Let me summarize a debate that is going on:
1. Matt Zwolinski repeats the popular argument that people like Warren Buffett who want higher taxes should donate money to the government like they do to charity. But people largely don’t do this, as a mere $3.2 million was donated to the government compared to $300 billion to charities. This tells you people don’t really want higher taxes.
2. Will Wilkinson replies that this is incorrect because it can be rational for someone to not comply with a rule that: “(1) you support, but (2) will only have its desired effect if general compliance with the rule is high, and (3) you suspect general compliance will not be high.” He compares someone who thinks we should not eat meat but their not eating meat won’t result in any less animals being killed, since his not eating alone will have zero effect on market demand.
3. Bryan Caplan responds that the real question we should be asking is: ”Why is government’s share of the voluntary donations market so damn small?” He argues that the prisoners’ dilemma can explain why a particular charity (or the government as a charity) has a low amount of donations, but it can’t explain why it has low donations relative to other charities, which also suffer from a prisoners’ dilemma.
This is going to be another one of those posts where I argue everyone kind of has a point. Overall, I think Will is correct that people legitimately do want higher taxes. But I think Matt and Bryan have a point that the lack of donations is indicative of something.
One point I want to make is that I think Bryan is incorrect that the prisoners’ dilemma can’t explain why the charitable donations to government are so small. Consider Bryan’s hypothetical that raises money for haircuts for hippies. Imagine that absent coercion people would voluntarily give $1,000 to hippy haircuts by themselves, but if they know that everyone else would also, they would be willing to give $3,000, making it the largest charity in the country. Now suppose the government taxes everyone $2,800 and gives it to the organization. In this circumstance it can be completely rational for everyone go give zero marginal dollars to hippy haircuts, despite the fact that without the government taxing them they would have donated $1,000. Likewise one could argue that people in this country would be willing to donate hundreds of billions each year to the U.S. government if they weren’t already paying taxes, and that we are still below the efficient level of contribution.
However, I also want to quibble with Will’s example of not eating meat. It makes sense for someone to believe they’re not going to have any effect on the consumption of meat since the tiny, tiny amount of lower demand may be a fraction of a rounding error that doesn’t even show up in the yearly spreadsheets upon which they base next year’s production numbers. Likewise the extra couple thousand dollars the typical U.S. household could donate to the government would amount to pennies per government program. But meat consumption is going to be relatively normally distributed, while income is going to be more log normally distributed. Consider everyone’s favorite example in this issue, Warren Buffett. I believe he makes in the neighborhood of $60 million a year, and total U.S. household income is around $7 trillion, meaning he accounts for 0.000857% of U.S. income. A rounding error? Maybe. But consider if Buffett consumed a proportional share of meat, as in Will’s example. U.S. households consume around 30 million cows a year, which means Buffett would personally be consuming around 250 heads of cattle. Would it be legitimate for a man consuming 250 cows a year to say that it wouldn’t matter if he became a vegetarian?
But this brings me to a section point related to Will’s meat eating metaphor. Part of the reason people who think eating meat is wrong shouldn’t eat meat is to be an example to others. Charitable acts are often purposefully visible signals meant to encourage others to do the same. Isn’t this why people do charity walks? Sure, a lot of this signaling is motivated by the desire to signal higher status, but this desire to signal can incentivize good behavior.
Like Bryan, I don’t find it hard to imagine us ending up at a different equilibrium where many people do donate to the government:
Could the U.S. government attract a lot more donations with better marketing? What if the President spent less time raising money for his campaign and more time raising money for the Treasury? What if Congress publicly acknowledge the ten biggest donors in an annual ceremony? I can easily believe that donations to the U.S. government would rise a hundred-fold. But even then, Uncle Sam’s share of national charity would be a mere .1%.
Rather than politicians appealing to people to donate to the government, I could imagine high profile people like Warren Buffett urging people to donate more and generating some movement on this. But I don’t think the lack of this sort of movement proves anything about how much people value government spending, I just think it’s a potential that hasn’t been realized yet.
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Wednesday ~ April 25th, 2012 at 8:19 am
vinc
If I support higher taxes, I don’t think that giving money to the government is the best use of *my* money. What I think is that taxes are a better use than the average use of money by other people.
Wednesday ~ April 25th, 2012 at 8:20 am
thearmotrader
Yes, I think it is VERY dumb to expect people who want higher taxes to government to “donate” money. It would be HIGHLY IRRATIONAL for someone to do something that is against their best-interest, even for someone like buffet who has lots of money.
Its pretty simple to see how this argument of giving money to the government voluntarily if you want higher taxes is so dumb.
Think of it like this. MANY people want the US government to stop spending + want a small Gov. HOWEVER how many people would be willing to send back their social security checks or any other aid they got from the government (see: http://www.good.is/post/half-of-americans-getting-government-aid-swear-they-ve-never-used-government-programs/ )? NOBODY would be willing to do that. Everybody wants to cut spending but NOBODY wants to cut their OWN spending….Same thing goes for taxes.
Unless it is levied upon them, there is no reason to expect someone do something irrational.
Now having said that, I am 10000% against raising taxes on anyone (or cutting spending) in this balance-sheet recession the US is still experiencing.
Wednesday ~ April 25th, 2012 at 9:25 am
Ryan P
This would be a much stronger argument if Buffett hadn’t already given away a lot to charity and hadn’t already set in motion the process of giving the vast majority of his lifetime wealth to charity. Or if he didn’t try (with some success) to convince other billionaires to do the same.
Wednesday ~ April 25th, 2012 at 10:49 am
Marcus
Why does that tell you anything? I’m not following your argument.
Government isn’t a charity, it has the power to tax, and as a result has revenue in the trillions. The Gates foundation doesn’t have that kind of money. It’s pretty easy to see why Buffett would be more willing to give $1.5B to the Gates foundation, equivalent to about 5% of its endowment,than giving it to the government because that would decrease the national debt by less than 0.01% (if it was actually used to pay down the debt).
Not to mention that donating to a charity gives you the ability to apply conditions on how it is spent, which Buffett did with his Gates donation. Donated money to the government is entirely fungible and could be spent on a number of things you might not like, including being sent out the door as tax cuts.
Wednesday ~ April 25th, 2012 at 11:06 am
Ryan P
@Marcus, See above. I was responding to the argument that Buffett doesn’t give to the gov’t because donating money is not in your narrow self-interest.
I’m not sure I see why seeing things in percentage terms tells us a whole lot. The social good of a marginal dollar to a charity and the size of the charity’s budget are two distinct concepts, and the one we’re interested here is marginal dollar.
As to the ability to control the money, or the concern that the gov’t will spend the money on things that you don’t value much, or that you actively dislike, that may be the case and it’s a fine point. But remember the question at issue was, is there a tension between calling for higher taxes and refusing to donate to the Treasury? You’re arguing that his best guess is apparently that society’s interests are best achieved by his reducing his tax liabilities and putting the money elsewhere.
Wednesday ~ April 25th, 2012 at 8:28 am
Michael
I think it is reasonable to assume that those who would make a voluntary donation to the government would do so because they would want to increase government revenues.
A taxe increase will lead to in increased revenue. Every dollar of voluntary contribution is likely to be offset by tax cuts, just as the late 90s budget surpluses were ultimately more than offset by tax cuts.
Wednesday ~ April 25th, 2012 at 8:30 am
kylind
You lost a few zeros there in your calculations.
60 million is to 7 trillion as
250 is to 30 million (roundabout).
Argument still stands.
Wednesday ~ April 25th, 2012 at 8:43 am
Adam Ozimek
Thank, corrected. You’re right, I think the argument still stands.
Wednesday ~ April 25th, 2012 at 8:32 am
Kevin_Hartford (@Kevin_Hartford)
I think that you can solve the inequity of charitable donations between the geovernment and the charities by looking at the efficiency of those donations. In the government, the overhead to service is huge (some would say the entire government is overhead. In a non-profit concern the overhead is typically less than 10%. When I donate something…I want to know that my donation is going where it is intended, not for waste.
Wednesday ~ April 25th, 2012 at 10:22 am
BSEconomist
This is just factually incorrect. For example, the administrative overhead of social security is around a percent (partly because it is so huge). Any private organization would envy this kind of efficiency.
Part of the issue, of course, is accounting. How do you count the “overhead” involved in bureaucracy? Not a simple problem, but the “overhead” should not depend on the budge cost of the enforcement mechanism when the enforcement mechanism is the point. Is the “overhead” the efficiency cost of the rule? Also not obviously correct.
Instead I would just argue that “orverhead” makes for a bad analogy to most of the activities of government; administrative costs of transfer programs being an exception (but these are small).
Wednesday ~ April 25th, 2012 at 1:46 pm
Mark
Activities of the federal government that most clearly substitute for charitable activities have overhead costs (relative to the amounts of charity distributed) that are well below the overhead costs of most or all charities, and much much below 10%. You shouldn’t include other categories of government spending (spending on defense, infrastructure, investment in capital, etc.) in your calculation of “overhead” because these expenses are unrelated to providing “charity” services, and make your comparison to other organizations (that don’t have similar expenses) an apples/oranges comparison.
Thursday ~ April 26th, 2012 at 8:14 am
Kevin_Hartford (@Kevin_Hartford)
The apples to oranges comparison has already been made in the article. When you donate to the federal government it is not as efficient as donating to a targeted charity…because your “donation” as your taxes are used for things that are not intended…such as defense infrastructure, investment in capital, and fraud and waste (paying off the President’s contributors). All of that is overhead.
Wednesday ~ April 25th, 2012 at 9:18 am
Max
It’s pretty obvious why government doesn’t get donations – it doesn’t give anything in return. Charities do. The exchange is that if you give $1 to a charity, the charity agrees to spend $1 more. And it may be narrowly focused on something you strongly approve of (almost nobody strongly approves of everything government does).
Wednesday ~ April 25th, 2012 at 10:26 am
BSEconomist
Doesn’t give anything in return? Yeah nothing except social security, medicare, medicaid, unemployment insurance, foodstamps and TANF, militray, policy, education, infrastructure… I’ve just explicitly named about 95% of govenment spending. Maybe you hate poor people… the “non-poor” spending is still around 60%.
Wednesday ~ April 25th, 2012 at 12:57 pm
Max
You missed the point completely. Donating doesn’t increase government spending. So even if you approve of all government spending, you aren’t getting that by donating to the government. You should donate to a politician instead.
Wednesday ~ April 25th, 2012 at 9:41 am
Bill Ramsay
I think the prisoner’s dilemma is the wrong example. The correct example is the Ultimatum Game.
It strikes the fairness chord very loudly to suggest donating $ to the government when you know that there are a lot of government haters who would not do so, yet who would still benefit from the public goods and services provided by the government.
Wednesday ~ April 25th, 2012 at 9:44 am
Ryan P
Is that different than taxation? It’s not like your tax bill is in any way a function of the benefits received.
Wednesday ~ April 25th, 2012 at 9:52 am
Arthur
Charity isn’t about helping? Anyone?
Wednesday ~ April 25th, 2012 at 10:17 am
Curt Doolittle
Interesting.
As @max says, people do not perceive giving money to the government produces either the status reward, or the care-taking reward. Both of which are the biological incentives for ‘giving’.
Humans are pack hunting animals. The spiritual experience is the abandonment of reason to the will of the pack, and to operate by empathic reflection alone. People give to belong to the group. Since a government consists of people, and of people who are in conflict, not agreement, then giving to the government is counter-intuitive. As such, government is a sunk cost buried in conflict and not a ‘spiritual’ good from which we can gain emotional reward for our charity.
A charity cannot act on its own, government can. It is counter-intuitive that charity be given to the powerful.
Giving to government cannot be ‘rational’ since cause and effect are unrelated due to the pooling of monies. This is @Kevin_Hartford’s argument restated.
So since giving to government cannot be rational it must be conducted on faith, and as we’ve shown, there is no reason to have faith, and therefore there is no reason to treat it as a charity.
For people with a lot of money, private-sector giving is much more rewarding in status and care taking perks than is government spending, and less open to ‘cheating’ or ‘rent seeking’, both of which humans abhor. It’s also demonstrably more effective. Gates has produced more good per dollar than any other program we know of to date. And he has rapidly abandoned programs that were a failure (small class sizes) where government persists in failed ideas (teacher tenure).
@Zwolinski’s argument does not make sense. It does not tell us anything about people wanting higher taxes. It tells us only that acts of voluntary charity are the result of rational action, and government is not a charity by any terms that human beings perceive.
@Wilkinson’s argument is true because people are twice as angered by ‘cheating’ as they are by achieving rewards. Government is an easily dis-equilibrating process. It is the ultimate disincentive for encouraging charity.
@Brian Caplan’s question makes sense in this context, but does not provide an answer.
So i would take @Caplan’s argument even further: what is wrong with how we have structured our institutions that people feel that taxes are ill used? There is an argument that representative government is no longer necessary, and simply a source of distraction and conflict. There is little reason why we cannot publish policies and ask people to fund them from their mandatory tax contributions, eliminating private lobbying and trades, and providing status, charity, and causal relations between citizens and their government. Government via policy auction would very likely increase tax revenues, and control the negative consequences of government: bureaucracy, waste, corruption, rent seeking, and the use of money for purposes with which we disagree. At the very least it would create civic virtues rather than the tragedy of the commons that government is under social democracy.
Wednesday ~ April 25th, 2012 at 10:46 am
BSEconomist
“So giving to government cannot be rational it must be taken on faith”
I’m not even sure what this means and the statement lacks economic justification. It is absolutely rational to give to government along certain margins; in fact this is roughly speaking how feudal societies functioned. Instead the problem is free-riding, I may contribute, but will others? And this meanst that funding will be (generally) below the efficient level if left to the free market (i.e. donations).
I also have issues with the last paragraph here. Policy auctions are a horrible horrible idea. I don’t mean to be rude, but I don’t think you’ve thought this through. In the political economy literature, they model policy auctions as voting models weighted by individual wealth. This is also how lobbying is modeled and that’s not an accident. So in this world, the one’s with the most money control the policy and these ones need also to defend that position from the median voter (marginal dollar of contributions vs. marginal voter). The end result is that he who seeks rent is the most powerful and perhaps the richest from the rent he has captured which would feed back into his power (i.e. being the marginal dollar of contributions). In short, you could increase “contributions” but only in the most destructive way possible. Feudal societies had a version of this problem, of course, but the issue was “solved” by making sure that the king was usually the richest and most powerful.
Wednesday ~ April 25th, 2012 at 10:47 am
Lord
If you want higher taxes you should expressly not donate to government as it makes higher taxes less likely. There is no need for any individual to donate to government since they can give directly to the causes they support.
Wednesday ~ April 25th, 2012 at 11:57 am
mic43ll3
People give to charities because it makes them feel good and gets things they’d like to see happen a little further towards that goal.
By that logic we can see that there is already plenty of charitable giving to the government – it’s just done through Super PACs and donations to think tanks.
Wednesday ~ April 25th, 2012 at 12:44 pm
J.V. Dubois
I would add another comment why donations to Government does not make sense – the point is that the could be “fixed”. There is a high risk, that if you donate something to a government, the only effect will be that other people will pay less taxes. Not that government uses your money in addition to what it gathered.
Also, I am quite surprised about the donations to government. Are you sure about this? I am not american, but I cannot imagine that people do not donate anything to local schools, public healthcare institutions, reconstructions of infrastructure, expansion of parks, danations of exhibits to public galleries and museums and lot of other things. Heck, if I just count the number of blood donors, their total contribution has to vastly exceed $3,6 million a year for USA (or you have no blood donors there?)
Wednesday ~ April 25th, 2012 at 1:17 pm
Ryan P
Many of those things aren’t necessarily donations to the gov’t. I would be rather shocked if a large proportion of donations to schools were donations to gov’t run ones. When I donate blood, I’m rarely (ever?) donating to the gov’t (and certainly not giving cash)
Wednesday ~ April 25th, 2012 at 1:03 pm
mic43ll3
Okay, looking into this further, many of us are talking past each other on one basic point – “donations to the government” apparently refers to filling out a line on your tax form that donates money to one specific agency for the express purpose of paying down the national debt.
Maybe most people just don’t care about paying down the debt right now, plain and simple.
Just because it’s a talking point by one of our major political parties doesn’t make it a meaningful cause to the general public. Why assume that everybody who wants the rich to pay higher taxes also thinks the best use of that money is to pay down the federal debt? It’s a false premise.
Wednesday ~ April 25th, 2012 at 1:14 pm
Ryan P
But money is fungible, so making a donation to pay down the debt has the exact same effect on the gov’t's ability to spend money on anything and everything as higher tax revenues do.
Wednesday ~ April 25th, 2012 at 1:50 pm
mic43ll3
Does it? I wonder how many people donate to PBS or Planned Parenthood or the public university they graduated from for the express indirect purpose of freeing up government money to spend on other projects.
My guess would be close to zero. Money may be fungible, but charitable giving relies a lot on the intent of the giver. Just like the aforementioned publicly funded agencies, if people care about paying down the debt, they’ll donate to that cause/agency as well.
Wednesday ~ April 25th, 2012 at 3:08 pm
Ryan P
I’m not arguing that’s their express purpose. Neither would I argue the sole or even primary motivation of donating is pure anonymous altruism.
But lack of control applies for calling for higher taxes too. Either way they have less pressure on the gov’t budget constraint. If the expected value is low one way, why not the other? If it’s high one way, why not the other?
Wednesday ~ April 25th, 2012 at 3:28 pm
michelle
“But lack of control applies for calling for higher taxes too. Either way they have less pressure on the gov’t budget constraint. If the expected value is low one way, why not the other? If it’s high one way, why not the other?”
Because “paying down the debt” is not the only function of the federal government. It is, however, the bait-and-switch figure that Zwolinski throws out as representative of “all donations” to the federal government.
So, two false premises – one, that those calling for higher taxes think the best use of that money is to pay on the federal debt, and the other being that $3.2 million is representative of all of the money donated to the government last year.
As a whole, the American people decided that paying down the debt was worth $3.2 million in donations. And that’s fine. But this would indicate to me that they are not, as a whole, as concerned about paying down the debt as they are about other causes.
Wednesday ~ April 25th, 2012 at 3:51 pm
Ryan P
Michelle,
Again, that’s the case for taxes as well. If you take the “literally all else equal” approach, then higher taxes just reduce the debt. If you take the “money is actually fungible and I think Congress understands that and I don’t trust or like their judgment” approach to why you don’t give to the Treasury, then you have yet to explain why you don’t think that’s the case for taxes (which, after all, are paid to the Treasury).
Wednesday ~ April 25th, 2012 at 4:09 pm
michelle
People donated $3.2 million in total to the Treasury *specifically* to pay down the federal debt, not to indirectly benefit the federal budget.
This is similar to the way that people who donate money to PBS do so expressly to help fund PBS, rather than to indirectly benefit the federal budget.
Just because they have the same general effect on the budget doesn’t mean that this was the intent behind the donation, nor should it be, necessarily.
Wednesday ~ April 25th, 2012 at 4:36 pm
Ryan P
And if I lobby for higher taxes, what do you suppose happens if I succeed?
Wednesday ~ April 25th, 2012 at 4:56 pm
michelle
Look, to put a finer point on it, people donate what they can afford to the causes they find important. Nobody donates to Penn State because they want higher taxes or because money is fungible and it helps the federal budget, they do it because they like Penn State. Same with PBS, Planned Parenthood, et. al.
It appears to me that the debt is not something that a whole lot of people are concerned about paying down right now.
Wednesday ~ April 25th, 2012 at 5:10 pm
Ryan P
Again, that’s fine and I largely agree, but you’re only explaining why someone might give to some charitable cause but not give to the Treasury. What you’re not doing is explaining that while simultaneously explaining why the same person might want everyone to give more money to the Treasury (via taxes)
Wednesday ~ April 25th, 2012 at 5:16 pm
michelle
Because taxes do more than just pay down the debt.
Wednesday ~ April 25th, 2012 at 5:18 pm
michelle
And by that I mean that revenues collected in the form of taxes aren’t just used to pay down the debt, they are also used to fund other programs that people might feel are useful to the country as a whole, or in part, where paying down the debt has a limited current usefulness.
Wednesday ~ April 25th, 2012 at 6:36 pm
Ryan P
I’m afraid I can’t see the difference. Money that goes to the Treasury by one method is equally useful (or not) for either reducing new borrowings or spending on new programs as by any other method. The closet I can get to making heads or tails of the difference is that we are supposed to assume that while Buffett knows taxes can be spent, it simply had not occurred to him that donations can be spent (our lack of a surplus notwithstanding), and so he gave most of his money to the Gates Foundation even though he believes the marginal social value of a dollar is higher in the hands of Congress.
Thursday ~ April 26th, 2012 at 9:00 am
michelle
If you can’t see the difference and insist that whatever money takes pressure off the federal budget is fungible, then you should add all of the donations to other programs and agencies that also “take the pressure off the federal budget”, such as donations to PBS, et al to the $3.2 mil figure.
Otherwise, it’s not an accurate amount.
Thursday ~ April 26th, 2012 at 4:02 pm
Ryan P
OK — how much do people give to federal programs and agencies? (I’m a little skeptical of NPR & PBS as examples. Those aren’t so much federal agencies as non-profits that get some federal money but mainly pay their bills with advertising and donations. And a rather large chunk of those donations are people giving to their local stations.)
Thursday ~ April 26th, 2012 at 4:26 pm
michelle
Right – they’re not federal agencies per se but they are in the federal budget and take federal funds.
So if you want to count everything that lessens pressure on the federal budget as fungible funds, you have to count that, too. And since a great chunk of it comes from the $290 billion figure (surprise!), I think you’ll find that it increases the $3.2 million figure considerably.
While I do not have exact figures on publically funded institutions, you can see general statistics at:
http://www.nps.gov/partnerships/fundraising_individuals_statistics.htm
where the breakdown is by subsector (education, arts/humanities, hospitals, etc). While the $290 billion total no doubt includes private institutions, the publically funded ones such as PBS, Planned Parenthood, and Penn State are in there as well.
Thursday ~ April 26th, 2012 at 4:36 pm
Ryan P
Penn State is not a federal program. I’m semi-fine with counting donations to federal agencies in general (I say “semi” because there’s reason to doubt the flypaper effect is identical for “donation to the Treasury” & “donation to a particular process, but whatever). But counting things that aren’t federal programs but in some way get a federal grant here and there isn’t remotely attempting to be accurate. Why not just go to the chase, classify the charitable tax deduction as spending (it’s a “tax expenditure” after all), include all money give to charities as donations to the federal gov’t, and skip having to do all that troublesome counting?
Someone makes a donation to the federal dep’t of education or defense? That’s a donation to the federal gov’t. Someone gives to the local university or radio station? Not so much.
Thursday ~ April 26th, 2012 at 4:56 pm
michelle
If people donate $150,000 to a university to fund a research program that advances a cure for diabetes, then the researchers don’t have to apply for a grant and the federal government (assuming they would have approved a grant) has an extra $150,000 to play with.
Whether they have an extra $150,000 because someone paid down the national debt, donated to PBS, or funded a research project at a public university doesn’t matter. Fungible is fungible.
Thursday ~ April 26th, 2012 at 5:07 pm
Ryan P
Just because taxes deposited in the Federal Dep’t of Treasury and donations both give money to the gov’t, it does not follow that all money given or spent in any way at all, anywhere at all, is “fungible” with giving money to a federal agency, and vice versa.
Thursday ~ April 26th, 2012 at 5:16 pm
michelle
In that case, considering that the $3.2 million donated to pay down the debt *must* go to pay down the debt, just as a similar $3.2 million donated to PBS *must* be used by PBS, I must conclude that people only cared $3.2 million worth about paying down the debt, and donated the other $290 billion for stuff they felt was important (even if it alleviated pressure on the federal budget in the process).
Thursday ~ April 26th, 2012 at 5:19 pm
Ryan P
Again, no. Leaving aside the fact that we do not in fact pay down the debt (making that *must* unlikely), you’re conflating donating money to things that aren’t the federal gov’t with things that are.
Thursday ~ April 26th, 2012 at 5:22 pm
michelle
Actually, I’m not. The $3.2 million dollar figure is donations earmarked for that one purpose. It cannot go into the general fund.
Thursday ~ April 26th, 2012 at 5:29 pm
Ryan P
Federal debt fell by $3.2 million last year? I think there’s an inadvertent sign change there (and the decimal point might be a bit off).
Thursday ~ April 26th, 2012 at 7:30 pm
michelle
It’s part of the US Code. Look it up under 31 U.S.C. 3113.
Thursday ~ April 26th, 2012 at 7:38 pm
Ryan P
That proves debt decreased precisely as much as it demonstrates all spending anywhere is identical to a gift to the federal general fund. I concede
Wednesday ~ April 25th, 2012 at 1:07 pm
The National Memo » Stop Nagging Buffett: Higher Taxes Should Be Law, Not Charity
[...] Ozimek jumps in on the should Warren Buffett just donate money to the government conversation here, with “Should people who want higher taxes donate to the government?” He builds off of [...]
Wednesday ~ April 25th, 2012 at 2:29 pm
Paul Mineiro
What about … the government does many things, whereas a good charity has a particular vertical focus (even a large one like the NRA or the ACLU). The vertical focus allows them to extract larger contributions because people understand what they are getting for their money. This is doubly true because without the ability to compel contributions (tax), a private charity can credibly threaten not to exist without contributions.
Wednesday ~ April 25th, 2012 at 3:06 pm
Soho
Just as importantly, the government does many things that a people don’t like. Suppose a given individual supports 75% of government programs. Given the choice between donating to the government or to charities which pursue the same goals as the branches of government the individual does like. Giving money to the government would ‘waste’ 25% of the donation. I can’t imagine a real voter whose policy preferences exactly match a government’s, so it always makes sense for the voter to donate money to targeted charities instead. The absence of donations to the government tells you nothing about the voter’s preferences regarding levels of taxation- this hypothetical voter supports most government programs, and so could support higher taxes to further those programs even though it doesn’t make sense for them to donate to the government.
Friday ~ April 27th, 2012 at 2:31 pm
HiJo
Maybe people don’t want to give charity to the US government because the US has the power to print money any time it wants to. The US doesn’t need your money to pay for stuff, it needs it as a means of maintaining demand for the currency, tempering imflation by curtailing demand, and as a means of social policy and redistribution.
The real question is why state governments like California don’t get charity.
Sunday ~ April 29th, 2012 at 2:36 pm
mrhuhk
One overlooked issue is that most charities don’t have an entire industry built around counter-programming against them.
The US gov’t will always face headwinds in collecting donations because there is an entire sociopolitical edifice dedicated to convincing people that government puts your money in a pile and sets on fire.
Charities, while often astonishingly wasteful compared to gov’t, don’t have a bunch of people telling the public they are wasteful.
Likewise, there is the issue of signalling behaviors. Donating to charities signals something positive. Donating to the gov’t, if it signals anything, probably signals that you’re a rube, something no one would intentionally signal.
Tuesday ~ May 7th, 2013 at 6:30 am
firstcard.me
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