Robin Hanson critiques Chrystia Freeland’s take on our billionaire overlords.
It doesn’t seem to matter to Freeland how deservingly the rich obtain or spend their wealth; they still must be taxed to help average Americans, even if that slows the lifting of Chinese and Indians out of poverty. It isn’t clear why she recommends the rich eagerly submit to such taxation; she suggests taxation will happen whether they like it or not. Why fear “populism” beyond its taxation? The point seems more to scold the rich, in order to reassure the rest of us that we are justified in taxing them.
It may be the case that many calling for higher taxes on the rich are belittling or even demonizing their contributions as a way to justify higher taxes.
I am starting to believe that the belittling and demonization are at least as important to many of the new rich as the taxation itself.
That sets up the possibility for a trade. We praise the rich as we redistribute their money. I am not completely joking when I suggest there might be room to turn taxation from a welfare destroying necessity to a welfare enhancing activity for everyone involved.
Suppose we start a government website which shows the taxes paid by the wealthiest Americans but instead of listing them in terms of dollars we list them in terms of “kids treated under CHIP” or “soldiers sponsored” or some other meaningful measure of government spending.
Right now paying taxes is a sign of low status. You allowed the government to get your money. However, if we advertise broadly what the money pays for then we can push tax paying as a high status activity.
This is crucial because most of the spending among the wealthy whether it is for a giant yachts or malaria vaccines is ultimately a status competition. Its either who has the biggest toys or who has done the most to save the world.
This is not a dig at the rich. Human are programmed to focus almost exclusively on status competition whenever material survival becomes a non-issue. This is why both high schools and senior homes are full of cliques.
What we want is not destroy status competition, that would be impossible even if it was desirable. What we want is to channel it.
Some status competition is obviously destructive. Tax evasion as a status competition – see Leona Helmsley– is destructive. However, if tax paying is promoted as a status competition it becomes productive. It serves the same function for the people in the competition but it serves an improved function for society.
Now, a key question Robin would be sure to ask is, why should we think paying taxes is productive. What about giving money to the poor in India. Isn’t that better than paying taxes.
There is a longer moral case to be hashed out. However, my short answer is that maintaining a pro-market polity is productive and this is becomes less likely when the average person sees the market as primarily benefiting others.
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Saturday ~ February 19th, 2011 at 3:13 pm
Brian
Scott Adams had a humorous post making similar suggestions here
http://online.wsj.com/article/SB10001424052748703293204576106164123424314.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsForth
Saturday ~ February 19th, 2011 at 3:40 pm
Eric Crampton
I think Scott Adams proposed something similar a while back on Dilbert blog.
Saturday ~ February 19th, 2011 at 3:41 pm
Eric Crampton
Ha! That’ll teach me to read prior comments first.
Saturday ~ February 19th, 2011 at 11:55 pm
TGGP
Robin Hanson blogged Scott Adams’ idea here.
I just got finished listening to Tyler Cowen discuss with Matt Yglesias a possible future of steady-state economics in a political system dominated by the retired. That discussion and this post both make we wish more fervently for a thousand nations to bloom.
Sunday ~ February 20th, 2011 at 10:52 pm
Frank Schmitt
I read the same Scott Adams article. I hadn’t thought of the “public list of patrons of the US Government” angle, but it works for theaters and symphonies.
I posted a couple of related ideas on HN:
- Some kind of cheap-to-produce-but-hard-to-forge physical token of having paid a lot of taxes that could be flashed by those wishing to assert status (not unlike American Express’s fabled Black Card). It could confer some modest privileges, but perhaps that isn’t necessary (the Kardashian Kard is/was a pretty lousy deal all around but I assume some people got one in spite—or perhaps because—of that).
- Neighborhoods with ridiculously high property taxes (say, 100% of the assessed value per year) and perhaps slightly better-than-normal government services. By mentioning that you live at such-and-such an address you could demonstrate that you have money to burn without needing to build a McMansion on five acres of lawn. Plus, all of your neighbors would be rich.
Wednesday ~ February 23rd, 2011 at 10:04 am
Andrea Marchesetti
What Karl suggests might indeed raise the status of paying taxes a tad bit, but only among those who already regard taxes as a “good thing on the whole”, i.e. as a way of providing services they approve of and would like to fund themselves even if government did not provide them.
I see two problems with that – strong fringe opposition and the effect of more information on the general public.
Firstly, anyone who had misgivings about the use of their tax money would be less likely to give more and might be motivated to reduce their tax exposure to adjust for spending they do not endorse. These fringe groups may be small when considered one by one, but my guess is that their number and influence collectively would be considerable.
(The list is long: e.g. pacifists trying to reduce their taxes by the amount they would otherwise contribute to military spending; pro-choice people refusing abstinence-based social programme or aid spending; creationists or climate skeptics trying to minimise the amount of their tax money funding scientific enquiries they disapprove of, etc…
The other critical point is that we cannot know how the average person would react to exposure to better information on what the money is being spent on. For example, given $x spend on state education, will people say “I want to chip in and sponsor one more child” or will they look at the same number “that much per child is way too much for what they get at my crappy local school!” and actually favour lower spending? Do you know of any research on how, and whether, attitudes change when taxpayers are informed about actual govt spending vs their prior perceptions of govt spending?
Both problems seem to point to the crucial difference between tax collection and private spending (and why patronage-based model of raising social status of taxation might not work): taxpayers cannot choose specific activities to fund and cannot exercise a degree of control close to that of philanthropists or patrons.
Still, would be an interesting experiment if it were ever to happen
Thursday ~ February 24th, 2011 at 6:09 pm
basketballisthe#1sport
The plutocrats already receive enough verbal fellatio from the business press and writers such as yourself.