Mort Dubois writes:

To those commenters decrying the power of the state: can you provide an example of a modern country that is low tax/small government/high quality of life? I'd genuinely like to know where this has been done successfully.

Greg G writes:

Mort,

You are probably going to be waiting a long time for that example.

Would you be willing to settle instead for a long list of complaints about how intolerable it is to live in the freest and most prosperous states in human history?

Kevin writes:

Mort,

There are probably others that can answer better, but you might need to define some things like
What is modern (is 1700s ok?)
What is low tax rate/small government?
How are you defining quality of life?

The answer to all of those will impact the answers you are willing to accept. In part this question is also asking about the eventual path of democracies given public choice realities - even if they all end up at the same place that doesn't mean it is a "good place" by many standards.

We can point out lots of places where there is high tax/strong government where they have both high and low quality of life.

Hong Kong and Singapore both have relatively smaller governments and lower taxes (Hong Kong less now than prior.) The US had a smaller government as total and percentage spent in past decades than it does now.

Tom Haas writes:

Just finished. Was this interview part of the EconTalk April Fool's series? I am really glad you aired this before I sent my taxes off. I really needed a good laugh.

jw writes:

I applaud Russ for bringing guests on the show and then letting them display their arguments for all to hear. Ms. Williamson was a perfect representative of the Brookings viewpoint. Notes:

- Agreeing with Rich Berger above, she absolutely did have "that NPR tone". She is so well versed in liberal Jedi mind tricks, misusing stats, leading questions, leading assertions, she was obviously used to getting away with it. It was all very amusing. All of her points are easily debunked, it was a target rich environment, but I only have time for a few.

- I agree with one of her survey results and disagree with Mark Crankshaw above - I am proud to pay my fair share of taxes and consider it my patriotic duty. Of course, this all depends on the definition of "fair". I consider fair to be about 1/3 of what I currently pay. This does not change my statement or her survey data, but it does not mean that we are anywhere near a consensus.

- Road taxes do not pay for roads. Lottery (taxes) do not pay for education. SSA taxes do not fund your retirement (as Russ pointed out). All taxes are fungible and go into a general fund and budgets are spent out of that fund. This is merely a marketing ploy by legislators to try and link a tax to an well accepted benefit.

- As we all learned from the last election, when headline generating surveys are being done by partisan pollsters, one has to look carefully at the raw data. According to Table 1 of her PhD thesis (here), her survey oversampled Democrats by 30% and undersampled Republicans by 50%. This would skew the data and bias the results. The interviews were a very small sample size. In fairness, she acknowledged these limitations in the paper, but on the other hand, are they always acknowledged in the press?

- Putting two concepts from the podcast together, if 47% of people pay no (income) taxes, wouldn't they generally be very happy with their fair share of taxes? Wouldn't this bias the survey results?

- A lot of the discussion seemed to be more about semantics than taxes. Were questions asked with enough detail? Did she actually measure attitudes about taxes or simply the difference between policymaker definitions and popular definitions of taxes?

- Taxing gasoline is a highly volatile income stream. As is taxing "the rich". In a recession, the rich's taxes can go down quite sharply as they are not usually salary based, and the receipts go down sharply as well.

- As of today, a 42,000 gallon contract for gasoline is $1.73. That is two large gas stations worth of gas. You are probably paying a nickel more than that to the gas station owner (and for only 20 gallons) and then 30 to 68 cents to the state and local governments. Government is making more profit than the oil company, refiner, distributor and retailer combined.

- As Russ mentioned, a lot of tax data can be found in Table 1 here.

- She wrote a NYT article about how Trump didn't pay taxes in 1995 (and mentioned above). Using some Jedi mind tricks, one could say that in 2005, Trump paid more income taxes than 50 million Americans COMBINED! ($25M vs $0. Of course, that would be misleading...)

- The "we all share common goals, don't we" leading question was amazing. Given the divide in the last election and the vitriol of the losing side since, how can anyone seriously say this?

- The (paraphrasing) "my public education was great so all public education is great" counterpoint to Russ's contention that inner city public schools are a disaster was particularly chilling.

Rich Berger writes:

Dear Mort-

You've just illustrated the post hoc ergo propter hoc fallacy. A couple of other observations:

  • Low tax states like Texas seem to do well and their legislature is in session less frequently.
  • Specifically, how do government programs enhance well being?
Finally, we will be getting a test of your theory if Trump is successful in reducing the Fed budget, taxes and regulations. Will our well being go down?
Seth writes:

Floccina wrote:

"What is fooling people is that there are some schools with a very good set of students and other schools with a very bad set of students. The former look good and latter look bad."

Well said.

School choice exists for those who can afford it. That's why they choose schools with more good students.

School choice is weaker for low income and they are more likely to get stuck in schools with a bad set of students.

This is why the success metric for school vouchers isn't test scores. It's how many more parents get to choose.

As Tony Blair once said, "A simple way to take measure of a country is to look at how many people want in, and how many want out."

That saying applies to a lot of things, including schools.

Eric writes:

About the melting pot and being American vs. a hyphenated identity, two days after this episode the look back into history for the April 5th edition of William J. Federer's American Minute was timely. Among other points, it included this quotation from Henry Cabot Lodge, who was a student of Henry Adams and later became U.S. Senator Majority Leader.

Henry Cabot Lodge addressed the New England Society of Brooklyn, 1888:

"Let every man honor and love the land of his birth and the race from which he springs ...

But let us have done with British-Americans and Irish-Americans and German-Americans, and so on, and all be Americans ...

If a man is going to be an American at all let him be so without any qualifying adjectives; and if he is going to be something else, let him drop the word American from his personal description."


Eric writes:
VW: "Americans have a very strong civic commitment to taxpaying. ... And what's interesting is that carries over into tax compliance. Tax compliance in the United States is very high by international standards. And economists often describe that compliance as having to do with our tax morale--that is to say, our sense that this is our shared responsibility and we all have to chip in."

RR: "... What do you think is the source ...? ..."

It is actually futile to try to explain the cause of this difference in Americans by appealing to human feelings (e.g. my emphasis added: "Well, I think it's a very human feeling to want to feel that you contribute. Right? There's all kinds of studies showing that, as people get older, one of the things that keeps them healthy is the belief that they are still contributing--that they are useful. It's a very human feeling.")

The reason that approach fails is plain. People in other countries are just as human as Americans. The observed differences cannot be explained by anything that is not a difference.

The explanation has to come from differences in the causal influences that have most strongly shaped American culture in ways that are less influential at present for many other countries.

I'm surprised no mention at all was made about the influence of the Bible's teaching about paying taxes. Even if many people are not Christians themselves, they have grown up in a culture that has been influenced by Christian values, which specifically includes the moral importance of the duty of paying taxes.

In the apostle Paul's letter to the saints in Rome, he explains that governments have a delegated authority from God and are responsible to reward good and to punish evil. He points out that Christians should obey governing authorities, not only for the reason of avoiding punishment (i.e. for disobedience), but also for the reason of conscience and obedience ultimately to God.

"Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also as a matter of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor. Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law." NIV See Romans 13:1-8

Even though many Americans today might be unaware themselves of this teaching to Christians through Paul, it is beyond doubt that it has had a deep and considerable influence on the culture of America, starting with the religious immigrants who brought this attitude into our culture even before we formed a nation. This ethic is part of the cultural core that has shaped us from the start.

Greg G writes:

Rich Berger,

You allege that Mort committed a logical fallacy in his comment on April 5. He did nothing of the sort. He simply asked for an example.

You can't commit a logical fallacy without making a logical claim. Mort's comment did not contain a logical claim. Therefore it logically follows that Mort's comment did not contain a logical fallacy. THAT is a logical claim.

Hume showed centuries ago that causation can never be logically proven. All you can show is what he called "constant conjunction." As a practical matter there are many times when evidence is good enough to assume causation but it is never full proven.

Despite this, theories of causation can be DISPROVEN with a single good example. So then, if I claim that taxpayer funded government is necessary, but not sufficient, for a modern capitalist economy to develop, that claim can be disproven with a single contrary example.
That makes Mort's question very relevant to this discussion.

As for your expectation that we may get to see the effects of smaller budget deficits under Trump, I am struggling to respond to that within the high standards for civility that Lauren insists on here. Let's just say that I find that claim...surprising. And that it does have the great virtue of being specific enough that we will get to see how it turns out.

Robert Swan writes:

As with most commenters, I didn't find much substance in Dr Williamson's insight. As usual, jw has already covered a number of things that occurred to me -- particularly the need for a closer look at the actual survey questions. Sir Humphrey Appleby's thoughts on the matter seem pertinent.

One other observation: Dr Williamson said "I'm proud that my son gets to experience other cultures" (because he attends a dual-language school). This struck me as pretty shallow. If you want your son to experience other cultures, send him overseas. What he will experience in an American school -- even a dual-language one -- is an American school culture.

Mark Crankshaw: I agree with much of what you say, but I don't understand your stance on "collective decision making". I often find myself "of two minds" (or more than two), even at the grocery store. Perhaps that's just an idiosyncracy of mine, but I have heard other people talk about listening to "heart" or "head". Your comment resonated with Margaret Thatcher's "There's no such thing as society". Fair enough, but the same logic can be used to argue that there's no such thing as the individual either.

TJP writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

Mark Crankshaw writes:

@ Mort Dubois

To those commenters decrying the power of the state: can you provide an example of a modern country that is low tax/small government/high quality of life? I'd genuinely like to know where this has been done successfully.

This question encapsulates the philosophical disagreement between GregG and I. There are few examples of any country (modern or otherwise) with a high quality of life that is low tax/small government that will stay that way. One could, of course argue, that prior to the Great Depression, the United States has a relatively small State (relative to today and to contemporary equivalents) and a very high quality of life (relative to contemporaries). As the imperial ambitions of the ruling class has escalated, so has the size of the US government.

However, I do not concede the point to GregG in any way since this is so, not because it can not be so, but due to the very predatory nature
of the social process we call "government". Franz Oppenheimer did a very thorough job in analyzing the fundamental predatory nature of the State, tracing through 7 evolutionary stages: The State.

If the State is a social representation of the fundamental human tendency of relatively stronger groups to band together to exploit relatively weaker groups of human beings (which is all of human history amounts to), then wherever there is a relatively high quality of life exists (i.e., lots of plunder opportunities for the stronger), then the strongest, best organized members of society will invariably band together to systematically exploit the weaker, least organized members (i.e., impose taxes and regulations upon them).

The rise in the size of the State is thus dictated by the strongest members upon weaker members (much like a farmer--the ruling elite-- dictates a dairy farm upon cows--the rest of us). What separates today's government-farmers from previous ruling classes is that have begun to realize that healthy, well-fed cows generate the greatest amount of revenue (political plunder), and therefore use some of that plunder to improve the conditions of the cows. Much of US government spending (social Security, Medicare, Medicaid) amounts to the government taking money out of the pocket of one cow, taking a small cut for itself, and then inserting the money into the pocket of another cow, so frequently that most cows have their pockets emptied and filled simultaneously.

It does not follow that wherever and whenever this predatory instinct is fully pursued, that the "freest and most prosperous states in human history" per GregG will arise. Far from it, history is replete with countless examples of this absolutely not happening. The State must be constrained from pursuing their natural inclinations in some way, or like a swarm of locust, they will complete devour their host.

Where GregG and I part philosophical company is how we assess the limits of these "constraints". I see these constraints as rather precarious, a haphazardly balanced set of opposing interests that, like a house of cards, can quickly and totally fall apart. Evidently (and I am not trying to construct a straw-man or put words in his mouth, but to deduce from his arguments), GregG sees a firmer more stable set of constraints.

Mark Crankshaw writes:

@ Robert Swan

I agree with much of what you say, but I don't understand your stance on "collective decision making". I often find myself "of two minds" (or more than two), even at the grocery store. Perhaps that's just an idiosyncracy of mine, but I have heard other people talk about listening to "heart" or "head". Your comment resonated with Margaret Thatcher's "There's no such thing as society". Fair enough, but the same logic can be used to argue that there's no such thing as the individual either.

Actually, having the tendency of being in "two-minds" in the grocery store was what I had in mind. I myself often see things I would like to buy ("heart") but do not because my "head" says no. However, when I get to the checkout, only my head gets to say yes or no. Ultimately only I as, an individual, make that final decision.

This process is in stark contrast to "collective decision making". Not only does the individual have no ability to make the final decision when it comes to political "collective decision making" at the national, state, or local level; the individual has absolutely no control over the decision. The individual can not decide how the decision will be made, when the decision will be made, and has no ability to effect the outcome of the decision in any noticeable way.

Imagine if we did not have the freedom to choose individually what we bought at the grocery store, the freedom to choose when we bought at the grocery store, and could not veto (or suggest) any purchase at the grocery store. How much would a "basket of goods" from a grocery store arrived at through the political process vary from those made by your "heart" or your "head"? Would you really want the cost of your "basket of goods" be a function of your income rather than how much produce you get? Would this "basket of goods" include items you might find too expensive or items you wouldn't eat at any price? Would you like a panel of "government experts" dictate to you what you must pay for? To allow corporations to bribe politicians so that you must by this product or are prohibited from buying that? I can only imagine government provision of "groceries" as an overpriced horror, where I got little of what I needed or wanted, and a lot of what I don't need and never wanted. Just like the rest of the stuff "we" collectively are forced to buy...

Kevin E writes:

I really enjoyed this discussion and appreciate Russ bringing on a guest that is not in complete agreement with him.

I have one big issue that has been stewing in my mind. The idea that Americans "like" paying taxes and are "proud" to pay taxes. I feel there may be a kind of Stockholm Syndrome lurking here. Many of us are terrified of the consequences of NOT pay taxes. Especially small business owners in the middle class who can literally lose everything. I've heard stories of the IRS seizing bank accounts, thousands of dollars in tax attorneys fees and harsh auditor pouring through every receipt. To me, it is not worth the trouble to avoid taxes.

My question is how much of our willingness to pay taxes is driven by this fear? And then have we convinced ourselves through this fear that our taxpaying is some kind of civic duty?

I think a good question Vanessa Williamson should ask in her next survey would be , "If you could get away with paying $15,000 less in taxes every year and you knew it would never be detected by the IRS, would you do it?" Does my hairdresser friend who encourages his customers to pay in cash so he can pocket the money tax free do this because he is unpatriotic?

Eric writes:

Re: Kevin E,

As I mentioned above, the original cultural sense of paying taxes as a moral duty was developed in America based upon a Christian understanding of governments exercising a responsibility delegated by God. Even those who didn't entirely accept the Christian premise held by many were still influenced by that sense of moral duty, which was woven into our culture starting even before we were a nation.

That said, we cannot endlessly coast on that as an inherited cultural understanding. Regarding your questions, if there were no God, then nothing would be inherently wrong and there would be no necessary moral sentiments and no inherent moral duty. Then everything would come down to preferences (e.g. I prefer this benefit vs. that people think of me thus and so) and expected cost vs. expected benefit calculations (e.g. if I did X, then the direct benefit is Y, but the probability of being caught or of it becoming known is Z, etc...).

Therefore, to the extent that a sense of duty to God is lost, to that extent the government would have to increasingly depend on instilling a sense of fear regarding penalties. That consequence can be seen all the way back in the apostle Paul's argument.

"Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also as a matter of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. ..." NIV See Romans 13:1-8

So, if the motivation is no longer duty to God as a matter of moral conscience, then you would be right to expect that what remains is fear of possible punishment.

Notice that this applies to any crime, not only the crime of failure to pay taxes.

This is basically why the founders were in wide agreement that the system they were designing was intended to work based on the assumption of a mostly religious and moral population. They counted on the fact that most people would have a sense of internal self-control out of moral duty to God. That is the essential foundation for a society that can afford to be as free as they intended.

Robert Swan writes:

Mark Crankshaw:

If your supermarket decisions are always governed by your "head", do you not think your "heart" might be feeling it's stuck in an arbitrary and autocratic system?

Decision making is always collective in nature. There are alternatives to consider. Choosing one means missing out on whatever advantages the other(s) had. If multiple people share in making the decision, that just adds more factors to consider.

I certainly agree on the horror that a government run "we define your shopping list" service would be. Its incompetence would not be because of collective decision making so much as because the decision makers are remote from those affected.

Though most decisions are best left to the individual, some are better made by groups, e.g. who will be the local policeman, who will be the local judge. Yes, I suppose my ideal bureaucracy would be about the level of your stereotypical "wild west" township. That might be something my heart and head agree on.

Greg G writes:

Eric,

A belief in God is far from the only possible basis for morality. Many of the founders were Diests who thought that God created the universe but did not take an interest in human affairs. And taxes, along with the belief that there was a moral duty to pay them, long predated Christianity.

There are moral systems based on a belief in minimizing human suffering in this world as the organizing principle. Surely you have noticed that people who act ethically tend to get better results in this world than those who don't. Surely you have noticed that individuals sometimes lose their faith in God and, when they do, their ethical standards rarely change. Surely you have noticed that some people find in a belief in God the justification for violent acts whether it is Christians attacking abortion doctors and abortion clinics or Islamic terrorist attacking civilians. In most cases, people use religion to justify what they would have done anyway.

You say that if there were no religion then everything would come down to preferences. Well, there are many different religions that teach many different things and choosing one does come down to preferences.

And your idea that you have to do what God wants because he punishes some behaviors and rewards others sure sounds like another self interested economic cost benefit analysis to me.

Eric writes:

I should clarify that even while recognizing the rightness of paying taxes, that doesn't imply a blanket approval of whatever government does or how it is run or how money is collected or spent or how decisions are made.

Robert Swan:

Though most decisions are best left to the individual, some are better made by groups, e.g. who will be the local policeman, who will be the local judge.

The principle of subsidiarity would seek to move decisions and control as close to the individual as is feasible. Can something be decided at the state level? Then it should not be federally decided. If it can be decided locally, then that is preferable to the state level. If each individual can make their own decision, then that is even better than a local group decision.

While recognizing some decisions must be made at a higher level, subsidiarity maximizes individual control and liberty, which also leads to better results.

For example, anyone who has studied the mess of the veterans' health care system has seen the disaster that comes from a federal single payer health system with central control.

To support veterans, it would be far superior to let the money follow the veteran and let the veteran choose the source of their care. Moving the power of decision to the veteran would empower veterans and obligate providers to seek to serve them well in order to retain their business.

Single-Payer Health Care: America Already Has It ( https://www.prageru.com/courses/political-science/single-payer-health-care-america-already-has-it

VW: "Moreover, I think I would say that I don't think it should be the case that if you are a child born to poor parents you should have to rely on charity to get an education."

Pitting the status quo against having "to rely on charity" would be a false dilemma. Those aren't the only options. Just as with VA healthcare, our deficient educational system tragically fails to serve many of the poorest who cannot afford private schools.

As with the veterans, letting the money follow the student would move the power of decision to the families. That would empower the families of the students. The result would be that schools would have to compete to give the best education. The worst schools would be replaced by more of those that do a good job.

Switzerland was once violently contentious, being divided by language, culture, and religion, but they applied principles of subsidiarity to their government, moved much of the decision making out toward the people, and developed an exemplary stable government in which "[m]ost of a Swiss person’s taxes go to his town, not the federal government." See

President Trump: Find Peace in Syria by Looking to Switzerland
https://stream.org/president-trump-find-peace-syria-looking-switzerland/

Eric writes:

To Greg G,

It seems mostly you have just missed what I actually said and are targeting assumed points I didn't say.

I didn't say that people could not choose a moral system apart from recognizing God. What I wrote was something quite different.

Regarding [Kevin E's] questions, if there were no God, then nothing would be inherently wrong and there would be no necessary moral sentiments and no inherent moral duty.

Nothing you wrote changes that. Sure, you could decide to live by religious or non-religious system X or system Y or system Z or no system at all -- whichever you prefer (as I said). The problem is there is no way to determine that any such choice is truly wrong, no matter what it advocates or forbids.

Apart from a creating God that designed humans intentionally, none of these choices can arrive at the result that any human behavior is "inherently wrong" or a "necessary moral sentiment" or an "inherent moral duty".

So long as human existence is considered an unintended accidental result of history, then it will always follow that the full range of human behavior is likewise an accident of history.

The result is that one could not consistently claim there is some particular subset of behaviors that is the particular way humans necessarily ought to be (in distinction to others that are necessarily wrong). If one cannot even claim that humans necessarily ought to be (i.e. to exist) at all, how can one claim they necessarily ought to be only this way and not that way?

Whatever system you might pick, you could not claim it is the "right" system and other choices are "wrong" choices. There would be no objective moral duty, only duty you might happen to choose (or not). It would simply be a calculation or preferential choice, just as I said. The reality would be that your morality would be nothing more than one of many competing artificial human constructs (like clothing styles), not a necessary or essential truth about humans.

To put it another way, human rights -- rights that are true of humans by virtue of being a human -- could not exist. Rights would be limited at most to the legal rights given or taken away by governments. The core argument of the Declaration of Independence would utterly and irredeemably fail.

Greg G: "Surely you have noticed that people who act ethically tend to get better results in this world than those who don't."

As C.S. Lewis discussed (e.g. in Mere Christianity), one of the challenges of doing the right thing is that it can easily mean sacrifice in this world.

Anyone who has studied the Bible or who knows the argument regarding evil knows that there are many examples where the wicked appear to prosper in this life and where the strong oppress the weak to gain advantages. One of the oldest books in the Bible (Job) is about the issue of good people who suffer.

No one surpassed Jesus in acting ethically, yet he was crucified by the Roman government and he warned those who would follow him as disciples of his way to be prepared for similar treatment. For the last three years running, persecution of Christians in the world has set successive all time record highs. Jesus had no illusions about the reality and wrongness of evil in this world. Nor do many who choose to follow him at potentially great cost.

There are be-good-and-you'll-surely-do-well-now religions and counterfeits, but authentic Christianity has never been one of them.

Bogwood writes:

Since gas taxes were mentioned, there may be valuable comparison between taxes paid by cars and trucks, and taxes paid by average citizens and the one percent.

Trucks, as noted on their bumpers, do pay a lot of road tax, more than cars, but they do many times more road damage than the cars. On a fairness scale they pay a fraction of their own maintenance costs.

The one percent pay a lot of taxes but not enough to cover the damage they cause. My poster child is Elon Musk(just compared to the veg-a-matic king by Barron's Magazine so will use the name). Clearly more sophisticated than Ron Popeil but still an extraordinary rent seeker. Just encouraging the bogus dream of a Mars colony costs the country through NASA, more than any taxes he pays.

Steve Shank writes:

The short discussion you had regarding government supplied education was absolute proof it is terrible. Thank you. We have 2 smarter than average people who got better and more government education than most people who are entirely unable to think clearly about the issue, despite having attempted to think about the issue extensively.

Both of you believed you got a pretty good education. The proof of this position was that you got a better education than most people. So the argument boils down to, "the system isn't terrible and works sometimes because some people get a better education than other people." But of course, this tells us absolutely nothing about whether the system is terrible or great. In every system, some people will fair better than others. She actually said, look at my resume (or vita), you can see I got a good education. - But of course that says NOTHING about whether she got a good education, (or her husband did), only that some people get a better education than others. This will be true if the system is great, or if it stinks.

The fact that the two of you could look at an internal comparison, some people within a system compared to others within the system, to make statements of the merits of the system shows a lack of critical thinking. If you can't do it, and you are smarter and better educated than most, then the system must be irreparably bad.

Greg G writes:

Eric,

Maybe you can explain the difference to me between having a moral duty and having an "inherent" moral duty. They sound like exactly the same thing to me with a little more dogmatism added to one. I think my moral duties are just as inherent as you think yours are. Biology installs us with many inherent features and one is a conscience.

You talk about "objective" moral duty as if you have some better claim to objectivity than I do or other non-religious EconTalk listeners do. "Objective" and "inherent" are just compliments you pay to your own values and beliefs. They aren't doing any more work than that in your writing.

You write about a non-religious morality as being merely a preference among possible choices as if you somehow avoided the problem of making a choice in choosing to believe in a particular one of the world's countless varieties of religion.

Whether or not there is a God there is a set of behaviors and values that support human flourishing and another set that undermine it. Whether or not there is a God, most people have a conscience regardless of their religion.

I hope you are not offended buy these comments. Your views are popular and you state them better than most. I want to engage with them for that reason. But for the reasons I stated, I think they are untenable.

Robert Swan writes:

Eric:

Thanks for the description of subsidiarity. Sounds good to me, though when you "move decisions and control as close to the individual as is feasible", that last word leaves plenty of scope for bickering.

I'd like to address your more recent comment to Greg G. You contend that Christianity gives you the right moral code where any other moral code is subjective. Is the Christian moral code as fixed as that? Is there really no debate on moral questions amongst Christians?

In the Old Testament, the hand of God was involved in writing the ten commandments, but their interpretation was very much in the hands of men. A hundred years ago, many Christians treated Sunday as "the Lord's Day", dedicated to worship, on which it was sinful to do frivolous things. Not so sinful now. And who ordered the Sabbath move from Saturday to Sunday for (most) Christians anyway? I perceive the hand of man, not of God.

My opinion is that all moral codes are emergent and will inevitably change over time.

Bogwood writes:

I was reading the chapter in "Drilling Down" about evolution of taxes(Western Rome, more complex; Eastern Rome less complex, one survived longer).

There has to be a surplus for taxation. Historically it was farming, slaves, conquest, and maybe the odd silver mine. Now the only surplus is the energy generated by fossil fuels. Lower yield from our recent conquests, fewer slaves and farming totally dependent on petroleum inputs.

Eastern Rome connected the military directly to farms. It might be more efficient to go directly to energy taxes. Europe does this to some extent and succeeds in using less energy per capita for a decent lifestyle.

The authors (Tainter and Patzek) advise against increasing complexity(see episodes about arms races) and the associated waste of energy but think it is likely inevitable.

Eric writes:

Greg G,

No offense taken at all. I consider it truly commendable that you have an interest in seriously engaging with ideas other than your own. It is a valuable quality that is too rare, especially in a culture that lately has taken to shouting down unwelcome ideas.


Side thought: I also commend Russ Roberts and EconTalk for the way they engage with alternate viewpoints. Russ can question those positions while nevertheless still being civil and respectful. Another great example.

For more than I can say here, I recommend C.S. Lewis's book Mere Christianity. The first five chapters originally appeared as a shorter work called, Right and Wrong as a Clue to the Meaning of the Universe. Very relevant. Another very short but very worthwhile work of his that digs into similar territory is his book The Abolition of Man.

For now, here are a few thoughts about the inherent or true or objective reality of morality, including moral duty (e.g. to pay taxes).

Suppose we asked, "What is the circumference of the Earth?" It might be hard to get an answer. People might disagree about the answer, but there would really be a right answer and other answers would be more or less wrong. This is because the question is about something inherently real that exists independently from anyone's subjective opinions about it.

Now suppose we ask, "What is the distance from here to the planet Dagobah?" or "...to Peter Pan's Never Never Land?" There is no "right" answer to this because these are fictions -- subjective artificial constructions created by people and about which they might have different subjective ideas, none of which are "wrong" because there is no independent reality to measure those ideas against.

If man was created by God according to intention, then there can be a real and true meaning to questions about whether a given behavior conforms to intended human behavior or deviates from it. Even if we are not sure about the answer, this is in the first case of a meaningful question about reality. "Wrong" indicates a deviation between actual and intended behavior, i.e. how humans are meant to behave.

If man were only an accidental organism, then this falls into the second case. Even though we could describe how people do behave, there would be no objective reality to the idea that there is a way that humans are meant to behave that is independent from how they actually behave.

If we try to define morality by biology, then you just get the same thing as what people do. Every human behavior is expressed by some human's biology. On what basis could someone say that some biologies are morally "wrong" rather than simply evolutionary variation?

If humans were not created with intention regarding behavior such that there was no true way that humans were meant to behave, then the idea that any actual human behavior is "wrong" for humans becomes a fiction, a myth constructed by humans in various ways just as they make up other fictional stories.

Consider your statement:

Whether or not there is a God there is a set of behaviors and values that support human flourishing and another set that undermine it.

Do you mean to say we should seek the flourishing of all humans, including those that fight against us or try to hurt us? Do you see any strong indication from history that people consistently seek the flourishing of all humans? Don't many people seek to benefit themselves at the expense of others? Which choice is good is which is not, and on what moral basis?

Throughout history many have sought the benefit of their own tribe/group, even if that means harm or even extinction for other tribes/groups. Many instances we would call great evil are behaviors that are actually consistent with a different choice about who should flourish. Is either choice wrong?

Is anyone's choice "wrong" about whose flourishing is morally important? If so, what external overarching ethical standard are you using to judge between those other competing ethical standards? What establishes the one over the others?

There is no escaping the reality that there must be a real intention about human behavior in order to say any actual human behavior is truly wrong, i.e. is a deviation from the true. If there were no true way that people are meant to behave, then the idea that any actual behavior is truly wrong would also necessarily be a fiction.

Eric writes:
Robert Swan: "You contend that Christianity gives you the right moral code where any other moral code is subjective. Is the Christian moral code as fixed as that? Is there really no debate on moral questions amongst Christians?"

Actually, I wasn't trying here to present a case that Christianity is the right moral code (though I am a Christian). That wasn't my goal.

My original primary objective was to answer Russ Robert's question about what is the "source" for the fact that Americans have an unusually high acceptance of the moral duty to pay taxes and an unusually high compliance in paying taxes. Where has that cultural influence primarily come from in America?

Whether one is a Christian or not, I believe the objective answer can be seen


  • by noting the large number of Christians in the American population throughout our history,
  • by noting what Alexis de Tocqueville and many others have observed about the central importance of religion in American life,
  • and by noting what the apostle Paul clearly taught Christians in the letter to the Romans (one of the most studied books of the Bible) about paying taxes for conscience sake, i.e. that it is the morally right thing to do, not just for the sake of avoiding punishment.

Nothing I said claimed that all Christians agree about all moral questions. Nevertheless, Paul's teaching about the moral nature of paying taxes is very clear and its acceptance by many Christians through the centuries has undeniably made its mark on our culture.

My subsequent point was that the reality of moral duty depends upon the fact that humans have been created intentionally with a real intended behavior, i.e. there is truly a way that humans are meant to behave. (This observation doesn't assume Christianity. It is a more general point about the objective nature of morality.)

If humans are mere accidents, then there is no objectively true morality or moral duty. We are left with subjective choices about preferences and cost/benefit calculations (e.g. avoiding punishment, etc.), but no choice can truly be called "wrong" in any objective moral sense. (For more about that, see my immediately previous post in answer to Greg G.)

Robert Swan: "My opinion is that all moral codes are emergent and will inevitably change over time."

One question C. S. Lewis raised in Mere Christianity was about whether or not there is such a thing as moral progress. If we think there is real moral progress, that would mean that some actual moral codes are morally better than other actual moral codes.

As soon as we make that observation, we are comparing those competing actual moral codes against some other moral standard -- the true moral code. It would mean that some actual moral codes are coming into closer proximity to or agreement with the true moral code, i.e. they represent a better understanding of the way we are truly meant to behave.

If there is no true way we are meant to behave, then that would make moral "progress" meaningless. There would simply be different chosen invented standards. None would be morally superior to any other because that would require an external moral standard to compare and judge them by.

Greg G writes:

Eric,

I don't doubt that there is an objective reality but I do doubt that humans have objective access to it with any real certainty.

And I really don't understand this idea that true meaning can only be created by God. No one doubts that humans can create families and friendships and art and that those things can all have great meaning.

One of may very best friends is a former Catholic priest who is still very devout. He talks about his faith as a willingness to embrace the mystery and and says that questions like this always come down to a matter of individual intuitions not logical proof. I agree with him on that. But he does not claim some special access to objective reality. He admits his faith is grounded in his deepest intuitions not any kind of logical proof. I admit the same. We have different intuitions.

A secular universe is not necessarily an "accidental" one. For most people a truly scientific point of view is a deterministic one. Many things about the world are not as they appear. It doesn't appear to me that I am standing on a big round rock spinning at 1,000 miles an hours as it hurtles through space at great speed. Perhaps free will is just another of the world's many persuasive illusions. Whatever you want to say abut a deterministic universe "accidental" really seems like the wrong way to describe something that perhaps couldn't be any other way.

No I don't mean to say we should seek the flourishing of sociopaths. I do mean to say that sociopaths have a mistaken view of what is in their own best interests.

I would say that minimizing human suffering is truly moral and inflicting cruelty is truly immoral and I am confident that is the case whether or not God exists.

You haven't really explained why we should think choosing a religion is any less subjective than choosing ethical secular values. You are still choosing the religion you prefer not the one you don't prefer.

Alan Clift writes:

Russ, would you expand your comment on public education "I think it's a system that has punished poor people for a long time". Am curious why you think that, and if it's public funding of education that is the cause. A refernce to an article or interview would be fine. Thanks.

Eric writes:

Re: Greg G., some responses.

1) If you are serious about wanting to know why choosing to be a Christian is not merely a subjective matter of choosing the religion you prefer, my strong recommendation is to start by seeing the movie The Case for Christ, which opened recently. It examines this very issue seriously from the viewpoint of an actual determined atheist who was an award-winning legal editor for The Chicago Tribune. If you want more details after that, see the book by the same title.

2) You said, "I really don't understand this idea that true meaning can only be created by God." But that isn't quite what I said.

You can create works that have meaning. (That said, the problem at hand is that you did not create humanity.)

If you want to know the true meaning of some work of art or any other intentional expression such as a book, the place to find that meaning is in the intention of its creator. If someone has the "wrong" idea about its meaning, that is another way of saying they did not understand the intention of its creator. If a musician plays the wrong note for some musical piece, they are not playing the note that its creator intended. If an actor says the wrong lines or makes a wrong entrance or exit in a play, they are deviating from the intentions of the creator of that play.

In every case, the wrong behavior is when the actual behavior wasn't what the person was meant to do. Meaningful "wrong" is a deviation between the plan and the execution, a deviation between the actual and the intended.

Consequently, where there is no intention and there is only the actual event, then the idea of deviation becomes meaningless and "wrong" also becomes meaningless.

It is only when something is created without intention, such as ink being spilled in a splash by mindless forces of nature, that it would be pointless to ask, "What does this "text" mean?" Without intention, there is no meaning. Without intention, it simply is whatever it is. That's all. It also becomes meaningless to try to say anything like, "That ink spill behaved in the wrong way."

If you want to know how humans are truly meant to be (and to consider moral duty, etc.), the only possible location for that answer is within the intention of the creator of humans. If humans have no intentional creator, then there is no true or real meaning. Humans would simply be whatever they happen to be and there would be no real foundation for claiming that any actual behavior is really a wrong behavior for humans.

3) About the universe being deterministic, actually modern physics has burst that bubble. The deterministic perspective has been long out of favor, given numerous more recent results. But regardless of that, if you don't care for my wording of "accidental", feel free to substitute "non-intentional". With either wording, the results are unaffected.

4) I wasn't asking you only about the case of sociopaths. My questions were meant to point out that most people who have ever lived did not share your moral choice about who should flourish. Why shouldn't one tribe flourish at the expense of others, or one powerful person and their family flourish at the expense of the weak?

If you choose one way and others choose other ways and you claim your moral choice is superior to theirs, then you have really conceded that there exists some objective moral standard outside of your choice and their choice that is siding with you rather than them. Yet you don't have a basis for any such outside moral umpire to rule in favor of your choice. Apart from that, it would be just your choice against theirs.

Greg G writes:

Eric,

Well we are down to disagreeing about basic premises and definitions so there probably isn't a lot of point in further debate but I do thank you for engaging in a way that helped me to understand your views and the views of the many people who agree with you.

I still think you have a big blind spot thinking that you can avoid a subjective choice in coming to any belief about religious questions. Bridging that gap between objective knowledge and belief is the whole point of why faith is needed.

And even if you grant the historical objective truth of all the supernatural events that Christianity claims you STILL haven't avoided the need to make a subjective choice. There are a bewildering variety of Christian sects from the Westboro Baptist Church to whatever version your own choice is. You call the others "counterfeits" but you are still choosing which are the counterfeits and which aren't.

And surely you know that many main line Protestant sects do believe in a deterministic universe on the grounds that God's inability to know your future would be an unacceptable limit on his unlimited powers. They called it predestination.

Eric writes:

Re: Greg G,

I welcome your questions and probing. Thank you for your thoughtful and also courteous scrutiny of my statements.

I agree with you that nothing I said eliminates the need for choices. Yet, they can be informed choices and not merely intuitions or choices of feeling. From the earliest days they have been choices to trust based on available facts, knowledge and reason.

On this particular weekend, I find it relevant that the apostle Paul -- the same one who later taught about the moral duty to pay taxes for the sake of conscience -- staked everything on the factual reality of Jesus rising from the dead and being observed by many contemporary witnesses, including himself. In one of the earliest books of the New Testament, he basically said that if this were not factually true, then the faith of Christians would be in vain, i.e. empty and pointless, and even to be pitied (cf. chapter 15 of 1 Corinthians).

The very best to you!

p.s. Briefly Re: choices, determinism, and omniscience...

God's knowledge about events has never depended upon a physically deterministic universe. This is because it has never depended upon the method used by creatures of trying to predict the future based upon an extrapolation from the present. That method could be foiled by unpredictable, non-deterministic events.

Yet even we can know the outcome of an unpredictable event once it has happened and we can observe it. Since we are bound within time, our knowledge is limited to moving forward in time through the space-time continuum -- that is, unless we could invent a time machine to bring the knowledge back to the past.

The Judeo-Christian position affirms that this space-time continuum of our universe is a created thing that had a beginning. It follows necessarily and unavoidably that the Creator of the space-time continuum cannot be contained by it or limited to it. God could see even an "unpredictable" event in that continuum just as we could see it. The difference is that God's knowledge is not bound within time. It is not limited to moving forward within time or even limited to remaining inside time at all.

God certainly can see any choice after it has been made, but that knowledge is not confined to time's downstream of the future. As Scripture says, God is unlike any created being and able to make known the end from the beginning and declare from ancient times things that (for us inside time) have not yet happened.

jw writes:

Eric,

Brilliant comments on Christianity, well done.

However, there is no knowable circumference of the Earth. (It has to do with the mathematics of infinitesimals.) We can come to some very useful and precise calculations, but we will never KNOW.

Greg G,

Taxes, as in all politics, comes down to morality as we have again shown in this discussion. I am afraid that your positions are biased by living with the fruits of centuries of Judeo-Christian civilization.

Two centuries ago slavery was fully accepted by most of the world. Less than a century ago it was fully accepted by Russia, Germany and Japan (just three examples) on a state basis. Today it is fully accepted by ISIS as one example, I am sure there are more. If you lived under any of these regimes, you may have been raised to believe in it yourself. In each case, rationalizations were made that slavery was morally correct.

What if in another hundred years people finally agree that a society based on entitlements, redistribution, tyranny of the majority, balkanization, and vague, self-identified victimhood turns out to be horribly destructive to human nature and that good old fashioned hard work at any price is where most self esteem comes from? Would the soak the rich progressive tax system that supports our current society be viewed as immoral?

Greg G writes:

jw,

>----" I am afraid that your positions are biased by living with the fruits of centuries of Judeo-Christian civilization."

Everyone is biased by the culture they grew up in. I certainly don't claim to be an exception to that and I hope you don't either. And not all biases are bad although it is conventional to use the word bias for those biases that we disapprove of. The ones we approve of we tend to call learning.

I was raised as a Christian. That theological bias didn't stick. Many, but not all, of the social values that come with it did. I was also raised to agree " that good old fashioned hard work at any price is where most self esteem comes from." That bias did stick.

No matter how long you wait everyone will never "finally agree" on the ethical merits of any particular tax system. And you won't have to wait another hundred years to find people arguing the current system is immoral.

For the purposes of this discussion it is important to note that Jesus was NOT among those who think that simply giving things to the poor is bad for them because it undermines their work ethic. I do remember that much from my Christian upbringing.

jw writes:

Greg G,

I am glad that much of the morality of your Christian upbringing stuck. My point was that that morality is not universal nor unchanging. Other religions and cultures exhibit morals that are repugnant to almost everyone in the west. To me, living off of the fruits of others' labor is morally repugnant. (Anticipating your next comment, yes, there are exceptions for those who simply cannot fend for themselves.)

I agree on your Biblical understanding. Jesus supporting tithing, but back then the church was the principal vehicle for supporting the poor. Entitlements have more than completely replaced church based and secular charity in the US and I would welcome a 10% maximum tax rate, even if defense and a few other costs were paid by separate taxes. Alas, all taxes combined, of which the majority are for redistribution, add up to a third, not a tithe.

I hope that I have been consistent in my criticism of people and politicians who promise more free stuff in the form of entitlements that will always be paid for via taxes on someone else in exchange for giving politicians just a little more power. I also consider this bargain to be immoral.

Cole writes:

I was shocked at the guest's defense of public education: "I am a product
of public ed, and I turned out OK." Really? Are we down to anecdotal
episodes to bolster our arguments? Of course there are some good
outcomes for some public schools, but Russ's arguments (and the rest
of us who feel that public education hurts poor people aggregately) are not
overcome by "Look at my résumé."

It's ironic how the guest would, as a progressive, use this type of
argument, given how progressives generally criticize others for saying, "See
how this individual is abusing the system" to assert arguments the other
way. The typical response is "Individual cases cannot prove systemic
faults." And yet, she uses individual cases to laud public education.

Eric writes:

Cole (and others similarly before),

Yes indeed, anecdotal successes cannot outweigh the utterly deplorable education many poor are afflicted with (but which politicians can afford to avoid for their own children). However, changing that would mean defying the priorities of the teachers' unions, which contribute lots of money to campaigns. Yet there is a movement toward school choice. The dollars could follow the students.

Greg G.,

I don't think the following overturns the point you were making just now about taxation. As a side detail, you and other people may want to know that there were no tithing laws in the (old covenant) Jewish law that applied to any wages or monetary income. None at all. The tithing laws applied strictly to the produce of the land (crops, flocks, herds) such that those who had land shared its benefits with those who did not. Jesus affirmed that as a valid practice "of the law" for the covenant with Israel.

For example, the tribe of Levi did not get a regular share of the land but was given a random tenth of the produce of the land. The tribe of Levi then gave the best tenth of the tenth (i.e. one percent of the whole) to the temple in Jerusalem. (Other tithing laws promoted sharing crops with the poor and others without land.)

In fact, there is not even one example in the whole Bible of anyone being commanded to give a tenth of their wages to a religious purpose. The idea of "tithing" to the church has never been taught by the Eastern Orthodox churches because it wasn't part of what the Lord's apostles taught Christians.

The Christianized tithing tradition was invented centuries later in the western churches (eventually Roman Catholic) in order to raise more support, eventually as a requirement of law. Initially it copied the old covenant practice and was only praedial -- a tenth of the produce of the land, not of wages. It wasn't until more than a millennia had passed before it was extended to some wages and monetary income.

Some Protestant churches (but thankfully not others) have begun to add a tithing tradition as well, but that added tradition is less than 170 years old! By the last half of the 1800s the idea of renting pews had fallen out of acceptability. Looking for a way to raise more money, some Protestant churches began teaching "storehouse" tithing as if it were a part of Christianity.

BTW, when I've used the word "counterfeit", I haven't used that as just a careless phrase, but rather for cases that have a superficial similarity to an authentic original while yet being objectively and fundamentally dissimilar. The historical record is clear and consistent that the tradition of teaching Christians to tithe had no place at all in the early centuries of Christianity. It is not part of original Christianity.

JPH writes:

Great, great podcast. I find myself agreeing with Ms. Williamson a great deal more than I do with most "Leftist" economists. And the discussion of what services nearly all Americans regard as appropriate for government to provide was fascinating, as was how we regard the term "foreign aid."

BTW, one of the few issues on which I disagree with Russ Roberts is on public education - his belief that the market and charity would combine to provide superior education for poor kids than they currently receive is the worst sort of Rightist fantasy, and it's easily refuted by history. Nowhere in the history of earth has non-public education for the poor been funded to a level we would regard as remotely adequate.

Eric writes:

JPH,

Actually, with one of our children we participated in a private school that provided a superior education than the public schools, but arranged for costs to be paid on a sliding scale according to family incomes. This allowed poorer families to have access.

In locations in India and elsewhere, poor families have found that they can get a superior education for their children by paying for a low cost private education. Check out this EconTalk episode (plus search for education videos with James Tooley).

DECEMBER 29, 2014 James Tooley on Private Schools for the Poor and the Beautiful Tree EconTalk Episode with James Tooley

There is no doubt that many poor are very poorly served by the current horrendous public system, despite throwing increasing dollars into the system. A simple fix that would not rely on charity would be to allow school choice and let government dollars follow the student via vouchers, thus empowering the families to choose better schools and incentivizing change. (See "subsidiarity" above.)

Lily Reynolds writes:

Russ,
Why do you feel national parks are a public good for government to pay for, but not public education? You quibble about national parks being mismanaged but you are mostly in favor of them. Why not the same attitude toward public education? An educated public is a common good that we all benefit from but is surely mismanaged. Does my comparison reflect how you feel about those two governmental institutions?

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