In yesterday’s post Can money buy happiness, people seemed to agree that money doesn’t buy happiness directly, but it can buy choices, security, freedom, etc., which can help happiness.
This question isn’t for the book, but for my own curiosity. I was talking with several people from European countries this February. We compared tax rates, and when you add in state, federal, FICA, and sales taxes, I pay as much of each dollar in taxes as they do.
Among the things they get: national health insurance (or in some countries, national health care directly), guaranteed mortgage payments on their home made if they’re past retirement age so they know they’ll have a place to live, six to eight weeks a year of vacation, nanny care for new mothers, etc.
We don’t spend our tax dollars that way. We spend roughly 20% on military, 20% on interest payments on our national debt (increasing at record rates, by the way), and 20% on Medicare. Everything else (education, social programs) all squeezes into the remaining 40%. (See here for reference.)
Once we’re done paying our taxes, if we want any of the freedoms and choices that some other countries have, we must pay for them ourselves with after-tax dollars. (Security’s a fine example. 20% of tax dollars go to physical/military security, but not other forms of security like housing, food, or education/prep-for-future.)
In America, we’ve very successfully adopted the knee-jerk idea that “taxes are bad” so we never look at the other side of the equation: what our tax dollars actually provide.
So here’s the question: if we had social programs provided by or supervised by the government that provided things that gave you more time, choices, or freedoms, would you be willing to pay more in taxes? If so, which choices or freedoms would you want provided? If not, why not–are the choices/freedoms not important to you, are you already happy, etc.?
5 responses so far ↓
1 Matthew // Apr 25, 2008 at 10:00 am
I’d be willing to pay more taxes than I’m paying presently _within_ a system that isn’t as deeply riddled and ingrained with inefficiencies as ours is in the States.
That’s to say, that I reject paying more taxes in the States because of how “broken” I view the current state of our Country.
So, a resounding No, would be my answer to your question as I read it.
2 Father Spike // Apr 25, 2008 at 12:26 pm
Interesting question. Can I ask the unasked preliminary question: is there potential for collective spending to surpass the effectiveness of individual spending for bringing about our happiness, be it as individuals or as a society?
This one seems to have a pretty clear-cut answer. As I understand economics, public spending is by definition less effective than individual spending, for the same reason you’re less likely to get the clothes/toys you want for your birthday from other people than if you bought them yourself, namely, that other people just don’t know your needs as well as you know them yourself. What goes for your Aunt Bernice who thinks everyone loves argyle goes triple for your friendly government officials in D.C. Some conservatives make government out to be deliberately, even maliciously inefficient. Not the case, as anyone who knows actual government workers knows. Sure, sometimes there are rotten people in there, and yes, the agencies need a lot of streamlining, but on the whole, they’re hard-working and dedicated people. In fact, in some cases (contrary to the prevalent conservative Mordor theory of bureaucracy) they’re just the kinds of people you’d want to have make decisions for you. Still, economics warns you not to do it more than necessary, not for fear that they will drain your soul, but because it’s “inefficient.” Just because these people aren’t you, nor do they even know you, their ability yo make decisions on your behalf will be extremely limited. Granted, you’re not asking them to buy you a new jacket, but there are enough questions of tailoring involved that it’s a risky proposition. If you’re working in the federal government, you’re having to get those socks for 300 million people. Chances are they’re not going to fit a few people.
To summarize, as you move from individual to national-scale, administration and research costs go up; likewise, the ability to spend money effectively goes down. It doesn’t particularly matter whether it’s a government or a big business; it’s going to take a lot more money to accomplish a lot less the farther the decision goes from you.
Me, I’d love six weeks of paid vacation a year. If you could convince me the government could do that realistically, I’d be on that bus. But it looks to me like I couldn’t do that without paying for everyone else’s six weeks’ of vacation with taxes. At best, it would be a simple transfer of money from their pocket to mine, then back. But because of the whole collective spending thing, it would about double in cost each time. It sounds like I’m better off as it is, and more importantly, so is everyone else.
3 Michael Purpura // Apr 25, 2008 at 3:55 pm
What if taxes were mandatory but each person got to decide what things or range of things the government can use their money for? I’m not sure who would make the list of choice, but I bet Americans wouldn’t mind taxes so much then.
4 Steve Mills // Apr 30, 2008 at 8:45 am
I think to volunteer to pay more taxes you have to have faith in the government and I would have little faith in ours (UK). Some examples:-
The Road Fund Licence was brought into force to pay for new roads. It’s now referred to as Car Tax - the licence disk that every car must have. Now most of that money goes straight into government coffers and very little is spent on extending and improving our road network, whilst the government is trying to force us out of our cars and into very expensive public transport.
Another example: we all pay a big sum out of our pay packets called NHI - National Health Insurance. Now if all of that went into the National Health Service then life would be much better, but it doesn’t. Once again it goes mostly into government coffers whilst the government try and persuade us to take out our own private health policies - I wouldn’t mind paying for my own private health policy if the government would then give me back the exhorbitant NHI payments that I have to make.
Finally, we have Council Tax - it covers street lighting, policing, waste disposal, etc and each year it goes up but at the same time the services are cut or reduced - this is a hidden form of tax - “get less for what you pay” - that’s financially the same as “pay more for the same thing”, but it’s sneakier.
So I for one would not vote for more taxes unless we had some very clear benefits like free public transport or train fares that cost less from A to B than taking the car instead of costing more. Do you know, I can hire an airplane and fly it from Nottingham to London for less than the cost of a first class rail ticket to London? Seriously!
Kind Regards
Steve
5 Jim Sewell // May 2, 2008 at 3:21 pm
The assumption is that “social programs provided by or supervised by the government [provide] things that gave you more time, choices, or freedoms”
The common thinking in the circles in which I run is that social programs:
remove choices - determining which doctor you will visit
wastes time - medical care is free so everyone goes for the smallest thing and the doctors are not incentivised by a free market
and adds freedom - less choice and less time is less freedom.
I think that the antithesis to this is what makes America the great country she is. (with apologies to others for being US-centric) The free market lets us have the opportunity to work our way into greatness instead of having to be born into royalty or be cousins to the person-in-charge. More taxes to put services into the hands of government are not the answer.
There are surely things that the government should do - protecting us from enemy invaders for example - but there are some things they should not be involved in such as legislating the use of cell phones while driving which has its own punishment as a wreckless driving charge.
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